Even the machines that dig the dirt are made across the water.Instead of digging silicon we should be working with it.

The future for the Australian electronics industry is NOT in computers, consumer electronics or semiconductors. These ‘commodities’ are produced in high volumes and we don’t have the high volume plants or low labour costs of Asia. What we do have (and it has escaped your analysis) is a vibrant, growing and successful electronics industry in Australia that produces high value-added niche products for diverse global markets in relatively small volumes. These ‘hardware’ products have significant ‘embedded’ software and are sold principally in the developed markets of USA and EU.

This industry is heavily concentrated in Adelaide, which has 5.5% of Australia’s population and 22.3% (ABS 8126.0-2003) of all electronics design and manufacturing employment. This proportion continues to grow and likely now exceeds 25%. One third of the electronics industry in Adelaide is defence related, the other two thirds produces industrial, commercial, telecommunications, medical and scientific systems.

Adelaide is one of a small number of global places that have developed such a ‘nationally significant’ concentration of electronics industry, others include Austin, Silicon Valley, Boston, Dublin, Glagow/Edinburgh.

Revenue of Adelaide-based electronics industry firms in 2005-06 will exceed A$3 billion and at its 5 year average growth rate will double in the next 5 years, as this industry continues to attract talented, well trained and well paid people to this ‘new-economy’ industry.

What happens when the resource boom busts? we all fall about in dismay.

Patrick Donahoo in an article a couple of days ago raised a similar issue in relation to R and D - we dont do it - because as long as we are doing ok today the future will take care of itself - or so we think.

We are, at an individual level fairly innovative, but most of it has relied on private and individual initiatives - but once we get to the implementation phase capital from both the public and private sector recedes farther faster than the tides at Broome.

We have just lept of the sheeps back and are now riding on the coal train.

As long as we lack a national vision based on sustainability, of the economy, the environment and social cohesion we will lurch from crisis to crisis.

The third oil shock will hit us where it hurts and erode some of the gains from resources boom. It is likely we will exploit our uranium reserves to offset the slide in other resources and dress it up to be a greehouse frinedly approach to the energy crisis. But in the end being lucky enopgh to have expensive dirt in ones back yard and beclever enough to dig it up is not really a solution for the future - at least long term - but it does seem to be the only one we can dream up

Hi Ronald,
I thought that somebody might raise the existence of the local non-consumer electronics industry. I mentioned there was "no significant local manufacturers of *consumer* electronics". I do not disagree that there is a significant local electronics industry in the automotive, medical and defence related electronics which is doing well and is to be commended.
I would argue that there is scope for Australia to have its own Apple, Sony, or AMD and the commodification of these areas actually creates as many opportunities to join in as it takes away. As you rightly say the commodification of these industries does squeeze margins, but there is still plenty of money being made in these companies and industries even in high labour cost countries.
With regards to the lack of large manufacturing plants locally, this is exactly what I believe should be addressed. These plants can be created with the right incentives. Semiconductor plants for example are actually not very dependent on the local cost of labour as they are so automated. As such are also not huge direct employers but they can be used to found a wider industry.
I think it is time we admitted that the niche approach is not the way to get seriously involved. It has not worked to get us into the thick of it so far and is unlikely to do so in the future.
Regards
Damian

Maybe if we processed our iron ore/minerals ourselves instead of shipping it overseas, and selling as a finished product,we could afford to build our own war ships, planes and tanks instead of buying them 'off the shelf'from other countries.
We need to bolster our manufacturing industries, not dumb them down, we may have urgent need of them one day and they will not be there.

I am an Indian citizen who studied in a reputed University in Melbourne and returned to India last year. I have worked in IT industry in India as a microchip design engineer for 3 years and have seen closely electronics Industry in Australia and India. Its hard to get a job in electronics industry in Australia even if you are a permanant resident of Australia. Motorola's chip design spinoff Freescale closed its Adelaide office and 135 engineers lost thier jobs(extended till september). And not too many electronics giants are having operations in Australia and in many cases if they have one its marketing office. India's silicon valley Bangalore have now become a land of opportunity..almost all big chip design/telecom companies have operations in Bangalore and have a large workforce. Right now only chip design activity is happening in India and manufacturing i.e semiconductor fabs are in far east like Taiwan, China & Korea. The first semiconductor fab is coming up in Hyderabad(Not in Bangalore as quoted in this article)with the invest of US$3 billion. Chip designing requires lot of intelligence unlike chip manufacturing which sucks lot of resources and leads to pollution. Given Australia's abundant natural resources, If Australia invests heavily in education and develops a skilled pool of young people then it definitely can produce world class electronics companies. I have seen in Australia university education is affordable only to the well off people unlike in India where government pays for students education if he is a merit candidate and student has to pay only the nominal fees(usually $200-$300 a year for an electronics engineering degree).

Given that

a) There has been a growing shift away from science and technology at both a school and university level; and

b) Many countries are far better at attracting and keeping the top people in science and technology that drive such industries (from both a cultural level and a government regulartory framework level -- just look at the number of top Australians helping create Singapore's biotechnology industry and those that moved to the US, for better pay and conditions. In addition, given that Singapore is going to expand its univerisity system, it is only likely that this loss will continue);

I find it hard to imagine that Australia is going to become a big new high technology player any time soon and nor successfully grow any of those industries that are currently here.

Damian Jeffree:

Your article explores what I have always contended - that Australia et al have too few constructive ideas, lack managerial skills, have no work ethnic, prefer easier options, sports obsessed and traumatised, and worst are guided by a quasi superficial Political infra-stuct pent on waging War, instead of garnishing Our Nation's most promising, in a National Future's Strategy.

With Internet Technology, the writing is on the wall. Nation's that invested heavily are experiencing multiple haemorrhages. Cyclic. Tech advances quadrupling each year. More players in a shrinking market - the outlook is ominous.Malaysia, Bangalore, Korea, Taiwan, Singa and Honker's are all area's confined to the 'sweatshop/low wages' syndrome. Ireland may soon be redundant. Fact is, despite the local IT hype, third generation computers wont be the marvel, the PR men stake their reputations on ?

Our latest 'yellow-cake' bonanza will undoubtedly provide a soft landing for mining giants BHP, MIM, Rio Tinto et al.Hopefully, the 'safe-guards' will ensure the 'sleeping giant' dosen't exacerbate a Nuclear Arms revival. China vying with the US, in another round of 'cold war' scenarios. Importantly, for those who remember 'Pig Iron' Bob Menzies, the lessons of 1941-45 seem to have escaped our Politico's myopic memories !

Damian mention's the CSIRO as a model for Scientific Research. Ultimately, what did the Giant computer achieve ?? Except to add, this behemoth has squandered billion's of tax payer's funds on projects that very rarely see the light of Day. Their latest ' Fab Diet'costing million's in advertising and promotion, has been debunked by imminent Nutritionist the www, as worthless. Obesity and diabetics M is rampant, gaining strength after strength. They have spawned a Nation of dysfunctional 'FATTIES" ?

Our brilliant graduates are migrating oversea's in droves. Career opportunities are minimal. CEO's, manager's cant-see-the-forest-for-the-trees, expecting to pay peanuts for qualified professionals to perform mundane tasks. There is no incentive to tackle research. The time span for tangible results is too daunting. Quick profits, plagiarism. price-fixing, staff poaching, tax evasion, and company collusion to corner a niche market is colloquially known as 'corporate ethics'.

continued..

The AWB Fiasco is a classic exposotion of how we operate in the Coporate World, with BHP-Billiton in the vanguard ?

It becomes only too obvious that any prosperous Business, with potential will wilt under the threat of a 'take-over'.Business's over the last millennium being swamped with fancy lucrative bids - shareholder's couldn't ignore.

Arnott's, Dick Smith,Patrick's Stevedoring,Gibson Chemicals,Vegemite, Victor Lawn Mowers, the list is endless. But for the timely intervention of the Fed's, Qantas would be flying Singapore Airway's logo. Just ask the ASX. Oversea's investment own the bulk of Aust Industry.

Mining,Oil and Gas, Transport, Textiles, Pharmaceutical's,Automotive etc the Multinationals play the tune, and call the shots !

In the present climate, State's Premier's are undermining each other for pole position in attracting OI. Tax breaks,real estate, bonus payments, 'wink-wink' incentives, falling over each other for the likes of Richard Bramston, Ted Turner, Boeing Aircraft, General Dynamics, Indy etc to establish in their patch oif turf ?

Since Federation, Aussie inventions and Innovations have followed the same 'yellow-brick' road to nowheresville. Aust Defence Industry are beseiged with masses of 'hair-brained', 'crack-pot' rocket science invents that remain with their originators. In it's raw state, it's plausable ADF just dont have the imigination or wizardry to put tax payers dollars into research that may not reach a satisfactory conclusion.

The' Victor Tourer' was rejected by ADF, sold to NZ, and returned to Oz, to be used by the RAAF at Pt Cook to train pilots.Classic case of reluctance to do the ' hard yards'. The Submarine Industry is chockfull of similar incidents. The Collin's Class subs are a Swedish concept, built in SA and Williamstown, and woefully inadequate to submerge below 150 feet !! Their 'black-box' of electronic software are riddled with 'bugs' and inoperable ?

It comes as no surprise, we buy our Defence Procurements from the US.Without George Bush, Donald Rumsfold, and the Pentagon, we would be sharing a 'woomera' with the Black fella repelling those 'nasty' Refugee's who dare to invade Our space in the Arufura Sea.

Cheers

In one of my previous incarnations I was asked by the Australian government to take part in a technology "trade mission" overseas. My task was to make a presentation on what it is like for an overseas company to have an Australian arm - i.e., to attract inward investment from mid-sized tech. companies.

The problem was, when I was asked to compare the Australian work ethic with that of the country in which we were making the presentation, I was forced to the conclusion that it didn't stack up. When they asked me to condense it into a single phrase, it came out as "on the whole, I'd rather be surfing."

But that is only one aspect of the problem. We seem to be quite comfortable as a society to allow the Banks - who provide absolutely nothing by way of added value to 99% of our population - to rip more than twenty billion dollars out of our economy each year.

And these are the same institutions that "support" new businesses in Australia by insisting that they take even the family home as security over their investment. In the US, an entrepreneur is able to quarantine his family home when launching a new business, which makes the decision just a little easier to sell to the wife.

Anyone who has ever trodden the "find a VC" path in Australia will also compare it unfavourably with most other developed countries. There seems to be no such thing as "angel investing", only funds with tightly-defined criteria that require a long history, secure cashflows and a willingness to part with massive chunks of equity.

In short, compared with overseas operations Australia has a number of in-built disadvantages when it comes to being innovative. The miracle is that we actually do have some successful niches, thanks to a small number of folk who actually get down and do it, rather than just talk about it.

I believe this article demonstrates that Australia is trying to sustain a 21st Century lifestyle with 19th Century economic activities. Yet, not even booming commodity prices have been able to reverse Australia's trade imbalance. Despite Australia experiencing its best terms of trade for more than 30 years, our woeful trade deficit has blown out to record proportions. Consumer demand for manufactured imports has long surpassed our ability to dig holes in the ground.

Therefore, it's painfully obvious that we desperately need a greater emphasis on innovation if we wish to dig ourselves out of this "comparative advantage" trap. As the article noted, countries like Ireland and Finland were able to rapidly develop high-tech industries within a few decades. Australia has the ability to do the same, but unfortunately, it seems our politicians and big business are drunk with complacency.