Göran Roos manufactures 2012 RMIT Business Lecture

24 February
Professor Ian Palmer, Pro Vice Chancellor (Business) RMIT University, Alun Needham, Executive Director -BTA R&D and Technology at Ernst & Young, Professor Göran Roos, Chairman VTT International and Julia Page, veski ceo.
Professor Ian Palmer, Pro Vice Chancellor (Business) RMIT University, Alun Needham, Executive Director -BTA R&D and Technology at Ernst & Young, Professor Göran Roos, Chairman VTT International and Julia Page, veski ceo.

More than 100 leaders from Victoria’s business, government and manufacturing sectors gathered on Thursday 23 February for a thought provoking lecture by Professor Göran Roos about making things in a high cost environment.

As part of the 2012 RMIT Business Breakfast series, presented by veski, RMIT and Ernst & Young, Professor Göran Roos covered topics such as the importance of manufacturing, the issues of a small economy, the changing shape of manufacturing in Australia and the outdated lens of public statistics. His presentation focused on the fact Australia has joined Switzerland, Norway, Sweden, Denmark and Canada, among others, as countries with high cost manufacturing environments.

Professor Roos, who was the 2011 'Manufacturing for the Future' Thinker in Residence for South Australia, and is supporting the Prime Minister’s Taskforce on Manufacturing in Australia, highlighted how moving from a low cost to a high cost environment changes the way firms need to compete.

He said companies need to move from looking at the economy through a neoclassical lens to an innovation, evolutionary and behavioural economic lens and pointed out that economics in Australia has moved through three stages.

“First … Australia had some major contributions in the field of academic research and thinking. From that it became an ideology … where it is in places like the UK and US and so on,” he said in his speech.

“But it has migrated one step further here. Now it is a religion and what characterises religion is you can’t query it. And if you can’t query it, you can’t move on. You can’t learn new things. You get dogmatic.”

Other characteristics of firms operating in a high cost environment are that they typically use their profits for re-investing and that the firms need to have a strategic innovation focus. He said the principle ingredients for a firm’s success in a high cost environment include knowledgeable, loyal employees, a depth of focus, and a closeness to the customer. This requires a different employee/employee relationship where the employer is responsible for making the employee more employable during their tenure, and the employee is responsible for making the employer more successful. Both should want more firms that are more successful but he said the employee and employer don’t have to agree on how to distribute the economic profit and social good that results from a successful firm.

Another important point raised by Professor Roos was the need for companies to invest in intangibles such as R&D, ICT, organisational structures, design, brand equity and education and training. He said Australia is lagging behind with the manufacturing sector investing less than 15% on intangibles compared to more than 25% investment in Sweden.

The presentation was followed by a number of engaging questions from Melbourne-based manufacturers including Holden and Compumedics, which allowed Professor Roos to share more of his international expertise.

If you would like to watch the full video of Professor Göran Roos’ presentation visit veski’s YouTube Channel or download a PDF of the presentation below.

Part 1 (PDF)
Part 2 (PDF)

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