Bridging the commercialisation valley of death

“Australia’s new Advanced Manufacturing Growth Centre will aim to bridge the 'commercialisation valley of death'", the centre’s Chair, Andrew Stevens has told a CEDA forum on Innovation and competitiveness in the New Economy.

Mr Stevens said the ‘commercialisation valley of death’ is a real phenomenon that describes the serious gap between the research and commercialisation worlds that Australia must bridge if we are to address the lack of local momentum in advanced manufacturing.

“Advanced manufacturing is not another industry code, but a way of operating that involves several key elements,” Mr Stevens said.

“Successful advanced manufacturing enterprises all involve high value products and services, high customisation, export-oriented integrated global supply chains, and are design led: they compete on value, not price.”

Mr Stevens stressed the need for Australia to accept the new manufacturing paradigm if we are to overcome our challenges and genuinely advance the local sector.

“We need to adapt to the new manufacturing model where the focus of human activity is no longer the production itself where people are rapidly being replaced by robots,” he said.

“Instead, the two activity-intensive areas requiring human skill and innovation are now pre-production with all its research and development leading to commercialisation.

“And post-production, which involves marketing, logistics, sales and service.”

Mr Stevens said the Centre will, “influence existing funding and balance the current emphasis on research and development with a new focus on industry involvement.”

“We will create access to global supply chains and international markets, and improve engagement between research and business,” he said.

“Our inability to grow advanced manufacturing has clear commercial causes that are not found in some deficiency of national character, or poor, risk-averse management, or any peculiar Australian preference for rocks and paddocks over test tubes,” CSL Chief Financial Officer, Gordon Naylor told the audience.

“Even where Australia has traditional strengths, such as in health and medical research, we haven’t made a serious strategic effort to successfully bridge the gap between the research and commercial worlds”.

Mr Naylor listed five elements that a successful ‘strategic effort’ would need, emphasising number five, “Introducing a competitive rate of taxation on advanced manufacturing undertaken in Australia, which derives a large portion of its value from Australian intellectual property.”
He was critical of the recent “fiddling with the rate of Business R&D tax offset”, which he called a backwards step.

“We lack the translational research that harnesses the scientific insights to potential, real-world applications that can attract commercial collaboration,” he said.

Mr Naylor said, “Australia is just not competitive enough to attract footloose investment. Our corporate tax rate is, in some cases, three times higher than alternative competing locations, even developed nations like Switzerland.”