Then and Now

100 Years in Business

One hundred years ago, Australia’s growth curve was at its steepest. As an expression of the expansion of its economy, and in particular of its manufacturing capacity, it is likely that no period before or since could compare.

At a time when the mass-production of Ford’s Model T in America changed forever the means of production of consumer items, the first electric self-starter for automobiles had also been introduced – you didn’t need to go out and crank the car by turning a heavy handle. As early as 1910, saddlery Holden & Frost opened a motor trimming department with the products marketed as Holdfast Trimmings; by 1913, it had begun production of complete motorcycle sidecar bodies and in 1914 produced its first custom-made car body. One hundred years ago, the GM Export Company appointed its first field representative in Australia and import of the first GM cars began shortly afterwards, though at this stage there was no connection to Holden.

Given the recent furore over intervention or the lack thereof by federal government in the car industry, it is worth recalling that it was the government’s wartime trade restrictions (decreeing that only one complete car could be imported for every three chassis) that led to a decision by Holden & Frost to commence large-scale production of car bodies. In 1917, Holden Motor Body Builders was set up as a division of Holden & Frost, with Henry J. Holden appointed as Chairman and Edward W. Holden as Managing Director. It began design and manufacture of a standardised car body for Buick and Dodge chassis and in 1918 turned out a total of 587 vehicle bodies.

Not many people now realise that Ford’s Australian interests – so closely associated with the Victorian city of Geelong since 1925 – were established not by Detroit but by Ford of Canada, which at the time was still completely independent of the US company. The Australian operation began by turning out the – by then outdated – Model T, initially in a disused wool store, before switching to the Model A and in 1934 the world’s first coupe utility (what we now know as ‘ute’ or pickup).

This is not the time or place for a debate on the wisdom of a domestic auto industry; but we could recommend applying some of the lessons learned – or at least observed – into other industries. A decade ago, the local car industry was trying very hard to position itself as a ‘niche’ producer. Laurie Sparke, then chief engineer at Holden Advanced Engineering, even suggested the limited local market could “be viewed as a business opportunity: it allows Australian manufacturers to create specialised businesses providing supplementary or niche products that are needed in larger markets. The opportunity is to be innovative and creative, and to be first into niche market opportunities.”

The president of the Lean Enterprise Institute, Jim Womack, countered at the time: “The world doesn’t know Australia even has a motor industry – and Australia would survive without one.”

In many ways Sparke was spot-on: Australia is a place for innovation and creativity. The trouble is, those admirable qualities are in very little demand in the auto industry, where production methods – and the product itself – have changed so little in a hundred years. Cars are inherently not niche products and their manufacture is not a niche operation. What Australia is so good at is just not in demand in the automotive sector. It’s not meant as a put-down, but if you can even make good cars in China or Thailand, why bother to do it in Australia?

However, some of the methods used in the car industry’s attempts around the world to compete and bring down the cost of manufacturing are of real interest in other operations. Management stopped being ‘seat-of-the-pants’; the Japanese auto industry (indeed its whole consumer-product sector) showed the world how to make things more efficiently and faster yet with improved quality and reliability. That’s how Japan’s economy became the world’s second largest. Concepts such as kairetsu, kanban and – much more recently – Six Sigma and associated doctrines revolutionised production lines just as the lines themselves had revolutionised production a century ago. But their usefulness is not limited to factories and mass production.

Today, although the period between the wars saw a different story, unemployment in Australia is thankfully low – as it was one hundred years ago. Low unemployment brings its own problems for employers, however. In Western Australia and Queensland, for example, wages are rising faster than inflation because of the need to incentivise staff to stay put, particularly in the resources sector.

Less highly paid are workers in healthcare; unlike a mass-production line, this burgeoning industry is labour-intensive. It can still be organised better using management techniques honed in Japan by the likes of Sony and Fujitsu. Without reducing skills requirements or dehumanising the jobs, it is perfectly possible to get more out of people by motivating them well, engaging them more and paying careful attention to the supply chain around them. Indeed, today’s healthcare (and its associated sector, aged care) is about much more than just curing the sick; cost-effectiveness is key to its progress.

Quality control / assurance and lean inventories are both at the fore in the defence procurement industry, one area in which Australia retains a prominent role. A hundred years ago, of course, Diggers were sent into battle woefully and criminally under-equipped, yet today, defence is seriously sophisticated.

The Lockheed F35 (Joint Strike Fighter) program is a case in point. Australia chipped in for $150 million USD in 2002 and has since seen good value in terms of many domestic companies involved in the project and marketing the resultant technologies worldwide. But even defence is subject to scrutiny these days and the bottom line is carefully examined. “We must use all our energy finishing development within the time and money we have, we must continue to drive the cost of producing F35s down, and we must start today to attack the long-term life cycle costs of the F35 weapon system,” the US Pentagon told Congress last year. Other governments share the relatively recent discovery of the need for cost-effectiveness in defence systems and the lessons learned in the automotive supply chain are very valuable in this regard.

This is a good country for mining, of course, and will remain so, although according to the Australasian Mining History Association, the industry was in a poor state in the early years of the last century. “In the early years of the twentieth century, mining activity in Australia began to decline despite a continued rise in the value of mineral production. The only major finds of the first half of the century were lead, zinc and copper deposits at Mt Isa but their full potential was not realised until the 1950s.”

The challenge in this industry has been to render it less unsafe for those in it. Thankfully, mining here has never been as dangerous as in some places – although the industry has had its share of tragedies such as those killed in the Balmain colliery in New South Wales in 1900, or the forty-two killed in 1912 in the North Mount Lyell fire, or the 1921 Mount Mulligan mine disaster in north Queensland, when explosions caused by using naked flame for lighting killed seventy-five men. The basics of getting minerals or gases out of the ground change relatively little, but the techniques for minimising risk (financial, as well as personal) have been revolutionised. As several recent features in our sister publication Resource in Focus have demonstrated, Aussie innovation and creativity are at the vanguard in developing a string of new ideas for increasing safety underground – ideas that will be used worldwide.

At the end of the day, Australia still demonstrates what it stood for a hundred years ago and can still market successfully worldwide: the ‘can-do’ spirit that created the Commonwealth and the ‘ANZAC’ ethos of courage and spirit. The last word goes to Charles Bean, historian of the First World War: “In the end ANZAC stood, and still stands, for reckless valour in a good cause, for enterprise, resourcefulness, fidelity, comradeship and endurance that will never admit defeat.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 5:13 AM AEDT