From settlement to six sigma: a short history of Australian manufacturing and quality improvement within the industry

Production line

It is hard to believe when you look around our vast manufacturing industries today — all our electronics and computers, our automotive enterprises, our clothing lines, our wines, our beers — that once upon a time, there was nothing at all. Literally nothing. No workshops or breweries, let alone mills and factories and warehouses. And when these things did first emerge, they consisted of little more than a few men bodging together some timber — to fix a shelter, a boat’s hull, an oar — in an area that might be called a “workroom”, but was more likely just a dedicated, empty space.

Nevertheless, this is where it all began. These spaces would pave the way for the very first factories in Australia, and in between those years to these, from those very first crude constructs, to the efficient, energy-saving, waste-minimising “lean manufacturing” plants in use today, there is a whole history of improvement, of development and refinement, that spans some of the most glorified and troubled ages of our nation. From the pastoral to the gold rush, the Depression to the end of World War II, manufacturers have always had to improvise and find their place within the limits of their time, meet the varied demand, and shoulder the inevitable slumps. And all the while they were undergoing a process of learning and passing down what they learned. Indeed we are, of course, still learning, and still spreading the word between ourselves today.

But, in a history that takes on board a whole sector’s chronicle of quality improvement, we must go right back to the first thing that there ever was to be improved upon; we must go right back to the days of those first early free settlers…

Once upon a time (1788-1830)…

… arriving on the naked shores of the south, travel-worn and weary, squinting at the ice-white sands, delirious beneath another sun flaring mercilessly upon another shore, another land, another canvas of opportunity. They climbed ashore, steadying one another, leaning, the stronger shouldering the weaker, the strongest undertaking the dead, and there, right there, upon the grains and the grit, the ancient rock obliterated, they sat and they looked and they saw…

 nothing

Nothing but each other. Nothing but each other’s nothing. Nothing but each other’s need for something. Nothing but need. So — what were those needs?

In those early years of Australia’s first settlement, industrial and commercial enterprises were simply non-existent. All there was, was the need to establish the means of producing the basic necessities of sustaining existence in the new colony, and indeed, the government provided such means. They founded a small number of workshops for the free settlers so they could manufacture their own flour and salt to make bread, their own candles and leather, their own tools and simple domestic items that could be used for cooking and such.

Nearly everything, though, had to be learnt from scratch. The population was so small, and the labour available so poorly skilled, that any hope for any meaningful economic development was quashed at the outset — private business ventures did occur, but invariably failed to prosper, as there simply wasn’t the domestic demand. Anything that was needed that these first few unskilled labourers were unable to produce was, generally, provided by imports.

But here, in this very fact, is where the story of manufacturing development truly starts. As more and more ships came, delivering goods, prisoners, and indeed more free settlers, so there became a genuine demand of a service. Many of the visiting vessels had been beaten by the waves on their long voyages — gnarled, splintering, split — and needed repairing before setting off again on their return journeys. Yes, this is where our great ship-repairing industry began — an industry that today boasts 102 independent companies, nearly all of which are catalogued as ASRG (Australian Ship Repairs Group) members — in the hands of a few early settlers with limited skills and limited means. But, more importantly, this is also where the beginnings of enterprise and significant economic development first emerged.

Early drinks manufacturing began to appear alongside the ship repair yards — specifically, they were built to brew beer. Even as early as Captain Cook’s time, it was noted that fermentation was a good way to preserve drinking water for long voyages. And so, over the next few decades, breweries began to pop up across the settlements, selling barrels to the ships, and jugs to the settlers. One of these is Peter Degraves’ Cascade Brewery in Tasmania, established in 1824, which is still in operation today, and credited as Australia’s first-ever brewery.

 1830-1900

A rapidly growing population saw manufacturing in Australia in this period of history really start to flourish in a way that it hadn’t done so before. The population rose from below 13,000 in 1815 to nearly 200,000 by the mid-1850s — figures that were fuelled by the continuous influx of new free settlers. Of course, this meant a greater diversity of people with new skills to bring to the country, and also to a greater demand for products — food and drink, transport, construction materials, etc.. The government reacted, and suddenly thousands of jobs were created for boilermakers, brickmakers, iron founders and engineers. It was a golden time. And then there was gold…

The gold rush of the 1850s through to the 1870s brought with it, naturally, a new-found wealth to the colony. Banking and commerce expanded in correlation to the population surge — an annual 19% growth between 1851 and 1860. All sorts of people, all from different trades — policemen, lawyers, accountants, engineers, priests, doctors — arrived on these shores in the hope of becoming instantly rich. The government became more willing to make available speculative finance for the various manufacturing industries, in particular to supply the demand for gold mining equipment. This created a huge boost to the metal-working trade, most notably in Victoria.  Shovels, picks, saws, axes, wheelbarrows, pans, guns — all were suddenly in high demand and industry flourished.

Most important lesson

But, it was after the gold rush that Australian manufacturing learnt its most important lesson to date. When there was no more gold — or at least not enough to go around — a surplus of labour befell the nation. The treasure hunters from all sectors quickly had a sharp reality check: they weren’t rich after all, and they needed to work.

The government’s reaction, quite frankly, was shrewd and remarkable. The first-ever protective Tariff Bill was passed in 1867, effective against overseas imports, to encourage the manufacturing industry to expand and produce more of its own means domestically. What is more, the revenue generated from the tariff of continued imports was used to fund public works — rail, train, tram, transport, telegraphs — again, giving a boost to the plants that produced the materials needed to enable such ventures. Yes, it may seem obvious now, but this was an important part of the learning curve along the way to our now well-founded domestic industrial success: an economy only thrives by what it produces itself — a lesson that should still be heeded as we head into the Asian Century (see the Asian Century Business Engagement Plan (ACBE) to find out what those early lessons have led to today).

1900-1945

Self-sufficiency, however, does not necessarily mean invulnerability to global crises, and when the Depression took hold over the world in the 1890s, Australian manufacturing would experience 30 years of growth at a significantly lower rate than the foregoing 30 years. The previous decades of unparalleled affluence were at an end.

But still there was growth. Federation played an important part — customs barriers were eliminated between states, encouraging trade and further industry expansion. By 1913, manufacturing employment totalled at 328,000 and accounted for 13% of GDP. This, in fact, was still relatively small, but encouraging nonetheless considering the global economic crisis.

But things improved again — for Australian manufacturing at least — with the onset of World War I. The mining company BHP (Broken Hill Propriety), which had been mining silver, lead and zinc since 1885 (and which is now global and the largest mining company in the world) ventured into steel making in 1915, eventually establishing the famous Newcastle Steelworks, providing the town with the moniker “Steel City”. The company generated huge profits during WWI and indeed WWII, providing the heretofore unprecedented demand for steel to build ships, ammunition and artillery. The steelworks was a success story for Australian manufacturing during the rest of the 20th century, employing generations of steelworkers who stayed loyal to the company for their whole working lives. It was such a tragedy to the industry, therefore, when it was forced to close down its production in 1999, although its legacy does live on.

Molten steel pouring

1945-1990

After the shortages of WWII, Australian manufacturing once again enjoyed a boom period, particularly in producing automobiles. With (GM) Holden and Ford Australia already having established plants in the country, Toyota joined the fray, founding their branch Toyota Motor Corporation Australia in 1958.

Indeed, Toyota have been (and are) one of the leading pioneers in manufacturing quality improvement programmes over the latter part of the 20th century. Following on from the remarkably astute manufacturing principles fathered by Henry Ford — his so called “flow production” — Toyota developed a system which has become known as “lean manufacturing”. The principles of this revolutionary dogma have now become famous, and are studied and applied to manufacturing plants worldwide. The aim is to go beyond eliminating waste by creating brilliant processes. So, what makes the processes so brilliant? Well, in part, it is a matter of immediately catching any errors or faults in the production line — which will inevitably occur from time to time — and putting a halt to proceedings, fixing them before the manufacturing process continues. This sounds simple, but the process has been refined to an almost immaculate operation, using machines that can detect even the slightest inconsistency, malfunction or defect, and safely bring production to a stop before imperfect products continue through the “flow production”.

This part of the process, which Toyota calls “Jidoka”, is combined with a second philosophy that they have named the “just-in-time (JIT) system”. JIT is the principle of “making only what is needed, when it is needed, and in the amount needed!”  In short, it is the principle of producing only what is valuable to the customer, but for the full run down you can read about the Toyota Production System (TPS) on their website — a page endorsed by the renowned Lean Enterprise Australia group (which is currently open for membership).

Production line

1990-present

From lean manufacturing came the six-sigma strategy, originally conceived by Motorola, but now adopted worldwide, including by the group Lean Six Sigma Society of Professionals (LSSSP) whose headquarters can be found at Wheelers Hill, Melbourne. The term “six sigma” derives from manufacturing statistical terminology. The maturity of a manufacturing process is described using a “sigma rating”, which basically indicates the percentage of defect-free articles at the end of production. The six sigma approach is one that aims to create a production process that expects to generate 99.99968% of flawless products over each production cycle.

Factory for Industrial Manufacturing

This is achieved by a business-management strategy that focuses on process improvement and variation reduction, through application of the DMAIC methodology (define, measure, analyse, improve, control). It is claimed that applying the six sigma approach can save companies as much as $230,000 per project, with the possibility of completing up to four projects per year. Plenty of Australian manufacturers are already embracing the approach, including BHP-Billiton and Orica Australia, not to mention General Electric, which is estimated to benefit by $10 billion during its first five years of implementation.

It is, as you might expect, proving to be the most important innovation in manufacturing quality improvement since it all began, way back in the 18th century, on an isolated coast, with a few barely skilled workers bodging a mean living together repairing visiting vessels on our once naked shores.

Further Reading

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Trent Munro

Trent Munro

Manager – Strategy & Business Development at Matthews Australasia
Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

by Trent Munro

Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

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