Domestic Supply Chain 

The passing of the Inflation Reduction Act (IRA) in the United States last year opened many Australians’ eyes, including mine, to where the world economy might be heading and what might be possible with domestic manufacturing.

The passing of the Inflation Reduction Act (IRA) in the United States last year opened many Australians’ eyes, including mine, to where the world economy might be heading and what might be possible with domestic manufacturing. 

The headline of the IRA is that it makes available more than US$391 billion to fund green-energy investment programs. But, the significance to Australia is that the Americans are trying to rebuild their domestic manufacturing sector, but doing so strategically in what is being called ‘green energy statecraft.’ 

Rather than create a generally protectionist economy or a rent-seeking bonanza that rides on manufacturing subsidies, the IRA aims at the high-paying, high-skills and high-tech industries of the future, and particularly those ‘green energy’ industries likely to generate export revenues.  

Paving the way forward

I am all in favour of creating high-skill jobs in a high-tech future industry – something we achieve daily at Harrison Manufacturing. There are other arguments to be made for what the IRA envisions and what could be initiated for manufacturing in Australia. 

I think it is about optimising what we already have, as well as innovation and new initiatives. 

Proudly 100% Australian owned, Harrison Manufacturing has been operating since 1949, and is the largest grease manufacturer in Australia.

Reducing the environmental impact

Consider the ESG (environment social governance) goals. At Harrison we currently manufacture around one-fifth of the 25,000 metric tonnes of grease used in Australia each year. We cannot make our grease as cheaply as some of the imports we are competing against, but by making it in New South Wales, our customers derive benefits that accrue from system-costs, rather than focusing on unit price. 

For instance, carbon footprint reduction is one benefit of buying locally made. If we import 40 tonnes of grease from a large regional supplier, for example, approximately 7,000 tonnes of CO2 is emitted in transportation alone. This is because the imported goods must travel considerable distance across multiple touch points and modes of transport including shipping to a regional hub, transhipping from the hub to Australia, and then delivery to site via road transport.

The same order of Australia-made grease delivered direct to site emits approximately 1,000 tonnes of CO2 in transport, giving our customers a viable pathway to reducing their carbon. 

Leaders in innovation

As well, Australia-made grease requires sovereign R&D, which is an investment in people and their expertise which is never more needed than when the entire economy is transitioning to clean energy. I see sovereign R&D investment as giving us a response to our customers’ demand for environmentally clean and emissions-free products. For instance, it means we can develop an all-Australian ‘eco’ grease which uses non-petroleum products.  

a man looking at the camera
At Harrison Manufacturing, we pride ourselves on being leaders in innovation, research and product development within our core area of ‘grease’.

Key benefits to Australian-made products

Supply chain risk is another factor that supports domestic manufacturing. We can turn around an order in three to four weeks, whereas an order from a regional supplier takes at least 12 weeks and would usually require two ships, transiting through a third country.  

We might be able to get grease slightly cheaper from overseas manufacturers but the domestically-made version employs Australians, puts wages in their pockets, produces income tax to build schools and hospitals, and teaches Australians valuable skills that keep them relevant in the jobs market. Advanced manufacturing also creates career and education incentives for STEM students, should they wish to live and work in Australia. 

I see the benefits of our facility every day at Harrison Manufacturing.  

We could expect more jobs from an Australia manufacturing renaissance, judging by the American experience. The Biden administration claims that the IRA created 170,000 jobs in its first year of operation, and $100 billion in new clean energy manufacturing investment (while reducing greenhouse gas emissions by 1 billion tonnes by 2030). 

Decades of global free trade encouraged us to think about manufacturing in places where there is a ‘comparative advantage’ – a mindset that is measured in unit price. But we can also think about manufacturing in terms of ‘competitive advantage’ which brings a variety of benefits in to the equation: emissions reduction, environmental standards, sovereign control of strategic manufacturing and a pathway for Australians who pursue STEM-related careers. 

The American IRA is not cheap, but it is strategic and it backs US innovation and manufacturing workers. Australia, take note. 

Julie Harrison is CEO and Director of Harrison Manufacturing Company