Saturday, February 13, 2010

Why make when you can buy - Australian import culture

Lately I have been doing lots of ordering of parts from the US and China via ebay and Little Bird. It all seems pretty cheap in Australian terms. I realize this must be due to the lately strong Australian dollar, second 0.90 plus peak in 2 years. I lack the economic expertise to analyse this fact, but I do know someone who did a PhD on macroeconomics and impact on exchange rates. The graph is created with a live link and will change as this post ages, but right now it demonstrates the point I am trying to make.

Australia has plenty of bespoke engineering, often aimed at the defence industry and not the larger and potentially more valuable commercial industry. This is most likely because defence is a protected field and bespoke engineering has high barrier to entry. Australian companies don't have the human talent and financial pool to play in the shark infested competitive world of commercial. Curse of small population base, lack of talent pool to pick and choose from. So in the end all commercial electronics gets imported as well as designed somewhere else. The ads on TV proudly tout that stuff is German Engineered or features European Luxury - while the same said Germans would rather live in Australia than in Germany. We would have all German engineers folking here if we can set-up industry and have decent education system. Engineering education needs to move beyond basics (move the basics to high school) and tailor students for the current market capturing all the principles. Not just technology - technology moves too fast to teach it for 4 years, but trends.

Suppose someone takes the bull by the horns and starts something native. Unless there is stellar talent, marketing, money and faith behind this drive - the Australian market will simply not sustain it. Another curse of small pool. You may develop a solution, but the client will simply walk off to a similarly skilled and probably longer established American or European operation to buy.

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