Industry and Synergies
What is the Western Trade Coast?
Key Strategic Issues
Opportunities / New Things Coming
Synergies (Industrial Symbiosis)
- What is it
- RDA Perth Lithium Report
- AMEC Report: A lithium industry in Australia
- AMEC Report: Australian Battery Minerals Investment Opportunities
- WA State Government Report: Future Battery Industry Strategy WA
- Federal Government Report: Lithium Ion Battery Value Chain
- Federal Government Prospectus: Australian Critical Minerals Prospectus
When the industrial world talks about industrial symbiosis (IS), it is usually referring to product, by-product and utility exchanges on commercial terms between a number of companies within an industrial area.
We say this is but one dimension of IS, and that there are three others. The KIC4 model is a way to describe the four dimensions of IS.
The model has been developed on the basis that the role of an industrial area is to facilitate industrial expansion so that a resident company’s ability to compete successfully is enhanced.
It has been developed by KIC while reflecting on direct practical interaction with industry over several years. It presents two important opportunities that do not currently exist:
- an objective process by which a particular company can select an industrial area within which to locate for better long-term commercial sustainability, and
- a process by which the owners of industrial areas (in Western Australia this is the State Government) can identify (synergy) dimensional shortcomings specific to a given industrial area.
Designated industrial areas typically have their own peculiar sets of characteristics that make them attractive to differing industry sectors.
The four dimensions are:
- Product, by-product and utility synergy exchanges – the traditional dimension
- Skilled workforce synergy – workforce stability, aggregated skill capital, adequacy
- Support industry synergy – proximity of the support industry sector to the primary industrial cluster.
- Governance synergy – the regulatory, political, policy, public common-user infrastructure, strategic planning, industry incentive framework.
Designated industrial areas typically have their own peculiar sets of characteristics that make them attractive to differing industry sectors. It is suggested that that the public service allocation of a particular industrial area to an incoming prospective industrial company without first assessing that company’s needs and offerings in relation to the characteristics of the particular industrial area, may inadvertently lead to diminished company sustainability, or even possible longer-term corporate failure.
Understanding the KIC4 dimensions of industrial symbiosis at the industrial area level is the first stage. The second stage is for the individual industrial proponent to understand its own peculiar KIC4 dimensional requirements. The third stage is for the two sets of dimensional needs to be matched to achieve a best-fit.
KIC is of the belief that the strong presence of a combination of the four dimensions of industrial symbiosis (the elements of the KIC4 model) greatly enhances the broad sustainability of a designated industrial precinct. Similarly, when the elements of the four dimensions are well understood by industrial company proponents, and through a self-assessment process they have determined their own particular profile, they are in a far better position to make a locational decision that best matches their dimensional characteristics.
Where there is a good fit, it is more likely the company will enjoy enhanced competitiveness.
Not only does the sustainability of an industrial area rely on some combination of the presence of the KIC4 dimensions, it also relies on those companies making a decision to locate there being a ‘good fit’. Where a company is not a ‘good fit’, in other words where its dimensional needs are not adequately met by the chosen industrial area, it has a higher risk of commercial failure as a result of the mismatch.
Not only does the sustainability of an industrial area rely on some combination of the presence of the KIC4 dimensions, it also relies on those companies making a decision to locate there being a ‘good fit’.
The process is made up of three individual steps:
- Step One presupposes that a range of established industrial areas (or clusters) have been evaluated under the KIC4 model for industrial symbiosis. It is recognised that in many cases, if not all, the four dimensions of industrial symbiosis will not have been formally evaluated on a per industrial area basis. There is scope here for further research to state a conclusion on what is the relative status against the KIC4 evaluation criteria. Making this assessment is considered in itself a responsibility of the State government department (DevelopmentWA is suggested as it ‘owns’ the responsibility for leasing or selling the land within the State’s industrial estates), but in the absence of this assessment, the individual company or even an industry body may consider making their own individual assessments.
This first step is complete when each of the separate industrial areas has an evaluation against each of the KIC4 dimensions, and stands alone as an industrial area with a known data set of characteristics against which each can be compared.
- Step Two is the responsibility of the prospective new entrant. Using a similar approach to assessment, the individual prospective industrial entrant carries out a self-evaluation of its own characteristic needs against the KIC4 Model. A checklist approach is recommended, against which the company explores the value it places on the various aspects of each of the KIC4 dimensions. The score applied to the characteristic is a value placed on a scale from zero (not important) to ten (very important). A more comprehensive checklist will be developed as an outcome of the research project.
- Step Three. The individual company makes a locational decision based on their value judgement as to the best match between their own synergy ambitions and the synergy characteristics of the various industrial estates available.
In making this matching decision the company will need to be in a position to make an informed value-decision based on the cost of compromises that may need to be reached.
“Chris Oughton, Director KIC, Oct 2020”