Industry and Synergies

What is this and why is it valuable?

When two individual companies exchange a manufactured or waste product, usually on commercial terms, this is known as a synergy exchange. Industrial symbiosis is where a whole cluster of industries have many exchanges simultaneously and continuously occurring – this is what happens in the KIA.

These exchanges grow over time as more companies move into the area. The synergies help to make the participating companies more internationally competitive, and this is good. It’s also good for the environment because one company’s waste becomes the input for another. The by-product is no longer a waste needing to be disposed of to the environment.

The value is created for participating companies when, through synergy exchanges, they are able to reduce costs of production, thus increasing their relative competitiveness. Yes, there may be positive environmental outcomes, which is good, but the ‘acid test’ question is “did it improve my bottom line?”

There’s a big, new wave of industry heading for Kwinana to set up their processing plants so they can take their place in the lithium battery value chain. Why? Because we have all four synergy types in Kwinana, and none of the other heavy industrial clusters do.

Skilled Workforce Synergy

The ‘human resource’ synergy in the Western Trade Coast refers to the 30,000 highly skilled and experienced workers that are directly and indirectly employed in KIA.

Two thirds of these workers live within 15kms of their place of work. This means the industrial area is surrounded by residential communities that understand industry. This is an important side benefit of this synergy dimension.

These workers choose to work in the WTC rather than away in the regions via fly in/fly out arrangements, they don’t want to move to other regions to live, and they don’t want to uproot their families. They get to sleep in their own beds when they’re off-shift. They value these lifestyle and career progression characteristics.

What many are in fact happy to do is to move between companies within the industrial area, advancing their experience base and taking promotions.

When a new company builds its plant in Kwinana, it will more than likely attract workers from within the local area. The new company starts up with experienced employees.

What about the future workforce? To answer that, have a look at what we’re doing under the ‘Education’ tab. You’ll see what Kwinana industry is doing to show the students in the region’s high schools that their future careers may be closer to home than they think.

Governance Synergy

For those reading this from abroad, in Australia we have three tiers of government, these being Federal government, Western Australia’s State government and local municipal government.

First let’s look at Federal governance first. This synergy dimension is about national leadership, and in this context, policy leadership in the heavy industry space. The important aspect of Federal government leadership is the provision of a stable national policy framework, good international relations facilitating international trade and market development, and a supportive industrial relations and taxation environment.

The Federal aspect of the governance synergy is quite strong.

Now to the State of Western Australia. It is important here to make a distinction between the elected and departmental aspects of State governance.

Departmental governance is generally adequate. There are numerous public sector departments and agencies with some degree of governance responsibility for the Western Trade Coast. It is commonly observed that the sharing of information and resources is problematic. Whilst strategic infrastructure, land use and transport planning for the industrial area seems uncoordinated across the departments, the industrial area functions adequately despite this. There is a great deal of room for improvement and this could easily be achieved through a single agency model.

Municipal governance is also problematic, and is compounded because the WTC is contained within three local council municipalities.  The councils generally have responsibility for local planning and local infrastructure management.  They each have their own local priorities, planning schemes, corporate cultures and approaches to their public infrastructure maintenance.  In reality, this needs to be simplified, and the way to achieve this is to have just the one municipality with local governance responsibility for the entire WTC. 

In summary, the governance synergy has its good aspects and difficult challenges.  Whilst there is a good deal of room for improvement, in an internationally relative sense, the overall governance synergy is delivering good outcomes for industry.  To improve this dimension, the public sector governance of industry, there needs firstly to be a focus on developing clear long term, bipartisan national and State policy leadership, and secondly to accept there is a governmental role to facilitate of the common-use infrastructure that industry needs for it to compete effectively in international markets.  This is not to necessarily say government needs to pay for it, on the contrary, all it needs to do is facilitate the projects.  There is plenty of private sector interest in delivering the projects under the Public Private Partnership (PPP) model. 

There are some clear opportunities to improve the governance of the Western Trade Coast.  KIC is suggesting that a ‘Development Authority’ be created by the State government with responsibility for planning for the development of the whole WTC – the industrial area within the industrial buffer zone, to implement and manage the various development projects involved, and to engage in internationally-focused industry attraction activities.    

Put simply, the challenge for this synergy dimension is for it to fulfill its role in facilitating an efficient infrastructure environment within which industry can thrive.

Synergy schematic upgrade project

In association with Murdoch University and several Masters of Engineering students, KIC has commenced a project to review the synergies schematic. The project will confirm the current product and by-product synergies, add the new exchanges that have occurred since 2013 when the schematic was last published, and digitise the platform for a presence on this website. The other three synergy dimensions will also be added. It is intended that a feature will include the ability to interrogate for product exchanges to assist potentially new industries to the area to make contact with suppliers or receivers of materials. The project is expected to be completed in late 2020.