Resilience Starts Before the Crisis: What Happens When an Industrial Anchor Disappears?
by Michael O’Connor
When a major manufacturer fails, the factory isn’t the only thing at risk. Jobs, production, creditors and the future of the site become the immediate focus, but the consequences rarely stop at the factory gate.
Through Tektology’s work with manufacturers, particularly around Lean, process improvement, digital and operational capability, we spend a lot of time looking at how individual businesses work: where productivity is being lost, what capability exists, what is constraining performance and what needs to change.
Increasingly, though, there is a wider systems question sitting around that work. How resilient is the manufacturing ecosystem that businesses operates within?
Large manufacturers often become anchors for entire regional manufacturing ecosystems. Around them sit suppliers, subcontractors, engineers, maintenance businesses, transport companies, specialist trades and other manufacturers. Over time, those relationships create dependencies, but they also create capability: skilled people, specialised equipment, processes, certifications, knowledge and customer relationships that may have taken decades to establish.
That is where the systems transformation lens matters. If one significant part of the system changes or disappears, the impact moves through everything connected to it. The challenge is not simply how we respond to the immediate failure, but whether we understand those dependencies well enough to know what needs to change, what can be transferred elsewhere and what valuable capability needs to remain once the transition is complete.
We have seen this before
Victoria has already experienced what happens when major industrial anchors disappear. The closure of Ford, Holden and Toyota’s vehicle manufacturing operations in 2016 and 2017 was more than the closure of three factories. It disrupted an interconnected automotive supply chain involving more than 200 local companies, many of which had developed equipment, expertise and operating models around the needs of automotive manufacturing.
The Victorian Government response included targeted transition programmes that enabled businesses to identify future opportunities, new markets and the capabilities required to enter them. The Automotive Supply Chain Transition Program was one such initiative. What was recognised was an important principle: when an industrial anchor disappears, you do not only have to think about the people who worked there. You have to understand what happens to the businesses, skills and industrial capability that grew around it. That lesson is no less relevant today.
Liberty Bell Bay in Tasmania is Australia’s only manganese-alloy smelting facility required for steel production. Due to a combination of factors, including global volatility and ore supply problems, the smelter went into liquidation in August 2026 and 200 workers lost their jobs. Naturally, the impact extends beyond the immediate loss of employment. It reaches businesses that have built equipment, skills, processes and customer relationships around the demand generated by that operation. Some may be highly dependent on a single customer. Others may have capabilities that could be valuable elsewhere, but have never had a reason to consider where else they might be applied.
So how do those businesses replace lost revenue? Can their existing equipment and skills be applied to other markets? Can they retain skilled people long enough to make that transition? And, perhaps most importantly, can the capability they have built be preserved?
The opportunity is to act before the crisis
The most effective intervention may not be when the anchor manufacturer fails. It may be years earlier, while the businesses around it are still healthy enough to make choices.
This is where diagnostic work becomes important. In our manufacturing work, we are already looking inside businesses at processes, productivity, operational maturity and capability. Applied at ecosystem level, that same thinking allows us to ask a different set of questions: which businesses are highly dependent on a single customer or industry, what capability do they actually hold, where is that capability transferable, where are the vulnerabilities and which adjacent markets are genuinely credible?
That changes the nature of the conversation. Instead of waiting until a business is under threat and asking how we save it, we can ask how we strengthen it so that it is better able to adapt before the crisis arrives. Digital transformation plays a key role in this process.
Victoria’s automotive transition experience demonstrated the value of helping supply-chain businesses identify new markets and transition their capabilities rather than treating the closure of vehicle manufacturers purely as an employment problem. The strategy at this level can sound relatively straightforward: diversify the economy, protect jobs, preserve sovereign capability and strengthen regional manufacturing.
The messy middle is working out what that means business by business; what can realistically move, what needs investment, what needs to be redesigned, what should be preserved and what will need to change, especially with new technology. That is where transformation either becomes practical or remains an ambition.
From manufacturer improvement to ecosystem resilience
Traditionally, business improvement focuses on the individual manufacturer. How can we make this business more productive? Where is waste occurring? How can processes be improved? Where could technology or automation make a meaningful difference?
Those questions still matter. But systems transformation requires us to look at the relationships and dependencies around the organisation too. In regions with significant industrial concentration, we need to understand not only the performance of individual manufacturers, but the resilience of the ecosystem they collectively create.
The same diagnostic thinking used to identify productivity opportunities inside a manufacturer can be applied at ecosystem level. We can understand which businesses are exposed, what capabilities they possess, which of those capabilities are transferable, what barriers might prevent them from moving and which markets could realistically absorb them.
That might mean defence, infrastructure, energy, mining or another advanced manufacturing supply chain. The answer will be different for different businesses because diversification is not simply about identifying somewhere else to sell. A supplier may already have valuable people, equipment, processes, engineering capability, certifications and facilities. The real question is which combination of those assets can create value somewhere else, and what needs to happen to get them there.
Protecting capability through change
Where there is a credible pathway to sustain or restart a major operation, we need to understand what capability exists, what is commercially viable and what needs to change.
Where the anchor cannot be sustained, the answer should not simply be to retrain people and hope that the market absorbs them. People can move, equipment can be repurposed, processes can be adapted, businesses can enter different supply chains and expertise developed for one industry can create value in another. But those transitions become considerably harder once businesses have closed, skilled people have dispersed and physical capability has been lost.
For us, this is an important part of thinking about systems transformation: what needs to remain when the system changes?
The objective should be to leave the wider manufacturing ecosystem stronger and more adaptable with businesses that understand their dependencies, have stronger operational capability, can see where their expertise transfers, and are less exposed to the failure of a single customer or industry.
The experience of Ford, Holden and Toyota in Victoria showed how quickly the loss of industrial anchors can flow through supply chains. Liberty Bell Bay provides a current reminder of the same risk.
The question is not simply whether the factory survives. It is whether we understand the system around it well enough to protect, transform and redeploy valuable capability before it is lost.
That’s why we work with manufacturers and government to diagnose complex systems, strengthen operational capability, improve productivity and support manufacturing transformation and resilience.
Michael O'Connor is the Managing Director for Tektology Australia, specialising in operational transformation, Lean systems and large-scale performance improvement. With a background spanning Toyota, EY and global consulting, he works with organisations to translate strategy into sustainable operational change.