HunterNet Co-operative

Hunternet fast facts (June 2023)

• 141 members, mostly small and medium-sized businesses
• 30 years advocating for industry
• $82B annual member turnover
• 90,000 employees across the network
• Works in Agribusiness, Defence, Energy. Environment, Export, Infrastructure, Manufacturing and Medtech sectors

Founded in 1992, HunterNet Co-operative (HunterNet) is a non-distributing, multi-stakeholder co-operative headquartered in Newcastle, NSW. In 2022, HunterNet had 130 member organisations (141 at the time of publication) of various sizes, employed around 12 full-time staff and reported an annual turnover of just over $2 million.

HunterNet is focused on assisting local businesses within the Newcastle and Hunter Region to sustain and grow through collaboration, networking, knowledge exchange and innovation. Its members are primarily small to medium enterprises (SMEs) engaged in manufacturing, engineering and specialist advisory and consulting services. Their focus is within the domestic and international defence, energy and resources industries, as well as emerging industries in environmental sustainability.

The co-operative runs programs focusing on specific industries (e.g., HunterNet Defence Task Force), workforce development (e.g., HunterNet Career Connections) and management and leadership skills of members (e.g., HunterNet Future Leaders Program).

The Hunter Region and industry background

The Hunter Valley became a site of European settlement in 1797, when a survey revealed it to be ideal for agriculture and coal mining. Initial attempts at coal mining began in 1801, and small-scale mining persisted until 1867 when substantial coal deposits were identified. By the late nineteenth century, the coal industry had grown significantly and Newcastle had become one of the world's largest coal mining and export centres, supplying electricity generation, steelmaking, steamship bunkering and exports.

In 1915, BHP established a steel works in Newcastle and became the largest employer in the city and wider Hunter Region, employing between 12,000 and 16,000 people. Newcastle also played a significant role in Australia's shipbuilding industry during the twentieth century. However, the 1980s saw the decline of shipbuilding due to international pressures and the expansion of steelmaking in Asia.

Coupled with a fall in domestic demand, local steel production became increasingly uncompetitive despite financial support from the federal government and various restructuring programs, resulting in the eventual closure of the steel works and the loss of direct and indirect employment.

At this time, manufacturing comprised around 22 per cent of all output from the Hunter Region. The 1990s marked a severe economic downturn, and the closure of the steel works and decline of shipbuilding contributed to what was viewed as the largest case of de-industrialisation in Australia. To address these challenges, governmental and private organisations undertook numerous activities, but a long-term economic development strategy was deemed necessary.

The creation of HunterNet and early years

During a time of economic and social upheaval, small local manufacturers in the Hunter Region faced a daunting future as the outlook for steelmaking and other manufacturing industries was bleak. Joss De Iuliis, the son of Italian migrants and founding Chair of HunterNet, observed the success of small firms collaborating in northern Italy and believed that this approach could be applied in the region, despite the local business culture of competition. Initially appointed to chair a forum discussing networking concepts, De Iuliis spearheaded the creation of HunterNet in 1992, a not-for-profit co-operative aimed at enhancing the resilience of local manufacturers.

As part of its foundation principles, the co-operative was committed to the pursuit of its three primary aims:

1. Develop the members’ capabilities
2. Facilitate new market opportunities
3. Reduce the cost of supplying services

Despite early mistrust and a competitive culture, HunterNet's multi-stakeholder model attracted fourteen companies interested in collaboration for competitive advantage. By early 1993, the co-operative's members had their sights set on major projects, including the construction of a local power station and six Huon-class naval coastal minehunters. However, the transformative moment came when Australia's leading designer and manufacturer of railway rolling stock, A. Goninan & Co. Ltd, extended an invitation to HunterNet to visit their premises and learn about their processes. This act of generosity not only transmitted knowledge but also built trust, which helped to encourage more members to join and boosted momentum for the co-operative's success. Rooted in the pursuit of developing members' capabilities, facilitating new markets and reducing costs, HunterNet has since become a leader in collaboration and innovation for local manufacturers

Knowledge and networks: A foundation for success

The HunterNet co-operative recognised the importance of enhancing its members' business capabilities and workforce skills through the development of knowledge and networks. It learned this lesson following the site visit to A. Goninan & Co., which resulted in the creation of the member value proposition (MVP). The MVP grew steadily and focused on the co-operative's role in developing its members' skills and capabilities for long-term success.

To achieve this goal, HunterNet arranged regular site visits to allow members to share knowledge and showcase their successes to their peers. These visits became monthly events that involved 20 to 30 member companies and around one hundred attendees.

The co-operative also invited guest speakers, organised trips to international trade shows and conducted tours of best practice companies. For instance, in 1994 HunterNet arranged for members to participate in the Hanover Trade Fair in Germany and the Australian Engineering Exhibition in Sydney, where they gained exposure to a range of engineering concepts, new business opportunities and innovative approaches.

HunterNet recognised that collaboration, knowledge exchange and networking were crucial for tendering and enhancing innovation. This led to the development of the concept of  "the power of many", which has become the mantra of HunterNet.

Through HunterNet's efforts, members were empowered to market their companies more effectively, engage in common problem-solving and work together to achieve shared goals. Education and collaboration were the keys to success, and HunterNet provided these opportunities for its members to thrive. According to HunterNet founder-director Neville Sawyer:

Promoting best practice and securing a sustainable future

In July 1994 HunterNet secured a federal government grant to deliver best-practice programs in six of its member companies and to enable it to expand its operations into pursuing more sophisticated project work for its members. The NSW Department of State and Regional Development also provided another grant which required the co-operative to become financially self-sufficient within three years.

It was now imperative that the HunterNet business model be developed to ensure that it would make best use of the grant funding and achieve financial self-sufficiency.

Throughout 1994 and 1995, HunterNet continued to engage its members through networking, participation in local and international trade shows and the promotion of best practice and quality assurance management systems.

Collaboration with local education institutions

HunterNet developed close working relationships with key local education institutions quite early. The first of these was the University of Newcastle, which had been active in the economic and social transition of the Hunter Region and had become a founding patron member of the co-operative.

The co-operative also developed a close relationship with the Hunter Technical and Further Education (TAFE) College, which is the main provider of vocational education and training (VET) in the region. It became a strategic partner in the HunterNet Group Training Company (HunterNet Career Connections), which was established in 1996 to provide apprentice training and management for its members.

HunterNet Career Connections (HNCC)

• 25 years in business
• Australia’s number one apprenticeship host company
• 40+ host organisations
• 185 apprentices in training

Traditionally, local Hunter manufacturers had not had a strong focus on innovation, research and development or apprentice training, instead relying heavily on BHP to fulfil these roles.

However, as BHP began to wind down its operations, there was a decline in apprenticeships, which became more pronounced during the 1990–1991 recession. This led to a shortage of skilled tradespeople in the industry, prompting local firms to realise that they needed to train and retain their own employees to ensure a skilled workforce was in place for future growth.

To address this challenge, local manufacturers recognised that they knew how to train apprentices but needed help with managing them. Hunter TAFE also struggled to manage apprentices working across multiple small companies. It was under these conditions that HNCC was created, with both HunterNet and HNCC leading the way in innovative apprentice training. HNCC managed the apprentices across its members' workplaces, encouraging them to move around and fill skills gaps, providing trainees with the necessary experience and exposure to different workplaces.

Today, HNCC's role is to recruit, employ, pay and oversee the training of apprentices contracted to work within member companies. It manages all the contractual arrangements on behalf of members, monitors the progress of the apprentices and makes regular site visits. As of 2022, HNCC was managing over 185 apprentices for more than 40 member organisations, making it one of Australia's top hosting companies. This subsidiary provides an essential service to its members while also serving as a valuable source of income for HunterNet.

Membership

HunterNet has three membership categories: general, sponsor and patron. General membership is open to businesses actively operating in the Hunter Region and involved in relevant industries. General membership fees range between $1,900 and $6,800, depending on company size. Sponsor membership is for service providers to the targeted industries and requires payment of $4,700 per year. Patron membership is $7,900 per year and is for firms that, due to their business leadership and influence, can contribute particular skills, knowledge, advice, influence and assistance for the effective implementation of the policies and activities most suited to achieving the co-operative’s objectives. In 2022, HunterNet had 85 general members (96 at the time of publication), 25 sponsor members and 20 patron members.

Promoting best practice and securing a sustainable future

HunterNet offers a comprehensive range of services to its members. One key benefit is the assistance it provides in developing business networks, including introductions and collaboration opportunities. Members also receive support in identifying and pursuing business opportunities, such as entering new markets or securing contracts. HunterNet provides expert guidance on tender preparation and presentation skills to help members succeed in these pursuits. Additionally, the co-operative offers consulting services in areas including business development, marketing and communications, work health and safety training, innovation, leadership development and environmental sustainability and governance. Networking events and export advice are also facilitated by HunterNet.

The benefits of HunterNet membership are summarised on the organisation's website as "Collaborate, learn, share, and grow." Membership offers opportunities to learn from experienced industry professionals, grow business capabilities while prioritising safety and forge connections through fun and informative events. Members are introduced to fellow innovators to share ideas and receive support in bringing them to life. By expanding the network and increasing its influence, HunterNet members contribute to industry success and growth.

Future directions

HunterNet CEO, Ivan Waterfield, expressed a great deal of optimism regarding the future of both the co-operative and the Hunter Region. One of the key factors that he highlighted was the NewH2 Hydrogen and Energy Industry, which seeks to develop a Hydrogen and Energy Technology cluster in the area. Additionally, the redevelopment of the Newcastle port and local steelmaking facilities offer ample opportunities for transitioning to carbon-neutral energy sources. With two potential hydrogen projects and a new container terminal approved for development, the Hunter Region stands to benefit in a major way.

Looking toward the future, Waterfield also highlighted a major offshore wind turbine project recently given the green light by the Australian government. This ambitious undertaking will see the construction of more than 130 wind turbines on floating platforms roughly 30km off the coast. These new projects provide a significant opportunity for revitalising the steelmaking and manufacturing sectors in the area. With these exciting developments on the horizon, HunterNet has positioned itself to continue supporting the future growth and development of local industries. As Waterfield noted, the co-operative's focus is not on the number of members it has, but rather on the sustainability of each business it supports.

Purpose and the member value proposition

One of the most significant challenges faced by co-operative and mutual enterprises (CMEs) is pinpointing a purpose and member value proposition (MVP) that can effectively engage and unite members while providing the organisation with strategic direction. However, HunterNet has a clear and unchanging purpose of supporting the Hunter's local manufacturing industries. Their vision is to be a recognised leader and voice that drives sustainable economic development in industry. Their mission is to help businesses grow, innovate and thrive – this begins with collaboration. By sharing ideas, developing capabilities, delivering support and stimulating opportunities, HunterNet aims to spark industry alignment, build strong work communities, unlock business acumen and create brighter futures for all. HunterNet’s five values are woven into their activities, with an unwavering commitment to member value, prioritising the environment and people's health and championing the region. The co-operative's MVP is built around these values, highlighting "the power of many" to drive economic success and growth.

Key lessons from the case

The HunterNet case is an important example of how a CME business model can create and maintain a regional industry cluster. In addition, it demonstrates that the key elements in success are the focus on a common purpose, generation of trust between the member and the CME, between the members as a group and between the CME and the wider community.

The example of HunterNet emphasises the need for CME management to invest time and effort to understand members' needs and value perceptions, and never to take the MVP for granted. Monitoring member engagement across the four areas of attention, co-development, enthusiasm and interaction is crucial and should be encouraged proactively. HunterNet embodies these principles and works systematically to engage members and shape events, programs and activities for their benefit.

The case study also shows that a value-generating CME can be successful based primarily on the exchange of knowledge and fostering networking rather than the trading of commodities or services. In addition, it shows that a multi-stakeholder membership structure, although complex to manage, can be a valuable source of competitive advantage if all members are united in a community of purpose.

This case study was published in the BCCM's 2023 National Mutual Economy (NME) Report. This is a summary of the case study presented in HunterNet Co-operative Ltd. – The Power of Many by T. Mazzarol.