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The aim of this paper is to highlight the major issues that arose during a project demonstrating vocational education and training (VET) organisations working with Co-operative Research Centres (CRCs). Swinburne University of Technology (TAFE Division) was funded by the Australian National Training Authority (ANTA) in 2004 to carry out the project. The demonstration project was underpinned by the concept of skill ecosystems. These are interdependent clusters of high, low and intermediate-level skills that are shaped by a number of factors. The project demonstrated knowledge building as a result of various activities and outlined a number of models of VET and CRC interaction. It was demonstrated that interaction between VET and CRCs benefits both types of organisation but there are still significant challenges ahead.