Helping Australian manufacturers build resilience

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The Australian Manufacturing Growth Centre (AMGC) has released a new report, outlining opportunities for Australian companies to protect themselves against the global economic volatilities.

The Commonwealth supported report by AMGC, titled “Building Resilience in Australian Manufacturing,” highlights that 26 per cent of Australia’s most profitable manufacturers were the lowest performing after the Global Financial Crisis.

The report defines resilient firms as those that outperform their industry in a downturn, with higher earnings than average companies.

The report identifies three strategies for building resilience and how manufacturing leaders can use these approaches for continuing success. The three strategies focus on superiority- firms offering technically superior products or services-, diversity, and flexibility.

“The AMGC’s Sector Competitiveness Plan identified ways to drive competitiveness for Australian manufacturers, but there was an ingredient we found that needed to explain long-term performance, namely resilience,” said AMGC’s managing director, Dr Jens Goennemann.

“Instead of seeing parts of Australia’s manufacturing base being wiped out in the next downturn, let’s rather learn how some of our manufacturers adapted and survived in such times of contraction.”

From 1996 to 2015, the period examined by the report’s researchers, and even without a recession, the manufacturing sector expanded to above and below 20 per cent of its trend size. This 20 percent deviation compares to 14 percent in the UK, 10 percent in the US, and 8 percent in Germany.

For one in three Australian manufacturing businesses, the loss of one customer would have a moderate to significant impact on their business. For one in 10 manufacturers, the loss of one customer would force their business to shut down.

Building Resilience in Australian Manufacturing outlines what drives resilience, with 70 per cent of resilient manufacturers exhibit technical leadership, 64 per cent produce a diverse product offering, and 54 per cent have business models that allowed for high flexibility.

The Advanced Manufacturing Growth Centre is an industry-led organisation established through the Australian Government’s Industry Growth Centres initiative. The vision for the Advanced Manufacturing Growth Centre is to develop an internationally competitive, dynamic and thriving Australian advanced manufacturing sector that is critical to the long-term health of the economy and the nation.

The full report can be downloaded from the AMGC website.