The Industry Capability Network (ICN) is working hard to debunk the myths about local manufacturing capability leading to a strong future for manufacturers that have adapted to the changing face of the sector.
The future of the Australian manufacturing sector is looking bright as the industry embraces change and actively seeks opportunities. Australian manufacturers are world leaders in advanced manufacturing and automation and are developing a highly skilled workforce.
Myth: Offshore sourcing is always cheaper and more efficient.
While it is true that Australian manufacturers face intense competition from countries with lower labour costs, fewer regulatory requirements and lower-cost production, the value of a sovereign capability cannot be underestimated.
We are still seeing supply change disruptions due to the pandemic, as well as geopolitical tensions and high transport costs.
“These changes mean we need to reduce the reliance on international supply chains for critical industries. We need to ensure Australia has the expertise and infrastructure to support key sectors such as Defence and renewables.” said ICN National Office CEO, Warren Jansen.
Thanks to advanced manufacturing and robotics, the Australian industry is seeing economies of scale that will reduce costs and increase output. This will create a ripple effect leading to community and economic benefits.
Myth: Australian manufacturing is a poor investment
The Australian Government’s Future Made in Australia (FMIA) initiative addresses the important of investment in the sector.
In its supporting paper for FMIA, Treasury says the initiative “takes steps to foster and encourage the significant private sector investment into priority industries necessary to harness these opportunities and ensure our future prosperity. In certain circumstances, targeted public investment can strengthen the alignment of economic incentives with Australia’s national interests and crowding-in private investment at scale to develop priority industries.”
Evidence of the value of investing in Australian supply chains is government’s Defence Industry Development Strategy, which aims to support Australian manufacturers through the range of actions, including a simplified procurement process, support for developing and retaining a skilled workforce and mandating the use of critical Australian businesses in Defence projects.
Investing in manufacturing supports supply chains across the country, not just in major cities. Strengthening our much-needed sovereign capability.
Myth: Australian manufacturing is no longer competitive.
In an interview with the Australian Mining Review, Advanced Manufacturing Growth Centre (AMGC) managing director Dr Jens Goennemann said many Australian manufacturers were “highly respected for the quality, durability and reliability of the products they make”.
“By prioritising being better over being cheaper, these manufacturers are able to charge more for their products because they deliver greater value to their customers.”
Meanwhile, the AIGroup’s Manufacturing in Australia, Performance Benchmark Report 2024 found that Australian manufacturing is consolidating into more competitive subindustries (such as food and metal) and has seen a 9.3% growth in gross operating profits. It also found that margins had grown, exceeding the all-industry rate for the first time since 2007.
Myth: There’s no job security and career path in manufacturing
The AIGroup’s report also found there had been a 5% increase in manufacturing jobs since the pandemic, reflecting recent growth in the industry.
It also found that manufacturing wages increased at an annual rate of 4.2% in the December quarter of 2023, the fastest rate of growth for wages since 2007. And manufacturing job turnover is lower than for all industries (9.5%) as well as peer industries such as construction (10.5%) and transport (10.2%).
Several manufacturing sectors are developing training programs and partnerships to build a future ready workforce. One example is the proposed Skills and Training Academy at Osborne, South Australia, which will train a new generation of our naval shipbuilding and submarine construction workforce.
Conclusion
At ICN, we strongly believe that Australia is well-placed to lead the world in technological innovation and global competitiveness.
Advanced manufacturing can help Australian businesses to innovate, differentiate and compete on a global scale, creating new markets and opportunities for growth.1
Warren Jansen was proud of the role the ICN plays in the sector’s growth. “Our network of consultants across Australia and New Zealand connect small to medium manufacturers with major projects every day. We’ve helped Australian business successfully scale through local supply chain opportunities.”
ICN has been committed to supporting and strengthening Australia’s manufacturing sector for over 40 years and is committed to being here for the long run.
To find out more about ICN go to icn.org.au or get in touch with your local office.
- From the submission to the inquiry into Developing Advanced Manufacturing in Australia
Author – ICN