A new report by the Australian Business Foundation has concluded that the manufacturing sector is a vital part of the Australian economy and will continue to be an important generator of economic activity and jobs if it embraces innovation, invests in skills, and boosts collaboration.

 

The report, Manufacturing Futures,  analyses the contribution of the manufacturing sector to the national economy and outlines the challenges and opportunities Australian manufacturers will face in the future.

 

The report reveals that the manufacturing sector, contrary to popular belief, has been growing at an average rate of 0.9% and accounts for 8.7% of GDP or $111.1 billion in economic activity. The sector also continues to be an important contributor to jobs, employing almost 1 million people or 8.7% of the workforce, and to exports, accounting for 36.1% of total exports.

 

“Manufacturing is not dead in Australia but very much alive and an important contributor to the nation’s economic health,” said Stephen Cartwright, CEO of NSW Business Chamber.

 

The report states that the manufacturing sector will face seven forces of change in the future:

 

  • more intensified competition;
  • more complex and varied opportunities for doing business globally;
  • shift from mass production to customisation and personalisation;
  • growing importance of the low carbon economy;
  • changing skills needs and imperatives;
  • technology that transforms entire business models; and
  • collaboration and connectivity that accelerates innovation and competitiveness.

 

“A lot of sectors are doing it tough at the moment with the record high Australian Dollar, the shortage in skilled employees, and a move to a low carbon economy and manufacturing is no exception, but given the right incentives and a drive to adapt to the changing economic environment, manufacturing can continue to have a bright future in Australia.

 

The report concludes that leaders in Australian manufacturing firms would be well-served to focus on three areas for action:

 

  • experimenting with business innovation;
  • investing in people and skills; and
  • multiplying their knowledge connections.

“Business model innovation is fruitful ground for manufacturers seeking to differentiate themselves to gain a distinctive and lasting competitive edge. The most immediate, tested, and practical business model change open to manufacturers is to add service to their products, providing new tailored and valued solutions to their customers.

 

“Innovation, contrary to popular perceptions and much government policy, is more about problem-solving and learning than about scientific discovery, more about the customer than the producer, more about the marketplace than the laboratory, and more about business transformation than technology.

 

“The quality and competence of people working in manufacturing are decisive to the success of the sector. Analyses have shown that improving Australian management practices and workforce skills and engagement are vital to boosting both innovation performance and productivity.

 

“Knowledge is power for the competitiveness of Australian manufacturing. Manufacturing, in the 21st century, should not be considered a solitary pursuit but a collaboration between manufacturing enterprises, customers, suppliers and knowledge sources providing new ideas and transforming them into new competitive capabilities.”

 

The report, Manufacturing Futures, is available at http://www.nswbusinesschamber.com.au/Home.aspx