Manufacturing is critical to our economy – how can we support the sector?

Michael Climpson 03 Jun 2019

Although the knock-on effects of the Australian automotive industry exiting our country are yet to be fully understood, the industry is evolving, and manufacturing continues to be a major employer and critical to our overall economy.

The pace of new technologies is accelerating, and manufacturers will require more investment in R&D than ever before to remain competitive in a global market. Our own research into mid-sized manufacturers demonstrates that the sector is resilient, and both sales and profitability are growing over recent years.

A good success story in this space is Redback Boots, an Australian footwear manufacturing company with its roots in the early 1900s. Specialising in work boots and army boots for domestic and international markets, Redback manufactures over 1 million boots a year. Key to their future success has been an investment in technology to better understand their customers and automate their operations.

Watch Mark Cloros, Co-founder and Director of Redback Boots, talk about the influence of technology and customer expectations on their business

Download report

Download PDF [ 5091 kb ]

There are a number of challenges facing the sector. Energy, for instance, is a major cost for manufacturers and has significantly risen over recent years. As local manufacturers are competing with global markets, a rise in Australian energy costs cannot simply be passed on, and margins are adversely impacted. Any government intervention that is effective in reducing energy costs would be welcomed by the industry.

Download our mid-sized business report to read the full Manufacturing insight.

Here is a short introduction to our three recommendations to help boost the Manufacturing sector:

Supporting manufacturing R&D

Manufacturing punches above its weight in terms of investment in R&D – with one figure stating that $4.8b was spent by the manufacturing industry in 2013-14 – as a proportion of GDP this is roughly four times the economy wide average.

Free Trade Agreements should complement local manufacturing

Australians like to buy locally – but if a competing product from overseas is available at a significantly reduced price (for instance 100% of China’s exports to Australia are exempt from tariffs) then it becomes more difficult to compete.

Manufacturing to support regional growth and payroll tax relief

Manufacturing is ideal for regional areas with many businesses requiring a significant real estate footprint as well as providing employment for a range of skill sets and backgrounds. One way the federal government can support regional areas is to compensate state governments for the removal of payroll tax altogether for businesses that offer employment in regional towns. Governments should not be afraid to contemplate fundamental changes to antiquated taxes.

Report Mid-sized Business Report There is an overlooked economic opportunity in Australia’s mid-sized businesses – with the right incentives and tax policies in place, they can grow in size, scale and reach. They can employ more people, collaborate with other Australian businesses, and better contribute to Australia’s bottom line. Read full article

Mid-sized business report Investment in education pays dividends for the wider economy The education sector plays a vital role in our economic growth and productivity, as well as our social cohesion and quality of life. Read full article

mid-sized business report The Financial Services sector in 10 years’ time Many of us that work in the sector talk about the post-Royal Commission world. It’s a pivotal moment that has shaken Australia’s trust and confidence in our financial services sector. Read full article

mid-sized business report Supporting affordable housing requires planning, certainty There is a lot of noise around the property sector at the moment – and it’s not all positive. Prices are down – but this shouldn’t be a surprise when some markets (namely Sydney & Melbourne) saw unprecedented hikes in recent years. Read full article

Mid-sized business report We’re laying the foundations for tomorrow’s energy network There is a particular opportunity in Australia for the energy sector. The global trend towards renewable and alternative energy, aligned with a local appetite for a better energy mix, is providing a ripe environment for project development and investment. Read full article

Mid-sized business report Investment in infrastructure is essential for our Agribusin Australia has a reputation for quality produce and products, so much so that our neighbours in Asia will pay a premium for the “Made in Australia” label. Read full article

mid-sized business report We need to support commercialisation in the Life Sciences s Australia has a reputation as one of the world’s leading destinations for life sciences, developing life-changing innovations that have real social benefit – from the world’s first anti-cancer vaccine to spray-on skin for burns victims. Read full article

mid-sized business report How can Professional Services navigate the cyclic nature of For the professional services industry, it seems as though we are on a growth trajectory. Work resulting from the Royal Commissions is keeping law firms at all levels on their toes and the infrastructure boom means our architects and engineers are more than busy. Read full article

Mid-sized business report Innovate or perish in Australia’s Technology & Media sector Innovate or perish – if not the motto for the Technology & Media sector, it is at least the theme song to which most businesses in this space dance to. The sector is dynamic and fiercely competitive – and having a great product doesn’t guarantee success. Read full article

Mid-sized business report Mid-sized retailers can take advantage of size to grow The Australian retail landscape is not only fascinating and dynamic, but highly prospective, with significant growth in the size of market forecast over the next five years. Read full article

mid-sized business report Is it time to review how we remunerate the Health & Aged Ca The Health & Aged care sector is one of the largest employers in Australia and is dominated by small and mid-sized enterprises. Read full article