Does Manufacturing in Australia Have a Future?

The Future of Manufacturing in Australia

A thriving manufacturing sector in any economy is the best indicator of economic progress. The importance of the manufacturing sector can be understood from the fact that the strength and success of the manufacturing sector can mean the difference between a developing and developed economy.

There are three main sectors of economy namely

  • Primary
  • Secondary
  • Tertiary

Primary sector is concerned with agriculture and raw materials and developing economies rely on the primary sector because this is the basic level that any country can operate upon. Secondary sector deals with the manufacturing of goods and this is where value is added to primary goods. Needless to say that value-added goods fetch more revenue than simple primary goods. This is why developing the manufacturing sector is so important, because this is singularly the most important factor that can transform an economy. Look at any developed economy and you will find that they have strong manufacturing sectors.

A brief look at the Australian manufacturing can tell us a lot.

This graph shows the GDP from the Australian manufacturing sector and it can be clearly seen that over the last decade Australian manufacturing GDP has dropped continuously and significantly. It fell from almost AUD 29 billion to AUD 26 billion before recovering in the first quarter of 2020 to reach the AUD 27 billion mark.

Read More : How COVID-19 Has Impacted the Australian Economy

Food and Beverage Industry

If we look at the manufacturing industries of Australia then the food and beverage industry has the lead, it is the strongest manufacturing industry that is also contributing to the exports. Food and beverage industry is followed by the mining sector that includes oil refineries and energy sector. This however is the past of Australian manufacturing sector and the Covid-19 pandemic has disrupted everything. So what is the future of Australian manufacturing sector?

A Balanced Approach is Necessary.

Experts believe that Australia needs a reformed approach for the future. Many people believe that Australia needs to look inwards and become self sufficient in the manufacturing sector to reduce dependency on trade partners such as China. While this is a very prudent approach but many industry experts believe that going for complete self sufficiency is going to be counterproductive. Why? Simply because economics works on the principle of comparative advantage.

While Australia can produce goods and services that it has comparative advantage in, producing goods and services in which there is no comparative advantage will simply result in an economic loss and inefficient allocation of resources.

Instead Australia needs to follow a balanced policy of both looking inwards to develop self sufficiency and also establishing and maintaining strategic economic ties with international trade partners.

In order to do this the government needs to identify key sectors that need to be focused upon. For instance the food and beverage sector needs to be strengthened further since it is the cash cow for the Australian manufacturing sector. It not only fulfills local demand but also exports beverages, meat and other products to other countries across the globe.  

Bio Health Industry

In future however other sectors and industries will emerge and one such industry is going to be the pharmaceutical and bio health industry. For example the Australian government needs to focus on developing this industry to be self sufficient in terms of medical needs. The number of mask manufacturers in Australia is very low and at present Australia is heavily relying upon mask manufacturers in China and other countries. As this pandemic develops, there is going to be an increased demand for masks and global prices may rise.

So, the government can incentivize production of masks for local needs. Manufacturing masks is not something overly complex, countries like Pakistan and Iran have gradually decreased their reliance on other countries for masks and Australia needs to do the same. In addition to this the bio health sector is going to be critically important in the coming years. This is where Australia needs to invest in research and development too.

Read more : Australia Must Invest in Nuclear Technology to Secure Its Future

Australia has so far managed the pandemic very well and with improved health and safety standards and availability of locally made protective equipment, it can lead the efforts to preventing the spread of not just this virus but any future virus break outs as well.

Energy Sector

The energy sector needs special attention. Australia has immense potential for renewable energy and this is where special focus is required. The government can reduce its expenditure and cost on energy development by gradually phasing into renewable energy sources such as solar, wind and hydro electric. Australia has a vast shoreline that can be utilized for hydro and wind electric farms and it receives immense amount of sunlight that can be converted into solar power.

Australia as a country has been severely affected by global warming and the annual bush fires are a testament to that. By phasing over to renewable energy Australia can try to reverse the wheel of time to protect her environment. The 2019 December bush fires did irreversible damage to the eco system and environment and this shows the urgency of the situation.

Switching over to renewable sources won`t only be beneficial for the environment but it will also help in reducing the cost of energy and allow Australia to attain economies of scale. This will also help the government invigorate and develop local production of material required for the production of renewable energy sources.

Also See : Australia’s Reliance on Chinese Trade is its Biggest Weakness

If we look at the last two decades, then many foreign car manufacturers have left Australia because manufacturing cars in Australia just isn`t feasible anymore. A move over to renewable energy can attract manufacturers of electric vehicles such as Tesla. Elon Musk has already worked with Australia in the past and there is a potential for Australia hosting one of Tesla`s Giga factories. But this needs to be worked upon.


The Australian government needs to identify key sectors that it needs to develop for the future and then work on long and short term strategies. The world is changing and this is the right time, as they say the iron is hot and it must be struck right now. This is the time to set up both short term and long term strategies looking at least two to three decades ahead and the focus needs to be on both developing self sufficiency in manufacturing and also establishing and maintaining strategic ties with the international trade partners of Australia.

Main Image Source : Own Source

Also See : Australia Must Invest in Defence Now – We Must Not Outsource Security

How Australia Can Win the Trade War With China?

Dave Peterson
Dave Peterson
Be a little better today than yesterday.


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