The 53rd state

 

According to the most recently published KPMG report, manufacturing organisations in Australia are "confronting unprecedented challenges in a turbulent and uncertain business environment". There are a number of burning issues for the Australian manufacturing sector. The top one is identified as "ageing capital costly to maintain, slower in output and less efficient". By capital, they mean machinery. We are driving a 1995 Mercedes with 700,000km on the clock. The second issue: "outdated technology impacting growth and response speed". Our Mercedes is not just on its last legs, but it is an ex-rental. And then, there are the usual suspects: shrinking profit margins due to rising energy prices, fluctuating commodity costs and skills shortages across many business areas. KPMG sums it up nicely and politely: the Australian manufacturing sector is facing strong headwinds. Basically, you would be mad to invest in any form of manufacturing in Australia. Here is a graphics presentation of where we are heading - the percentage of manufacturing as a portion of total GDP. Only 5.4% of our national yearly product comes from manufacturing. Actually, out of the top ten contributors to our wealth, manufacturing is the last one on the list!

On the other hand, Manufacturing is essential to national sovereign capability. If we can't make it here, we are vulnerable and dependant. The question is - do we have a national industrial strategy to get us there? Or should we just give up manufacturing altogether, focus on mining and finance - in the hopes that someone else will take care of us, for decades to come?  [to be continued]