How COVID-19 could launch an Australian manufacturing revival

In recent years, the Australian manufacturing landscape has taken several significant hits.

The car manufacturing industry was the most dramatic, with Mitsubishi ceasing production in 2008 followed by Ford in 2016 and then Toyota and Holden in 2017.

The textile industry – which boomed until the mid-1980s – experienced gradual decline until all-but disappearing from 2010 onwards with all manufacturing now taking place in Asia.

At its peak, the manufacturing industry in Australia made up almost 30 per cent of the gross domestic product (GDP) in the boom days of the 1960s.

It represented around 11 per cent of the total GDP according to KPMG Australia but has since halved to just 6.5 per cent.

Then came the novel coronavirus COVID-19, shutting down many operations and putting severe restrictions on logistics for others.

Once again, all eyes were on the manufacturing industry and its ability to survive the latest hammer blow.

The impact COVID-10 has had on global manufacturing

PricewaterhouseCoopers Australia outlined the damage to the economy COVID-19 was causing in a report released in March 2020.

That report outlined two critical impacts on the economy: the movement of people becoming restricted and supply chains becoming disrupted.

The disruptions caused by COVID-19 on a global scale meant shipping and moving products around became difficult and inventories in manufacturing operations started running low, sometimes empty.

For the first time outside of wartime, consumers were wandering shopping centres and seeing many products completely unavailable, empty shelves.

Other products soared in value as they become a commodity in a withering supply chain.

The opportunity that lies ahead for Australian manufacturing

It is important to put to bed any thoughts of Australia going ‘back to the good old days’.

The car industry is not suddenly going to lurch back into gear, textile manufacturing is not suddenly going to recommence on our shores instead of overseas.

But the world we live in beyond COVID-19 is going to change forever, including manufacturing operations, logistics and supply chains.

And that is where the opportunity lies for Australia.

While Federal Governments have issued white paper after paper seeking ways to pump up the industry (with extremely limited success), the current state of the world means solutions can be found for the future.

The focus for the future will be on niche manufacturing in Australia, rather than large-scale projects that will compete with other nations.

And the Federal Government has set up a manufacturing task force to ensure this happens in the post-COVID-19 world.

Erasing the manufacturing mistakes of the past

One of the main goals of this manufacturing task force is to provide advice and guidance for niche manufacturing operations.

Australia has the skill and the resources to create a range of products ideal for industries like the mining sector, medical operations, our defence force, food production and high-end operations like engineering and space exploration.

But we cannot repeat the mistakes of the past.

Australia is the largest lithium producer in the world, for example. And this is by a wide margin, with our operations producing 51,000 tonnes every year, compared to just 16,000 that comes from second-placed Chile.

But what do we do? We export the lithium to China where they use it in manufacturing and then sell us back the products (mainly batteries) at inflated prices.

That is a prime example of how we can revive Australian manufacturing, using resources we have in abundance and producing the products right here.

And this is just one example. With the supply chains staggered and in some case broken because of COVID-19, the time to explore niche operations here in Australia is now.

More than ever we need to have a supply chain that is adaptable, easily identified, collaborative and willing to transform to align with the challenges which we will be facing as a nation.

Through adversity comes opportunity and as a result of this, we will see a more robust supply chain rise up through those that are willing to change, be agile and ready to adjust to the needs of now as well into the future.

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