The Australian market is changing as are the challenges and opportunities, and some say the outlook for manufacturing in Australia is dim. The rise of the Australian dollar and globalisation are leading to predictions that all manufacturing will be moved to countries with lower labour costs. This is evidenced by the decreasing amount of Australian employment within the manufacturing industry, which has fallen from 11.6% share of total employment in 2002 to 8.4% share in 2012.
The increase in the import of manufactured goods from overseas is said to be one of the reasons for the reduced level of employment. With the high labour cost in Australia, it can be cheaper to manufacture goods overseas and transport them into Australia if there is a high enough volume.
In other parts of the world like Asia and South America, lower technology manufacturing practices are used to produce a higher volume of product. Although this sometimes equates to lower quality goods, the cheap labour makes it very difficult for Australian manufacturers to compete in a high-volume market.
What does this mean for the future?
Australian manufacturing contributes 7.3% of the Australian gross domestic product, making it an important part of the country’s economy. However, for Australian manufacturers to compete in a globalised world, they need to use the latest technologies and manufacturing methods.
The manufacturing site of the future should be flexible, fast, high quality, and efficient. The use of computer-controlled manufacturing improves flexibility and quality while also reducing labour costs associated with repetitive, hard labour jobs. The use of robots, CNC machines, conveyors, and automated guided vehicles (AGVs) increase the efficiency of the manufacturing process, and using these tools provides manufacturers the flexibility to make low volume, high quality manufacturing economical.
Using modern manufacturing methods also increases the profitability of Australian manufacturing. Quality management is an important part of competing in the global economy, and modern technologies such as automated machining tools, supply chain software, and AGVs provide reduced errors in manufacturing and order fulfillment. This ensures companies produce high-quality goods, while keeping costs as low as possible.
The use of lean manufacturing and just-in-time methodologies also increases the efficiency and profitably of the manufacturing process. Both of these practices can be better executed through the use of automated equipment and software.
Australian manufacturing is not dying, but to remain a critical part of the economy, manufacturers will have to invest in modern automation technologies to ensure competitiveness with lower cost manufacturing economies throughout the world. With the high cost of labour in Australia, remaining competitive using labour intensive mass production is becoming unviable in a globalised economy. Australian manufacturers must move to advanced manufacturing using modern technologies and techniques.
Opinions on the future of manufacturing in Australia are quite varied. What are your thoughts? Comments are welcome below.