Optimism abounds in Australian manufacturing
In 2016, The Australia Institute and the Centre for Future Work released a report titled “Manufacturing (Still) Matters: Why the Decline of Australian Manufacturing is NOT Inevitable, and What Government Can Do About It”.
In it, the authors pointed out that:
“Manufacturing is not an “old” industry. It is in fact the most innovation-intensive sector in the whole economy — and no country can be an innovation leader without the ability to apply innovation in manufacturing“
And what a time it is to be part of the Australian manufacturing sector. The latest research from the Commonwealth Bank’s Manufacturing Insights Series – “Momentum: Pathways to Peak Performance” – shows that while manufacturers continue to face ongoing economic uncertainty, most express confidence in business conditions over the next 12 months and the vast majority are expecting to see an increase in production levels, revenue and profit.
This optimism is even more bullish in regional areas. More than half (57%) of regional manufacturers are “very confident” in business conditions, versus just under a third (32%) of metro decision-makers, and are 31% expecting a “significant increase” in revenue versus 24% of their metro counterparts. The disruption that began with COVID continues with a host of other economic and environmental changes impacting organisations, but both regional and metro manufacturers are proving yet-again they can not only survive but thrive in challenging times.
Accompanying this optimism is an investment in technology to support innovation and growth. Investing in new tech is the top strategic priority for the year ahead, with 87% of manufacturers planning to increase their spend here, and a staggering 99% of regional players indicating they will do so in the next 12 months. Investing in marketing and sales to improve customer acquisition is also in the top 5 business priorities for the next 12 months. And those that a growth-focussed are – perhaps unsurprisingly – more likely to be investing in marketing and sales than those seeking just to maintain their current performance levels.
Sustainable manufacturing is also playing a key role in driving innovation and meeting the challenges of today’s manufacturers. According to the CommBank study, “sustainable manufacturing is also seen by almost 9 in 10 as an important part of their business strategy – from creating a positive impact to strengthening outcomes from competitiveness to financial performance”. It’s not all sunshine and rainbows of course. As outlined in the report:
“For the majority of manufacturers targeting growth, and the many seeking to maintain their performance, there are a range of hurdles to overcome. These include rising costs, keeping up with rapidly evolving technology, navigating regulatory requirements, staying competitive in the marketplace, and navigating a tight labour market, among other challenges.”
And, in this scenario, it is regional manufacturers who are the most likely to expect cost increases and constrained capacity due to supply chain challenges. Regional and metro manufacturers are meeting these challenges head-on however. This great table from the report outlines some of the more common actions organisations are taking to address rising cost, supply chain and cash flow issues:
As the CommBank study shows – and as many commentors have espoused in recent years – the death of manufacturing in Australia has not only been greatly exaggerated, but also largely avoided thanks to COVID starkly revealing the importance of sovereign production. And the COVID lessons have been learnt, with manufacturers – and particularly those based in regional areas – identifying opportunities and making significant investments to support growth. It’s refreshing to see such proactivity and optimism reflected at a national level through studies such as the CommBank report, as well as experience it first-hand with many of our own Hunter-based manufacturing clients firmly on the path to increased production levels, revenue and profit.
Where does your manufacturing organisation fit today? Are you expecting significant growth? Planning an investment marketing and sales activities?
If you are a Hunter, Mid North Coast or Central Coast-based manufacturing business meeting the challenges and exploiting the opportunities head-on, you may also want to consider entering the
2023 Hunter Manufacturing Awards.
Visit https://www.hma.org.au/ for more information.