22-11-2012, 06:29 PM
Future Manufacturing Industry Innovation Council Discussion paper: Trends in manufacturing to 2020
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Executive summary
Australian manufacturing is a diverse and vibrant industry that plays a significant role in
the economy. The industry employs close to one million people and its of total industry
gross value-add was 10 per cent in 2010-11. In addition, manufactures accounted for onethird
of Australian exports. Manufacturing is also an important driver of innovation in
industry – being responsible for a quarter of research and development among businesses.
The industry is faced with both challenges and opportunities. Some of these are shorter
term 'shocks', while others are longer term trends. Some, such as globalisation, ageing
workforce and the small size of the Australian domestic market have been recognised for
some time. Others are more recent, including requirements for low carbon production, the
impact of terms of trade and the associated rise in the exchange rate of the Australian
dollar. Global 'megatrends' resulting from population growth, economic growth,
urbanisation, peak resources and societal changes are contributing both opportunities and
threats over the medium term.
Technology, such as information and communication technologies and emerging
technologies, is also driving 'disruptive' changes, providing major opportunities and
challenges in product and production innovation which will enable the Australian
manufacturing industry to respond positively to the challenges and opportunities.
A robust manufacturing sector of the future requires firms that are not only
technologically sophisticated, but are also agile, adaptive, and efficient. This is only
possible in firms that are knowledgeable, innovative and well managed, and which have
access to skills as well as capital. Such assets provide the absorptive capacity needed by
successful firms to embrace new knowledge, technology and innovative practices to
increase productivity and competitiveness.
Background
The Future Manufacturing Industry Innovation Council (Future Manufacturing Council),
in collaboration with the Department of Innovation, Industry, Science and Research, and
the CSIRO Future Manufacturing Flagship, prepared this discussion paper on trends in
manufacturing to 2020 at the request of the Enterprise Connect Manufacturing Advisory
Committee.
The paper describes Australia's manufacturing industry as it is currently and discusses a
number of emerging issues and trends that are affecting, and are expected to affect and
influence, Australian manufacturers in the period leading up to 2020 and possibly beyond.
The paper collates informed views of a cross-section of stakeholders including industry,
the R&D community, innovation advisory bodies, unions and the public sector.
The paper is intended to invite and provoke debate and discussion among relevant
stakeholders on the implications of these, and potentially other, emerging issues on the
future of innovation-driven, high value-add manufacturing in Australia.
Future Manufacturing Council
The Future Manufacturing Council is one of a number of Industry Innovation Councils
established by the Australian Government.
The Council’s focus is on innovation-intensive, high technology, high value-add,
high-skill, export-orientated manufacturing. While its primary role is to advise the
Minister for Innovation, Industry, Science, and Research, the Council is also championing
innovation in manufacturing and helping to build connections between and collaboration
with other innovation initiatives and organisations.
Why is manufacturing important to the economy?
Recent experience with the Global Financial Crisis (GFC) highlighted the importance of
maintaining the full spectrum of manufacturing capability in the broad economy. Evidence
from Germany, Switzerland and other high value-add manufacturing countries in Europe
demonstrates that business culture and economic policy settings have kept manufacturing
a strong contributor to economic production, productivity and employment. This enabled
Germany to survive the GFC much better than other leading developed economies. The
US Chicago Manufacturing Renaissance4 is advocating a similar approach of a
manufacturing sector closely aligned with broader society, and especially education.
Profile of Australian manufacturing
Australia’s manufacturing industry is diverse. It comprises industries ranging from those
producing relatively low value-added commodity products such as some foods and
beverages, and other simply transformed manufactures, to high precision, high value-add
products including automotive and aerospace components, machine tools, medical
devices, electronics, scientific instruments, advanced materials and pharmaceuticals.
Australia’s manufacturing industry has grown steadily in absolute terms over the last
decade, albeit at a slower rate than other sectors of the economy. The comparative growth
of the industry sectors within manufacturing has not been uniform; Australia's
manufacturing industry is characterised by change and diversity (see Table 1).