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Manufacturing needs to embrace disruption for a strong future

08 December, 2016

Australia's manufacturing sector needs to embrace the opportunities offered by disruption and shift towards high value, knowledge intensive industries, Assistant Minister for Industry, Innovation and Science Craig Laundy has told a university symposium.

Laundy told the University of Technology Sydney Business School conference on the future of manufacturing that the latest manufacturing data showed predictions of the sector's demise were premature, with a 3.3 point rise in the November AiGroup's Performance of Manufacturing Index to 54.2.

"Despite the challenges of weak global demand, China's slowing growth, the fallout from Brexit and a new US Administration, we have a chance to shape our economic future by focusing on our strengths and growth areas of the economy," Laundy said.

"In manufacturing, we can do more to seize the opportunities disruption has to offer and to gain niches in the global production value chain, including greater integration of Industry 4.0 methods in Australian manufacturing.

"Advanced industrial nations like Australia are moving into an era of smart factories, using Industry 4.0 to prepare their industrial bases for the future."

Laundy said the Prime Minister's Industry 4.0 Taskforce complemented initiatives under the National Innovation and Science Agenda by connecting Australian industry to German and US industrial leaders and helping to drive the transition to the smart, niche and export-focused industries of the future.

"Manufacturing continues to be an important part of Australia's industry mix; accounting for 6.1 per cent of Australia's GDP and 7.4 per cent of employment, but its importance goes way further.

"Many firms use goods manufactured in Australia as inputs to their business, and others provide inputs to manufacturing.

"Manufacturing also makes large contributions to R&D, skills and technology transfer, exports, and productivity growth. In the 2015–16 financial year, manufacturing generated $100 billion in export income, second only to mining's $117 billion.

"Manufacturing in the 21st century is no longer about low-skilled workers and scale-intensive production – in fact in Australia many globally competitive firms use advanced manufacturing to supply high-value components and related services to the global supply chains of multinational firms.

"For example, the Advanced Manufacturing Growth Centre's soon to be released Sector Competitiveness Plan has found that our highly skilled manufacturing businesses in medical technology and aerospace enjoyed a labour cost advantage of around 40 per cent over their US counterparts.

The plan details the opportunities for Australian businesses to increase competitiveness in skilled labour and increase technical leadership."

"And CSIRO's recently released Advanced Manufacturing Roadmap, endorsed by the Advanced Manufacturing Growth Centre, tells us that the move towards globalisation, digitisation and increased demand for bespoke, value-added products and services, puts Australia in a better position than ever before to take advantage of global opportunities.

"Ultimately the responsibility for seizing the opportunities and tackling the challenges that disruption and structural change present lies with business.

"Governments' role is creating the right policy settings for Australian businesses to thrive."

Laundy said manufacturing had made a major contribution to Australia's stellar economic performance over the past 25 years and the Australian Government's vision was for a sector that was highly innovative, made a significant contribution to Australia's economic prosperity, and created high-skilled jobs. 

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