AMTIL is a member of the world Manufacturing Technology Association Network. Each year 21 industry associations from around the world get together at a major international show to share knowledge and network.

This year at IMTS, held in September in Chicago, we had a number of meetings and presentations focused on global manufacturing trends, as well as current and future issues that may impact on certain economies. The Network commissions Oxford Economics to produce a 100 page bi-annual report which takes into account the sum and consumption of manufacturing technology across 23 key economies and eight key industry sectors. This is combined with key economic data and other factors to come up with a modeling report that has proven to be an accurate forecast for manufacturing growth over the years.

Jeremy Leonard from Oxford Economics gave a thorough overview of the statistical data that went into the latest Outlook Report. It was reported that there has been disappointing growth in all parts of the world, leading to world GDP growth of 2.2% over the past 12 months. When you consider that China (6.9% increase in GDP) and India (7.2% increase), whilst down on expectations, still had reasonable growth levels, it shows how sluggish the rest of the world’s economies have performed during that time.

It was reported that world trade and world GDP are both forecasted to grow between 2-3% per annum for the next three years, with multiple risks being identified that may have impact.

One of those risks is the rebounding of oil prices. From August 2014, oil prices have dropped from over $100 per barrel to around $40 per barrel and operational oil rigs in the US have dropped from 1600 to 400. The massive market volatility of oil prices is relatively unseen but it does potentially have a significant impact globally on automotive sales, consumer spending and ultimately inflation.

Another risk highlighted in the report is a severe downturn in the growth of China. This past year is the first non-double digit year of growth for China and whilst a 6.9% increase in GDP may appear strong from a local perspective, this level of growth will not sustain the rapid expansion of infrastructure within China. The impact of single digit growth for this burgeoning economy will be hard to forecast and therefore poses a real threat to future predictions.

Believe it or not, the impact of a Trump presidency on the US economy has been identified as a major global risk to the manufacturing sector. The Oxford Economics report has forecast five consecutive quarters of negative growth under a Trump administration with his current proposed policies in place.

Another significant risk to global economics is the Brexit-related uncertainty that is weighing heavily over Europe at present. Since the 52:48 decision in June to leave the EU stunned most of the pollsters, we have been in this state of flux not really knowing for certain when the next steps in the process will be taken. The final process of negotiations will only take place once the UK triggers Article 50 of the Lisbon Treaty – now predicted to eventually happen early next year – almost a full year since the landmark referendum. Until then, the UK remains a full member of the EU although they have already declined to take up the rotation of the Presidency of the EU that was due in 2017. Meanwhile, all of this delay and speculation has had a negative impact on the economy already. The Manufacturing Technology Association (MTA) in the UK has reported a sharp deterioration in business confidence and declines in export planning and investment intentions over the past few months. An August 2016 survey by the Bank of England asked the question of what impact the decision to leave the EU will have on business and the response was that negative impact will occur on capital spending, corporate activity and hiring of staff. So whilst these projections are not good for the UK in terms of jobs and growth, we are yet to see the impact on the global stage of the Brexit decision.

Geopolitical tensions was another risk factor that remains a bit of a mystery. Talking to my counterpart with the Turkish Association it was evident the impact their recent events has had on the economy in general but manufacturing specifically. Tensions across the Middle East and South China, for example, have the potential to impact so this is a risk and we will wait to see what happens.

However, whilst the Outlook Report forecasts only modest growth and the risks identified are real, we still remain positive about the future of the global manufacturing sector. The key question is, how does Australia position itself within global supply chains to improve on its potential? But that is a story for another time.