Modern Manufacturing Strategy: Industry responds

Prime Minister Scott Morrison announced the plan on 1 October, which will see around $1.5bn in new funding invested over the next four years in a Modern Manufacturing Strategy to make Australian manufacturers more competitive, resilient and able to scale-up to take on the world. The centrepiece of the Strategy is the $1.3bn Modern Manufacturing Initiative (MMI), which will see the Government strategically invest in projects across six priority manufacturing sub-sectors, helping manufacturers to scale up and create jobs.

Shane Infanti, CEO of AMTIL, was broadly positive about the plan, while stressing that the details to be unveiled in next week’s Budget will be critical. Infanti welcomed a $50m increase to the Manufacturing Modernisation Fund and greater commitments to government procurement and supply chains, while warning that the Strategy’s focus on six National Manufacturing Priorities should not leave other sectors at a disadvantage.

“Identifying specific sectors we have a competitive advantage in and supporting these sectors with a robust, long-term plan has a lot of merit,” said Infanti. “We also need to stress to the Government that the focus on the six areas of Advanced Manufacturing they have outlined cannot come at the expense of other sectors already well established such as aerospace and rail.”

“What we need is a solid foundation for all advanced manufacturing sectors, that provides low taxes, encourages investment in technology, develops lower-cost energy options, provides skilled workers, and creates marketing opportunities both locally and globally. This will drive all industries forward.”

Companies from across the manufacturing sector were broadly supportive of the plan. Slavko Planinic, Managing Director of ABB Australia, said: “We welcome the Prime Minister’s plans to invest $1.5bn into the manufacturing sector. This is a once-in-a-generation opportunity to renew and reshore manufacturing capacity across industries critical to Australia’s future. A globally competitive and advanced manufacturing sector is essential to rebuilding our economy and creating long-term jobs.”

BAE Systems Australia Chief Executive Gabby Costigan endorsed the measures to develop Australia’s defence manufacturing industry: “The announcement by the Prime Minister today is a show of support for the growth of advanced manufacturing in Australia. A strong and capable manufacturing industry is essential to delivering our modern defence capabilities and rebuilding the nation post COVID-19.”

Pat Boland, co-founder of ANCA, said it was unclear how his company would benefit from the funding boost given its limited involvement in priority sectors such as medical or defence. Speaking in the Sydney Morning Herald, Boland also cited a lack measures aimed at creating greater demand for local goods, which he said would give manufacturers more long-term sustainability.

“There is a lot of room for government to focus on the demand side rather than just supply,” said Boland. “This is $1.5bn; the Government has already announced spending programs many times bigger than that in the defence segment. Really getting defence to inject demand into manufacturing in Australia would be a far more powerful approach.”

Industry bodies were also supportive of the plan. Innes Willox, Chief Executive of Ai Group, said that a strong, vibrant and diverse manufacturing sector was “crucial to our national prosperity”.

“It is gratifying that the Federal Government has clearly recognised the role of manufacturing in the economy and committed to creating the right conditions for industry growth through policy areas such as taxation, skills and training development, energy, innovation and deregulation,” said Willox. “These are central to developing ‘smart sovereignty’; a broad-based lift in economic performance; the widespread creation of challenging and sought-after jobs; and of dynamic Australian industries. “

Business Council of Australia Chief Executive Jennifer Westacott commented: “By playing to our strengths, the government’s strategy is designed to back in Australian manufacturers to help drive the recovery and rebuild a clever economy for the future.”

The Australian Academy of Science said the strategy’s focus on increased collaboration between manufacturing and Australian scientists is important and plays to our nation’s strengths. The Academy’s Secretary for Science Policy, Professor David Day FAA, noted that manufacturing is a major funder of R&D in Australia.

“Business investment in manufacturing R&D has been declining in the last decade from almost $5.5bn to $4.6bn (in current prices), so this new investment into revitalising Australian manufacturing, supported by Australian science and technology, cannot come soon enough. A modern, growing, manufacturing sector working hand in hand with Australian science promises to be key to our economic recovery from the recession.”