Everything has a beginning and that’s a given fact. The Universe Through The Big Bang, planet earth through rocks and space debris; lands through volcanic births or tectonic plates colliding; countries founded by people and politics; economies rising through different industries, manufacturing and a free market. A country cannot survive with just its citizens doing nothing. Resources must be acquired to make the economy moving. Resources can either be made in the country or can be imported from other countries. Resources can be in the form of raw materials that can be manufactured to different consumer goods or imported finished products from different countries. Electronics, food processing, clothing and textiles, transportation, mining, chemical industry and petroleum are some of the industries that produce the goods that all consumers demands and needs.
A Start OF Something Solid
Just like most countries, Australia’s economic rise can be directly attributed to manufacturing. Every Australian may think that in the early days, there was barely nothing in the vast Australian continent. This doesn’t mean that the country and the continent is not rich in culture and natural resources, but the modern industry and manufacturing were not present at the time. There were no breweries, workshops, warehouses, mills and factories. When these types of workplaces emerged, they were just little workrooms for men gathering timbers for building shelters, a boat or a simple oar. But from these humble beginnings, these workrooms will pioneer the first factories in Australia. From very crude machineries and contraptions to efficient manufacturing plants in operation today, the rise of the economy is due to the improvement, development and refinement of the techniques and procedures learned that spanned from the founding of the country up to its present state. Yes, there were years or decades of hardships during the early days and through the modern times, but Australian manufacturers have learned to improvise and found their place within the limits, to meet the demand and shoulder the inevitable slumps in the economy.
A Short History
A fast growing population has made manufacturing essential in Australia between 1830 and the 1900s. There were great diversity of people with a continuous influx of settlers during 1812 to the 1850s. This influx also means that new skills were brought to the colony. A rise in population also puts a great demand on food, construction, transportation and other materials. The government never failed to overlook this thus new jobs were created for engineers, founders, brick layers and miners. The 1850s gold rush gave a new found wealth to the colony and expanded its commerce in mining, and manufacturing. The metal machineries boost the metal manufacturing sector and the industry flourished. After the gold rush, the government focused on having protective tariffs to encourage the local manufacturing industry and expand the products to be made and sold domestically against overseas imports. The tariff revenues were used in funding different ventures such as communication, transport and logistics.
In the 1890s the colony experienced 3 decades of growth as compared to the depression in the western world is experiencing during the time. During the first world war, mining and steel making pushed the economy forward. It was also the same during the onset and duration of the second world war. Although it may be insensitive to say that some countries have made profits in helping the allied war machine, still, the demand for manufacturing boosted economy. After WWII, the manufacturing industry enjoyed another boost specifically in the automobile industry. General Motors and Ford Australia have established plants in the country, Toyota Motor Corporation joined the car manufacturing fray in 1958 and soon followed by Mitsubishi Motors Australia. The contribution of of the manufacturing sector in Australia’s GDP peaked during the 60s at 25%, but dropped to 13% between 2001-02. In 2005-06 it dropped another 3 points to 10.5 %. Between 2000 to 2001, a total of $3.3 billion was spent on assisting the manufacturing industry. 48% was allotted for exports and 45% of research and development.
Food and beverage processing remains the largest industry in Australia, followed by the textile industry, car/motor manufacturing and the chemical industry.
Reasons Why Manufacturing Is Essential For Economic Growth
According to Jon Ryn, author of the book titled “ manufacturing Green Prosperity: The Power To Rebuild The American Middle Class”, manufacturing is essential to economic growth. Which has been proven correct over decades in many countries. According to the article by Paul Krugman in the New York Times, he argued that manufacturing is one of the bright lights of a generally disappointing recovery. But there are signs which are preliminary, but is nonetheless hopeful that a sustained economic comeback is under way. He also pointed out that the gap between what is sold and what is purchased is improving. Here are the reasons why manufacturing is important to Australia:
1. Manufacturing is the path to development
This has been the strategy of rich nations over many decades is to create a high quality manufacturing sector in developing an enhancing a country’s wealth and power. The rise of western powers like the UK, US and Germany in the 19th century to the economic rise of Japan, Russia and China in the 20th century has proven that manufacturing is the key of national growth.
2. Manufacturing is the foundation of powerful nations
A country’s size does not equal to power, but the country’s manufacturing capabilities does. The powerful nations are those that control the worldwide production of manufacturing industries. Making the “means” for production will also have a direct impact on the growth of the economy.
3. Manufacturing is equal to economic growth
Technological improvements and the manufacturing output are the direct drivers of economic growth. There will be no sustained or long-term economic growth without industrial and manufacturing machineries. The productive potential and technological advancements also have a direct effect on each other. If the two components are in continuous development, it will lead to explosive economic growth.
4. Goods, not services are the basis of global trade
Although some countries are providing services to other countries that needs servicing, AC country just cannot trade services for most of its goods. In extreme cases where an economy is based on human services or resources, it would be very poor. The reason is that it cannot trade services for actual goods. The value often currency will go down.
5. Services are based on manufactured goods
You cannot trade or export experience of using something in bulk as compared to goods. Yes, expertise may be exported or provided to other countries, but trading goods provide more clout. The laws of supply and demand is applied in building up the economy. The health of the country’s economy is based on that of the its manufacturing sector.
6. Manufacturing creates jobs
Most jobs, indirectly or directly depend on the manufacturing. And according to the report of the Economic Policy Institute, each manufacturing job supports at least 3 other jobs in the economy. It can be said that it is a domino effect which makes sense.
The State Of Australia’s Car Manufacturing Industry
2014 has been a shaky year for the country’s once flourishing car manufacturing industry. As of 2007, there are four car manufacturers in Austalia – General Motors-Holden, Ford, Toyota and Mitsubishi. Mitsubishi ceased production In march or 2008. GM-Holden announced that they will cease car manufacturing operations by the end of 2017. Ford will close two manufacturing plants by October 2016. Toyota also announced that they will stop the car and engine production by the end of 2017. The decline of car manufacturing in Australia has prompted recession fears. Many citizens fear that they will undergo the same recession as the US when their car manufacturing industries went into bankruptcy.
According to associate professor John Spoehr of the Australian Workplace, Innovation and Social research center of the University of Adelaide, the country is facing some of the worst economic conditions that other nations have experienced. He also stated that the death of the car industry, specifically Toyota’s decision to leave will tip the traditional manufacturing states of South Australia and Victoria into recession.
Australian Manufacturing Marches On
The effects of these industry changes can be countered through designing and manufacturing high value vehicle components, special purpose vehicles and niche vehicle modifications. It is a given fact that all industries around the world go through many transitions from the original business model to the one that suits the present economic conditions. If industries cannot adopt, it will surely die and no amount of bail-outs or subsidy can rescue Australia has a lot of technical auto expertise and are very successful at it, it’s just that it is not told openly. There is more effort on looking backwards and putting the recession factor into the headlines than the solutions. Even with the closure of traditional car manufacturing plants, there are still automotive brands that are strong and thriving in the country. As of March 2012, Australian automaker Tomcar announced that they will put up a new factory in Melbourne. Troika, Jayco, Suncamper and Cruisn’ will continue to export Motorhomes in NZ and other open markets. Military vehicle Bushmaster troop carriers are exported to Japan, Indonesia, Great Britain, Jamaica and of course Australia. Kenworth, Volvo, CAT and Iveco have trucks and other heavy equipments in the country. Buses and coaches are still built locally, as well as emergency and medical vehicles. Components design, manufacturing and R&D will still continue and provide high quality and value parts worldwide for many years.
Australian manufacturing is not facing extinction according to the Australian Workforce and Productive Agency. The agency also added that to become competitive again, there should be a shift from heavy industrial manufacturing to technologically advanced and higher value-added produce. The agency sees a future for high-end innovative products where the country has an advantage. There should be transitioned in high end base and diverse products with a stronger focus on R&D and innovation. A shift in this niche manufacturing may be hard for older workers though. In this rising niche industry, it will require people with higher education, skills specifically in engineering, science, technology and mathematics. Improved management skill will also come in handy in providing leadership and technical capacity in driving the transition. This is a window of opportunity that cannot be missed, although it will hurt many Australians specifically older workers. Change in inevitable and Australian manufacturing is without a doubt, suffering from these changes and the high dollar. But take note, it is still in good shape. The economy is just leaner, with less body fats. It is better to survive the harsh world and face it head on than to turn back, cower and face a horrible death.