Despite recent downturns and closures in some subsectors of Australia’s manufacturing industry— manufacturing in Australia can have a positive future.
The industry is Australia’s fourth largest employer, has deep links to other sectors such as primary production, utilities, construction and the services sector, and is vital to economic activity in many regional areas. Manufacturing makes a disproportionately large contribution to exports and research and plays a critical role in the uptake and spread of innovation in our economy.
The Australian manufacturing industry is quite diverse, ranging from the manufacturing of foods and beverages and other simply transformed products, to precision, high value added products such as aerospace components, medical devices, electronics and advanced materials. No one group of manufacturing—including automotive manufacturing—accounts for more than 6 per cent of value added and employment.
Manufacturing has been in transition for decades as, for example, tariff cuts and industry restructuring, changing technologies and the outsourcing of tasks to lower cost economies have impacted the sector.
More recently, the high Australian dollar and slower productivity growth across the economy have placed additional pressure on the industry.
While transition is not new, it highlights the need for Australian manufacturing to focus on high-end innovative products where it has a competitive advantage. The future lies in us shifting from heavy industrial manufacturing to higher value added, technologically advanced production. This transition is well underway with products such as Australian pharmaceuticals, medical instruments and scientific equipment already making their mark.
Raising skill levels, including by employing a larger proportion of university graduates, will be critical to success; as will stronger collaboration between manufacturers and universities to ensure the supply of skilled graduates and drive innovation through research.
The Council of Australian Governments has acknowledged the substantial transition the industry will need to make over the coming years and has tasked its new Industry and Skills Ministerial Council with developing joint proposals to facilitate this transition and foster internationally competitive high-end manufacturing in Australia. Business, supported by peak industry groups and governments, will need to drive the transition in order to secure a competitive future.

Skills and jobs in transition
More advanced, high-end manufacturing will require a stronger focus on innovation—particularly in processes, markets, products, services, delivery and business and management models. More manufacturers are likely to be engaged in research and development (R&D), design, production of prototypes, and the small-scale manufacture of complex, high value added goods. More businesses will be participating in global supply chains and offering life time services for their products.
Success in this new environment will require new and higher level skills, particularly science, technology, engineering and mathematics (STEM) skills. Currently, manufacturing employs fewer university graduates than many other Australian industries and while the skills of VET graduates will continue to be in demand, the industry will require more people with higher education skills to provide the technical and leadership capacity that will drive the sector’s transition.
Improved leadership and management skills are necessary for businesses to increase productivity, innovate, adapt to changing business models and integrate into global supply chains. In developing its
2013 National Workforce Development Strategy the Australian Workforce and Productivity Agency
(AWPA) developed four potential growth scenarios and commissioned economic modelling which found manufacturing managers are expected to upskill in the years to 2025, with the proportion with bachelor degrees or higher increasing to 47 per cent under the highest growth scenario (compared to 33 per cent in 2011).
While the transition in Australian manufacturing will create more higher skilled and technologically advanced jobs, in line with most developed countries there will be fewer jobs overall in the industry.
AWPA’s growth scenarios projected declines in manufacturing employment by 1.0–1.5 per cent per annum under the three most plausible scenarios in the years to 2025. Modelling on all the scenarios only projected growth in Food, Beverage and Tobacco Manufacturing and Primary Metal and Metal Product
Manufacturing subsectors.
Despite the probable lack of overall job growth businesses will generate demand for a wider range of skilled Trades Workers, Technicians and Professionals, particularly in STEM disciplines. Technology and innovation may result in the loss of some occupations but will also change the scope of job roles and create new occupations.

Industry snapshot
Manufacturing contributed $102.8 billion in 2013 to Australia’s GDP, 33.5 per cent of merchandise exports, and (in 2011–12) just under 25 per cent of business expenditure on R&D.
• The industry is Australia’s fourth largest employer, employing 936,400 workers or 8.1 per cent of total employment.
• Small and medium sized businesses account for just over 60 per cent of all Australian manufacturing employment.
• Employment in the sector has declined by 10.2 per cent over the past 10 years, or around
106,600 jobs, however five subsectors including food and beverage, and medical and pharmaceutical, have experienced employment growth.
Workforce profile
• The manufacturing workforce is slightly older, with a median age of 41 years, compared to an all industries median age of 39 years.
• Males make up 73.3 per cent of manufacturing employees, compared with 54.2 per cent for all industries, and Manufacturing is the third lowest employer of women after Construction and
Mining.
• A large proportion (45.2 per cent) of the manufacturing workforce does not hold any post-school qualifications, compared to 39 per cent for all industries.
• Almost one in every three manufacturing workers holds a Certificate III, IV or other certificate.
• Just 14.5 per cent of the manufacturing workforce holds university qualifications compared to
27.2 per cent for all industries.
Jobs in the sector
• A significant proportion of employment is full-time (85.3 per cent).
• Only 41 per cent of the manufacturing workforce is generally engaged in transformative processes Technicians and Trades Workers and Machinery Operators and Drivers).
• In 2013 (four quarter average), almost a quarter (24.4 per cent) of manufacturing workers were classified as ‘high skilled’ (Managers and Professionals), an increase from 19.8 per cent in 2003
(four quarter average).
Managing the transition—strategies to deliver the right skills
The Manufacturing workforce study report makes recommendations to ensure Australia builds a more diverse, sustainable and globally competitive manufacturing base.
Focusing on skills development
The industry’s future lies in Australia shifting to advanced and niche manufacturing, with our businesses being first to market with innovative products, active in global supply chains and offering life time services for their products.
The Manufacturing workforce study report recommends industry work within Australian Government manufacturing initiatives to identify linkages that promote industry-wide collaboration on skills and workforce development.
Continued Australian Government support will be needed for programs which assist businesses to develop and upskill their workforces such as Enterprise Connect, the Workplace English Language and
Literary program and the National Workforce Development Fund.

Enhancing management skills
Managers at all levels—from executives through to the shop floor—play an important role in fostering a high performing culture. Australia’s management performance is above average, but could be enhanced.
Improving the qualification profile of managerial staff, particularly in university level qualifications, will strengthen the management capacity of Australian manufacturers. Management training should reflect the needs and work patterns of managers, particularly those that work in small and medium sized businesses.
The Centre for Workplace Leadership should establish a taskforce to review and where appropriate revise management training to suit contemporary managers in manufacturing, who are often time poor and have significant operational responsibilities.
The taskforce should include relevant Industry Skills Councils such as Manufacturing Skills Australia and
Innovation Business Skills Australia; higher education groups such as Universities Australia and the
Australian Business Deans Council; as well as industry peak bodies such as the Australian Industry Group,
Australian Chamber of Commerce and Industry and Australian Council of Trade Unions.
Positioning the workforce for adjustment and renewal
The industry’s shift to advanced and niche manufacturing will be difficult for some workers, particularly those in declining sectors or jobs that become obsolete. A relatively high proportion of the workforce do not have formal, industry recognised qualifications and may need support to develop stronger language, literacy and numeracy skills to meet the demands of the modern workplace and find new jobs.
Strategies that assist vulnerable workers transition to new roles must be pursued, in combination with structural adjustment assistance packages, to mitigate the impact of closures on workers, their families and communities. Action must start now to best position vulnerable workers to take up new job opportunities and enhance their existing skills through formal recognition of prior learning and targeted retraining.
Due to high replacement rates projected within the sector, firms will need to adopt strategies to extend the working lives of mature-age workers and limit loss of knowledge due to retirement.
The Australian Government Department of Human Services and relevant state/territory and VET agencies need to collaborate to help vulnerable workers transition to alternative employment. Strategies should include Workplace English Language and Literacy program training where required; be based on learning from previous manufacturing business closures and best practice models.
The National Centre for Vocational Education Research should lead an ‘action research’ project on better recognising the existing skills of employees impacted by the announced closures in the automotive subsector. This would involve live participation in the change process and building on current practice in recognition of prior learning.
Manufacturing as a rewarding career
The Australian manufacturing industry provides career opportunities across a range of disciplines, and increasingly in high skilled, STEM based-roles. An expanding range of opportunities in ‘non-traditional’ manufacturing careers are also emerging as more businesses look to value-add and bundle services to their goods.

However, public perceptions of manufacturing are not reflecting the new creative, high skilled and interdisciplinary jobs which are emerging and this is hindering the industry’s ability to attract skilled workers.
The report recommends peak industry groups, relevant Industry Skills Councils and trade unions work together with career development advisory groups, such as the Career Industry Council of Australia, to promote the full range of manufacturing jobs and career opportunities on offer.
Demand for STEM skills
Australia’s manufacturing industry increasingly needs STEM skills as it transitions to more advanced manufacturing. The industry’s future competitiveness relies on its ability to secure workers with adequate qualitative and quantitative skills primarily through the recruitment of university and higher level VET graduates.
The work of the Office of the Chief Scientist should be strongly supported to ensure that manufacturing has access to workers with sufficient science, technical, engineering and mathematical capabilities to meet future industry needs.
Guaranteeing a supply of capable apprentices
A strong manufacturing future for Australia will continue to be founded on a core base of skilled
Technicians and Trade Workers. Australian Apprenticeships play a critical role in providing a recognised entry pathway into these roles, however, industry has raised concerns about current completion rates for apprentices.
The report recommends that peak industry groups, state training authorities, relevant Industry Skills
Councils and the Australian Government Department of Industry work to improve completion rates for trade apprentices. The focus should be on strengthening employer and apprentice matching through
Australian Apprenticeship Centres; streamlining employer advisory services; improving apprentice mentoring and better coordinating apprentice and employer support across all levels of government.
Stronger industry–university collaboration
Currently, Australian manufacturing’s engagement with the higher education sector is underdeveloped and its employment of tertiary graduates lags behind that of other countries with developed manufacturing sectors.
Deeper engagement between manufacturers and universities is needed to supply the skilled graduates, research and expertise that will be needed to transition the industry.
A multi-sectoral working group should be established comprising peak industry groups, Universities
Australia and the Australian Collaborative Education Network. It would focus on research, innovation, the supply of appropriately trained graduates and work-integrated learning, and would build on the work of the Office of the Chief Scientist’s Industry Group.
Work-integrated learning (WIL) should be expanded and strengthened to meet industry demand for work ready graduates, with a focus on involving more small to medium sized businesses; developing case studies to highlight successful WIL initiatives; and better integrating WIL into course learning objectives.

Increasing diversity in the manufacturing workforce
Traditionally, manufacturing has been male dominated with full-time jobs predominating which can create barriers to employment for those not within this cohort. The future of manufacturing will see the creation of new occupations and career paths. Increasing the participation of underrepresented groups will give employers the opportunity to draw from the largest possible pool of skilled workers to fill these future roles.
Peak industry groups and trade unions should provide advice and support to assist manufacturing employers attract and retain employees from underrepresented groups.
The Australian Workforce and Productivity Agency is an independent statutory authority which advises the Australian Government on Australia’s skills and workforce development needs.
In developing the Manufacturing workforce study AWPA considered the key factors likely to affect Australia’s manufacturing workforce over the next decade; the implications of changing circumstances on the demand and supply of skills; and the workforce capacity required to drive productivity and innovation in the industry. AWPA undertook this study in close consultation with industry, unions and education stakeholders.
You can view or download the Manufacturing workforce study report.
Visit: awpa.gov.au
Phone: 02 6102 8906
Email: contactus@awpa.gov.au.