How Australia can become a hardware manufacturing powerhouse again

Australia was once a country of great manufacturing capability but local production has been steadily waning over the years. Today Australian manufacturing contributes around 6% of Australia’s GDP and supports over 862,000 jobs — a low figure when compared to other advanced economies.

There’s an urgent need for the country to revive its manufacturing prowess in the face of rising competition from lower-cost economies. Australia already has a rich legacy of developing highly sophisticated technology, from the first practical refrigeration system for the brewing and meat-packing industry in 1851 to the cochlear implant in 1978 and the introduction of polymer banknote technology in 1988.

For decades, Australian manufacturing matched its innovation. Historically, Australian automotive and pharmaceutical industries were most notably recognised for their strong research and development capabilities. At its peak, the Australian auto manufacturing industry employed over 70,000 people and produced a gross output of $20 billion.

Unfortunately, a combination of high labour costs, small domestic markets and a strong Australian dollar has resulted in local hardware manufacturing plummeting in recent years.

If this widening gap is addressed, economists estimate that Australian manufacturing could grow by almost 50%, while stimulating innovation, creating employment and driving the economy.

It isn’t too late to seize the opportunity for renewed impetus. If innovation and technology are wholeheartedly embraced now, a future-ready hardware sector can unlock several opportunities.

Reversing the decline

To get back on track as a manufacturing powerhouse, there are a number of steps Australia can take:

1. Invest wisely. The Australian Government announced plans to revive manufacturing with a $1.3 billion Modern Manufacturing Initiative in 2021. This is a positive step — but organisations will need to re-think conventional ways of doing business. Bolstering Australia’s manufacturing ecosystem will have extended benefits for all Australian businesses as they are exposed to and adopt cutting-edge technology much faster than if we were adopting foreign practices. This speed, combined with adding value to processing and bringing down labour costs, will give local businesses a leg up on international counterparts; build a resilient ‘Australian-made’ economy of the future.
2. Develop more nurturing programs for early-stage hardware companies. We need more support for hardware startups to tap capital and early-stage expertise. It’s important to note that the definition of hardware startups must go beyond just hardware. Hardware startups are now data companies building solutions that create, collate and meaningfully analyse data and produce actionable information. With this in mind, it is not just up to government to facilitate a sharing network among key players in the market, but also the responsibility of these emerging players who lean on each other to share knowledge and expertise and contribute to critical collective growth.
3. Prioritise building hardware for the information age rather than the industrial age. This means supporting those who are creating machines with in-built data-sharing and setting new standards for machines that talk to each other. While machines perform specific tasks well, data collection and sharing between machines is needed to elevate these processes and optimise them for full efficiency. Without it, industries miss out on the benefits of advanced analytics and feedback loops, which equates to lost revenue when product demand is particularly high. Data-sharing is critical for growth but globally, industries are still grappling with very limited capabilities in this space. Australia has an opportunity to capitalise on this lag and emerge as the leader in the space, one that the world will look to emulate.

Remo Carbone, CEO of MEQ Probe.

Top image credit: iStock.com/Alfio Manciagli