Blackbook Executive

2018 Forecast: Advanced manufacturing remains bullish

Manufacturing in Australia has capped 14 consecutive months of expansion – led in part by the food and beverage industry, according to projections tracking this sector’s performance.

The manufacturing sector continued its expansion throughout 2017, notes an index released by the Australian Industry Group (AI Group), Australian Performance of Manufacturing Index.

November was marked by strong performance, while mirroring an uninterrupted growth phase that kicked off in October last year.

This trajectory was influenced by strong sales, production and jobs growth, and an escalation of exports across emerging and traditional markets.

Among the trends, the traditional manufacturing industry will thrive, together with a factory floor adoption of the newer, more advanced manufacturing technologies.

The AI Group notes that manufacturers are in a “rebalancing act,” marked by pockets of growth in food, beverages, groceries, and specialist machinery. The other sectors incorporate pharma, building materials, industrial textiles and furniture.

Advanced manufacturing is defined by an ability to blend the skills of a multidisciplinary team, leveraging internet and emerging technologies, and capturing customers’ needs to deliver innovative products and services.

This roadmap is also highlighted at the 2nd Annual Industrial Internet 4.0 Summit being held 21-22 February in Sydney. With a line-up of 30+ speakers and industry partners, this dedicated forum highlights core trends, and reflects industry forecasts, among these:

The future of manufacturing is influenced by the industrial internet of things (IIoT), robotics, automation, sensors, connected devices, big data, analytics, and mobile apps.

Manufacturing is entering a phase of restructuring. This blueprint recalibrates cumbersome business processes, embraces automation, and adopts the more advanced techniques to improve productivity.

On the automotive front, local manufacturers compete with low-cost imports. This sees a trend in moving production overseas, especially to Asia, while managing the overheads and reducing pressures on the bottom line.

On the technology front, manufacturers weigh in behind robotics and 3D printing to help with the commercial turnaround, together with industrial-strength automation to reduce a reliance on costly labour.
Competitive pricing, especially from Asia, means local manufacturers will need to match dollar-for-dollar to stay profitable against regional contenders eyeing similar markets.

Domestic manufacturing is undergoing transformation, according to the CSIRO. Over the next 20 years, the manufacturing industry will evolve into a highly integrated, collaborative and export-focused ecosystem. This offers high-value customised solutions within global value chains.

The focus is on pre-production (design and R&D), post-production (after-sales services), value add, sustainable manufacturing and low volume, high-margin customised manufacturing.

Against this backdrop, manufacturing supply chains are increasingly global. The focus is on customisation and an integration of service offerings.

Manufacturing transformation is influenced by advances in digital connectivity and analytics. These platforms are playing a role in creating more efficient supply chains and factory floors.

As key inputs become scarcer, and concerns grow over the unpredictability of climate change, manufacturers will need to consider more sustainable operations and offerings, together with adoption of cost-saving technologies.

The broader rethink adapts to marketplace volatility, including fluctuations in the Australian dollar, and ever-evolving government policies at the federal and state levels.

The outlook for food manufacturing remains buoyant, including a demand for high-quality or premium meat, especially across the East Asian markets.

In this space, forward-thinking Australian companies are beefing up regional exports, and investing more actively in fully-integrated manufacturing, production, distribution, and end-to-end supply chains.


Moreover, a continued demand for milk products, especially from China, is ringing in the cash registers for local manufacturers.

Dairy Australia says the forecast for 2017-18 milk production remains strong, marked by a forecast total of around 9.2 billion litres for 2017-18.

The global dairy market has benefited from slow growth in milk production across a number of key exporters.

By region, the story is mixed, with solid growth in Greater China, Japan and Mexico combining a more modest pace in Southeast Asia. This offsets a continued slowdown in the Middle East and North Africa.

Meat processing manufacturers, especially those producing high-quality beef, will continue charging premium prices and bulk up profits. However, intensified market competition forces prices down, while placing pressures on the operators and suppliers.

In relation to small-to-medium enterprises, the Australian government has ramped up R&D funding for manufacturing. The 2017-2018 budget earmarked $100 million into an Advanced Manufacturing Fund, while helping boost innovation, skills, and a growth in jobs.

This funding mirrors Prime Minister, Malcolm Turnbull’s National Innovation and Science Agenda that flags the impact of changing technology, and connecting to an innovation infrastructure.

The federal government, however, warns that Australia’s rate of collaboration on innovation between industry and researchers remains the lowest in the OECD.

The future focus is promoting innovation and collaboration between Australian businesses and the research sector. The onus is to link small and medium businesses with researchers, while expanding an “Innovation Connections” program.


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