The Federal Government has announced plans to invest $1.5 billion in local manufacturing through its Modern Manufacturing Strategy grant. Under the measure, manufacturers can apply for a grant to help them strengthen their local supply chain, handle mass production, upskill employees, scale up, and improve competitiveness.
As of this month, the investment is available to two of the six priority manufacturing sectors as of this month. Experts believe the initiative will help not only in the availability of locally-made components and machinery, but also improve the safety of consumer goods in the country.
“Restrictions enforced across the world have resulted in a lack of availability, or delivery delays, of goods, due to parts and components held up in international supply chains,” Saeid Nikdel, a quality management expert at SAI Global – a company that helps manufacturers in Australia manage their risk through standards, assurance and training – said.
“The slowing of production lines has led a flow-on effect to Australians wanting to access goods. The problem has highlighted our manufacturing sector’s deepest vulnerability: its dependence on overseas markets for the supply of machinery, tools, parts and product components,” Nikdel added. “Most of the machinery that we bring into Australia comes from the US and Europe, while product components and parts mostly come from China.”
Saeid noted that in the last 12 months, local manufacturers, assemblers, and distributors faced delays almost twice as long as in 2019.
“These [delays] have impacted their ability to produce local goods. Numerous manufacturers have also struggled to scale up operations to meet the increase in demand,” Nikdel said. “It has been a wake-up call for our manufacturers, who now realise they must strengthen their supply chains.
“A number of our manufacturing clients have revealed to us they are now looking to produce their own product components in Australia,” Nikdel added. “The growth and strengthening of Australia’s manufacturing sector is dependent on this happening and the Government investment is timely.”
The initiative comes on the back of a survey revealing that nearly nine in 10 Australians believe the country should produce a higher proportion of essential products locally, and that 82 per cent think that infrastructure projects in the country should use more Australian-made products whenever possible, even if it costs more.
“We have higher standards and product statutory and regulatory requirements than other countries, benefiting the end-user with superior-quality products with safer design considerations,” Nikdel said. “Safer products will result in minimal incident risks or product recalls, increasing customer satisfaction.”
Nikdel expressed optimism that the $1.5 billion Government investment will improve its target markets of space, resources technology, critical minerals processing, food and beverage, medical products, recycling and clean energy, and defence sectors.
“As demand for Australian suppliers increases, our local manufacturers will also need to boost their workforce and facilities to scale-up their operations,” he said. “Right now, the manufacturing sector has a shortage of skilled machinery operators. The Government’s direct funding of the sector will not only result in new manufacturing areas, but also an increase in skilled workers and manufacturing facilities.”