The changing face of Australian manufacturing

09-07-2014
A sharp decline in manufacturing employment in the past 40 years is no real cause for concern, says university professor Jeff Borland.
 
Borland, who has recently completed a major analysis of Australian manufacturing, says changes in total employment do not necessarily reflect the relative importance of manufacturing industry in the labour market.
 
The analysis shows net job losses in the manufacturing sector have totalled about 400,000 over this period. 
 
“The decline in manufacturing has been going on for a long time. It’s not something that has just happened in this downturn, during this period of a high exchange rate. It has been declining since the early 1970s,” says Professor Borland.
 
“At every major downturn Australia has experienced we have lost jobs in manufacturing. Yes we have lost a lot of jobs recently but this loss of jobs in manufacturing has being occurring steadily for the past 40 years.
 
Expressed as a share of total employment, however, the decline in manufacturing industry employment has been continuous and has occurred relatively steadily. 
 
The demise of Holden and Toyota, Alcoa’s plant closing, and crises at Cadbury and 
SPC, have again brought attention to the future of manufacturing industry in Australia. 
 
This attention is not new, says Professor Borland. “It has been a regular feature of cyclical downturns in Australia.”
 
The state composition of manufacturing employment has undergone significant change in the past three decades. There has also been a substantial convergence in the relative importance of manufacturing between states. 
 
“In 1985 one in five jobs in Victoria was in manufacturing and only one in 10 in manufacturing jobs were in Queensland, but today basically every state has the same share of its jobs in manufacturing industry, he says. “So while there is a lot of focus on the decline in Victoria and South Australia, in fact all states’ fortunes depend to pretty much an equal degree on manufacturing.”
 
Victoria and NSW have seen their aggregate share of manufacturing industry employment decline from 69.5 per cent to 57.7 per cent. At the same time Queensland’s share has grown from 11 per cent to 21 per cent. 
 
Professor Borland’s analysis shows the food products sector has come to comprise a much larger share of manufacturing industry employment in the past three decades. At the same time the textiles, clothing and footwear sector has seen the largest fall in importance. 
 
Since the mid-1990s employment in manufacturing industry has shifted away from machinery operators and labourers and towards the managerial and professional occupations – to a much greater degree than in the overall workforce. 
 
At the same time, manufacturing has remained a male-dominated industry, with the proportion of females employed remaining at around 25 per cent over the past three decades. 
 
And in the same period the proportion of part-time jobs has increased from 7.3 per cent to 15.3 per cent. 
 
The growth in part-time employment is quite similar to that for all male employees in the Australian workforce, where the proportion of workers in part-time jobs rose from 6.3 per cent to 16.9 per cent between 1984 and 2013. 
 
It shows the number of Australians employed in manufacturing since the 1960s, the zenith of Australian manufacturing, when a quarter of the workforce were employed in this emotive sector. 
 
But from that period on the graph tumbles to show that just under 10 per cent of total Australian employment currently hails from manufacturing.
 
“To a large degree this reflects the difficulties that manufacturing faces in Australia compared with countries like the United States and Japan,” says Professor Borland. “Manufacturing in the 20th century has been about large-scale production to gain economies of scale. With our small population and distance from the richer world markets we have never had access to the size of market that is needed to underpin large-scale production.”
 
Fast forward to today and Professor Borland’s analysis of Australian manufacturing provides interesting insights about the changing balance of Australia’s industrial base. The ‘rust belt’ states of South Australia and Victoria are commonly considered the manufacturing heartlands of Australia but that has changed, and we’re witnessing a convergence of manufacturing jobs across all Australian states.
 
Key points 
  • Large declines in employment in manufacturing industry have occurred since the 1970s. The declines have been concentrated during cyclical downturns. 
  • Net job losses have totalled about 400,000 over this period. 
  • Expressed as a share of total employment, however, the decline in manufacturing industry employment has been continuous and has occurred relatively steadily. 
  • The food products sector has come to comprise a much larger share of manufacturing industry employment in the past three decades; at the same time the TCF sector has seen the largest fall in importance. 
  • The state composition of manufacturing employment has undergone significant change in the past three decades – Most notably, there has been a substantial convergence in the relative importance of manufacturing between states. 
  • Since the mid-1990s employment in manufacturing industry has shifted away from machinery operators and labourers and towards the managerial and professional occupations – to a much greater degree than in the overall workforce. 

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