Some good news at last.
After several years in the doldrums due in part to an abnormally strong Aussie dollar, there is now light at the end of the tunnel for Australia’s manufacturing industry.
A new report prepared by the Grattan Institute suggests manufacturing will bounce back from the mining investment boom.
The report says that far from being permanently damaged, industries sensitive to the exchange rate, such as manufacturing, tourism, education and agriculture "survived the boom in reasonable shape."
The report says that rather than killing manufacturing, the mining boom "temporarily accelerated" its long-term decline as a share of gross domestic product.
It’s no secret that manufacturing has been in decline in Australia for more than two decades. But despite recent plants closures and job losses they are now reasons for optimism.
The Australian dollar has fallen significantly from its lofty highs (about a 15 percent fall since April). This spells good news – particularly for exporters.
If it falls even further as predicted by many economists Australia will again become very globally competitive.
The Grattan report cited 13 countries similar to Australia where manufacturing grew rapidly after the exchange rate came down.
Within three years, manufacturing exports as a share of GDP had risen by more than a third on average, the report found.
Manufacturing constitutes about 8 per cent of the economy and employs more than 950,000.
Both major parties have pledged support for the manufacturing sector. And both sides have firm strategies in place to ensure this sector survives and prospers.
Despite the gloom and doom, both sides remain optimistic about the future of manufacturing in Australia.
The outcome of the forthcoming federal election will be vital in determining whether manufacturing will grow and flourish in Australia.