Leslie Massey
Manufacturing is a significant part of Australia's economy and industrial output, encompassing a wide range of industries and employing hundreds of thousands of Australians. The sector has a long history in the country, with notable achievements such as the production of the Beaufort bomber during World War II and the establishment of car manufacturing in the 1920s. While there have been challenges and a decline in manufacturing jobs in recent years, the industry is projected to grow, and advancements in technology and a focus on sustainability are expected to play a crucial role in shaping its future.
| Characteristics | Values |
|---|---|
| Manufacturing output in 2023 | $92.89 billion |
| Manufacturing output in 2022 | $91.3 billion |
| Manufacturing output in 2021 | $86.05 billion |
| Manufacturing output in 2020 | $74.77 billion |
| Employment increase in 2022-23 | 28,000 people (9.2%) |
| Employment increase in medium businesses in 2022-23 | 185,000 people (6.1%) |
| Value added in 2025 | $60.4 billion |
| Value added per capita in 2025 | $2.2k |
| Output in 2025 | $249.1 billion |
| Output per enterprise in 2025 | $1.9 million |
| Number of enterprises in 2025 | 130,800 |
| Labor productivity in 2025 | $90.1k |
| Manufacturing's contribution to exports in the early 2000s | 48% |
| Manufacturing's contribution to R&D in the early 2000s | 45% |
| Percentage of the workforce in manufacturing in 2021 | 6.2% |
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What You'll Learn
Manufacturing's economic impact
Manufacturing is Australia's 5th largest industry for economic output, contributing 6.3% to its GDP. It is also the 7th largest employer, with 873,000 Australians (6.8% of all employment) working in the sector. The manufacturing supply chain supports 1.27 million Australians in work.
The manufacturing market in Australia is projected to grow by 1.54% from 2025 to 2029, resulting in a market volume of US$64.2 billion in 2029. The value added in the market is projected to amount to US$60.4 billion in 2025, with a compound annual growth rate of 1.54% expected from 2025 to 2029. The output in the market is projected to amount to US$249.1 billion in 2025, with a compound annual growth rate of 1.41% expected from 2025 to 2029. Labor productivity in the market is projected to amount to US$90.1k in 2025.
The manufacturing sector in Australia has a diverse range of industries, including food and beverage production, textiles, chemical manufacturing, metalworking, and electronics manufacturing. The largest sub-industries are food, beverage and tobacco, machinery and equipment, petroleum, coal and chemicals, and metal products. The sector has seen a decline in recent years, with the number of people employed dropping to 6.2% of the workforce in 2021. This decline can be attributed to various factors, including the reduction of tariffs, making imports cheaper, and the move of manufacturing work to other countries, such as Asia.
However, there are opportunities for growth and modernisation in the sector. The pandemic has provided a unique chance to accelerate innovation and modernise manufacturing in Australia. The emergence of 'Industry 4.0', which includes the use of robotics, artificial intelligence, and automation, presents opportunities for reshoring manufacturing work to industrialised nations like Australia. Additionally, the government can play a role in supporting innovation precincts and small and medium enterprises through public procurement policies.
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Employment in manufacturing
Manufacturing is Australia's seventh-largest employer, with 873,000 Australians working in the sector, accounting for 6.2% to 6.8% of all employment. The manufacturing supply chain supports 1.27 million Australians in work.
The manufacturing market in Australia is projected to grow by 1.54% between 2025 and 2029, resulting in a market volume of $64.2 billion in 2029. The value added in the manufacturing market is projected to amount to $60.4 billion in 2025, with a compound annual growth rate of 1.54% expected between 2025 and 2029. The output in the manufacturing market is projected to amount to $249.1 billion in 2025, with a compound annual growth rate of 1.41% expected between 2025 and 2029.
The manufacturing industry in Australia encompasses a wide range of physical goods and activities, including the creation of finished products from raw materials, the assembly and installation of industrial machinery and equipment, and the repair and maintenance of these systems. The largest sub-industries within the manufacturing sector are food, beverage and tobacco, machinery and equipment, petroleum, coal and chemicals, and metal products.
The structural steel and welding trades workers are the largest employing occupation in the manufacturing industry. Other significant occupations include electrical engineering, metal fabrication and engineering, and production management.
The future of the manufacturing industry in Australia is expected to be influenced by several factors. The adoption of advanced technology, such as artificial intelligence, robotics, and the Internet of Things (IoT), has the potential to improve efficiency and productivity while reducing costs. Sustainability and environmental awareness are also becoming increasingly important, with investors and consumers preferring companies that prioritise eco-friendly products and practices. Geopolitical factors, such as trade tensions and changes in government policies, can also impact the industry. The COVID-19 pandemic has exposed vulnerabilities in Australia's manufacturing supply chains and highlighted the need to modernise and innovate.
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Manufacturing's future
Manufacturing in Australia has a rich history, from its early beginnings in the 1830s with the production of small steam engines to its remarkable achievements during World War II, such as the manufacture of the Beaufort bomber aircraft. Today, Australia's manufacturing sector is diverse, encompassing industries like food and beverage production, machinery and equipment, and chemical manufacturing. While the sector has faced challenges, including a decline in the early 2000s due to tariff reductions and the impact of the COVID-19 pandemic, there are reasons to be optimistic about its future.
The manufacturing market in Australia is projected to grow by 1.54% from 2025 to 2029, resulting in a market volume of US$64.2 billion in 2029. This growth will contribute to Australia's economic output, as manufacturing is currently the country's fifth-largest industry in this regard, contributing 6.3% to its GDP. Additionally, manufacturing supports a significant number of jobs, employing 873,000 Australians directly and supporting 1.27 million in the wider supply chain.
The future of manufacturing in Australia will be shaped by several key factors. Firstly, the adoption of advanced technology, such as artificial intelligence, robotics, and the Internet of Things (IoT), will play a pivotal role in improving efficiency and productivity while reducing costs. This trend towards "Industry 4.0" and the increasing sophistication of production techniques will require investments in educational and technological infrastructure. Secondly, sustainability and environmental awareness are becoming increasingly important for investors and consumers, creating opportunities for companies that develop eco-friendly products. Thirdly, geopolitical factors, including trade tensions and changes in government policies, can significantly impact the industry, as seen during the Russia-Ukraine war.
To capitalise on these opportunities and overcome challenges, Australia should focus on several key strategies. Firstly, building awareness of the value and potential of the Australian manufacturing sector is crucial, both domestically and internationally. This includes addressing the gaps in the supply chain and reversing the hollowing out of manufacturing capabilities. Secondly, all levels of government should invest in the sector and work collaboratively with the industry to develop favourable policies that encourage innovation and trade. This includes supporting entrepreneurial startups and small to medium enterprises, which are often key drivers of economic renewal and creative thinking. Finally, Australia can benefit from the trend towards reshoring manufacturing work back to industrialised nations, driven by factors such as rising labour costs in other countries and the desire to manufacture closer to the market. By addressing these factors and adapting to the changing landscape, Australia can strengthen its manufacturing sector and secure its future growth.
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Manufacturing's history
Manufacturing has played a significant role in Australia's economy and history, with a range of industries contributing to its development over the years.
During the colonial period, Australia's manufacturing industries were primarily focused on supplying the domestic market with essential goods such as food, shelter, and clothing. The industry experienced a boost during World War I due to a lack of imports, with increased production in the steel, aspirin, and chlorine industries. The 1920s saw the introduction of car manufacturing, with Ford and General Motors opening factories. By the end of World War II, manufacturing contributed to more than one-fourth of Australia's GDP, peaking at about one-third in 1959-1960. This period also saw an increase in factory employment, which continued into the 1960s.
The post-1900 era was marked by significant government intervention and the importance of foreign investment in the industry. The government provided assistance through protective tariffs and other policies to increase employment and promote development. The Jackson Committee was established in 1974 to advise on policies for the manufacturing industry, and during the 1980s and early 1990s, tariffs were cut, impacting workers in various industries. From 2000 onwards, the Australian dollar soared due to the resource boom, making exports more expensive and imports cheaper. This contributed to a decline in manufacturing, with companies moving production offshore to Asian countries with lower wages. Despite these challenges, certain sectors of manufacturing in Australia remain strong. The food and beverage industry is the largest in Australia, and the country also has a significant chemical industry, with companies like Tasmanian Alkaloids and GlaxoSmithKline processing raw materials into pharmaceuticals. Motor vehicle manufacturing is also a principal source of employment, with Japanese and American corporations playing a prominent role.
The manufacturing market in Australia is projected to grow, with a compound annual growth rate of 1.54% expected between 2025 and 2029, resulting in a market volume of US$64.2 billion. The industry is expected to be influenced by factors such as advanced technology, sustainability, and geopolitical issues, presenting both challenges and opportunities for companies operating in the market.
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Manufacturing's sub-industries
Manufacturing is Australia's fifth-largest industry for economic output, contributing 6.3% to its GDP. It is also the seventh-largest employer, with 873,000 Australians working in the sector.
The largest sub-industries in Australia's manufacturing sector include food, beverage, and tobacco, machinery and equipment, petroleum, coal and chemicals, and metal products.
Food and Beverage Manufacturing
This is the largest sub-industry within Australia's manufacturing sector. It includes the production of a diverse range of food and beverage products, from fresh produce to processed foods, as well as the beverage industry, encompassing alcoholic and non-alcoholic drinks.
Machinery and Equipment
This sub-industry involves the creation, assembly, installation, and repair of industrial machinery and equipment. It includes a range of activities, such as metalworking, using advanced technologies like robotics and automation, and the production of machinery for specific industries, such as agriculture or construction.
Petroleum, Coal, and Chemicals
Australia has a significant chemical industry, including the manufacture of petrochemicals. This sub-industry also involves the initial processing of raw materials from mining companies and the conversion of raw narcotic materials into pharmaceuticals.
Metal Products
Metalworking is a crucial part of Australia's manufacturing sector, with a history dating back to the 1830s when the production of small steam engines began. Today, it includes the production of structural steel and welding trades, and metalworking using advanced technologies.
Other notable sub-industries within Australia's manufacturing sector include textiles, electronics manufacturing, and the production of medical devices and products. The adoption of advanced technologies, such as artificial intelligence, robotics, and the Internet of Things (IoT), is expected to play a significant role in the future of these sub-industries, improving efficiency and productivity.
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Frequently asked questions
Manufacturing is Australia's 5th largest industry for economic output, contributing 6.3% to the GDP. The manufacturing sector employs 873,000 Australians, with the supply chain supporting 1.27 million Australians.
Australia's manufacturing sector is diverse, with the largest sub-industries being food, beverage and tobacco, machinery and equipment, petroleum, coal and chemicals, and metal products.
The manufacturing industry in Australia has faced challenges due to reduced tariffs, rising labour costs, and competition from other countries. The COVID-19 pandemic also exposed gaps in the supply chain and the vulnerability of a commodity-based economy.
The manufacturing market in Australia is projected to grow by 1.54% from 2025 to 2029, resulting in a market volume of US$64.2 billion. The adoption of advanced technology, sustainability, and geopolitical factors will impact the industry.
