Manufacturers look to reshore operations: Report

More than half of Australian manufacturers are looking to reshore their operations locally in the next two years, a new report has found, as sovereign capability in the sector shapes as a key election issue.

According to the PROS Australian Manufacturing Outlook report, more than half of Australian manufacturers will reshore their operations in the country by 2023 due to market volatility caused by the ongoing COVID-19 pandemic and tense relationships with neighbouring countries.

Sovereign manufacturing capability has been in the spotlight since the onset of the pandemic, and will be a key priority area in Australia’s economic recovery.

The federal government has launched a $1.5 billion Modern Manufacturing Strategy, while the Opposition recently pledged a $15 billion fund that will look to help existing industries bring manufacturing back to Australia, among other objectives.

For the report, PROS surveyed 500 senior employees in the Australian manufacturing sector. It found that nearly a quarter of those surveyed had already reshored at least part of their operations during the pandemic, with nearly 80 per cent believing that Australia has the technology, people and economy to support the industry’s local growth.

According to the report, this will lead to a significant focus on creating local jobs and growing priority sectors locally, including lithium batteries, defence and space.

The states most likely to benefit from this new local manufacturing capability are Western Australia, the Northern Territory and South Australia, the report found.

These areas of focus are in line with the federal government’s new manufacturing strategy, which has six priority areas: resources technology and critical minerals processing, food and beverage, medical products, recycling and clean energy, defence and space.

There has been a concerted effort to raise Australia’s sovereign capability in manufacturing in light of the COVID-19 pandemic, and this is shaping as a key focus for both major parties in the lead-up to the likely 2022 election.

Last month Opposition Leader Anthony Albanese unveiled plans for a $15 billion fund to support the manufacturing sector, including through partnerships with the private sector, such as superannuation funds.

The fund will provide capital to commercialisation innovations and to help existing industries bring manufacturing back on shore.

Branded ‘The National Reconstruction Fund”, it will also prioritise key sectors similarly to the government’s current strategy. But Labor’s policy has a promise of a far bigger pool of cash.

Labor will also be looking to propose onshoring entire supply chains rather than optimising current exports.

The new report shows that this is an active consideration for Australian manufacturers, with 55 percent planning to have reshored parts of their operations locally in the next two years.

Former industry minister Karen Andrews, who is now the Home Affairs minister, placed an emphasis on sovereign capability as part of Australia’s economic rebuild from COVID-19, saying that government procurement is potentially a crucial level in ensuring local capability.



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