One thing that the coronavirus pandemic has highlighted, is the frailty of our globalised
supply chains.
The manufacturing industry has been in a steady state of decline over the last few decades
in Australia (and America, and Canada, and I’m sure many other countries).
By the late 1950s, manufacturing accounted for almost 30% of Australian GDP, but this
has since fallen to about 6%.
And now this trend is coming home to bite us.
The pandemic has laid bare our over-reliance on internationally produced goods (read: China).
This is great for China, but not for other countries which rely heavily on importing
life-saving medical equipment and other products from foreign sources.
Of course, this has all been set up essentially for one reason — to save money.
Why pay Australians (or Americans, or Brits) to build stuff in factories if somewhere else
you can pay people one-fifth the price?
From an economics point of view, it makes sense.
But from a commonsense point of view, maybe it’s looking increasingly broken.
“How incredibly stupid it is for us as a nation to dig the lithium out of the ground,
send it overseas and buy the batteries back at 50-times the price.”
University of Technology Sydney’s Professor Roy Green is right.
Australia has an abundance of lithium, but we export it to China to make batteries for
our mobile devices and electric cars.
Australia is great at digging stuff out of the ground, but we’re seemingly hopeless
at doing anything meaningful with said stuff.
It’s not that Australians are stupid.
Obviously we have many smart people living here.
But the issue isn’t lack of intelligence.
Historically, Australia was an industrial nation.
In the 1800s, Australian manufacture was producing a wide range of goods sufficient to supply
most domestic demand.
In the early 1900s, the Australian steel industry was established closely followed by ordnance,
interchangeable parts, and the automotive industry.
During the early days of World War II, Australian manufacturing geared up for national defence.
New industries flourished in the years following with Australian manufacturing entering somewhat
of a golden age in the 1950s.
But fast forward 60 years, and that golden age is no more.
Emerging Asian industrial nations showed huge growth in demand for resources.
They also had governments willing to suppress their people’s wages in order to gain a
competitive advantage on the international stage.
From Australia’s point of view, simply shovelling coal and iron ore onto a ship and sending
it overseas was seen as the line of least resistance and the pathway to riches.
It was a lot easier digging minerals out of the ground than the grinding, competitive
struggle of Australian manufacture.
But as I said, the issue isn’t lack of intelligence.
Essentially, successive Australian governments have allowed this decline to happen.
There’s been an ongoing erosion of public policy that once supported Australia’s manufacturing
industry.
In essence, we’ve abandoned a century and a half of industrial development and chosen
to dig holes and provide services instead.
We do have some industry left, but it exists primarily to cater for very niche markets.
These businesses typically don’t require much labour or energy input, and exist to
cater for customers who require proximity or immediacy.
To be fair to the current government, Prime Minister Scott Morrison and his team have
been talking about this issue recently.
Federal Treasurer Josh Frydenberg has promised a re-evaluation of supply chains.
They have set up a new Federal Government manufacturing task force to deal with this
ongoing issue.
But until action is actually taken, it’s all just words.
From my point of view, we need to support at least some Australian manufacturing.
I’m not saying that we have to manufacture everything (that’s probably an impossibility),
however, we should be at least manufacturing things that we need.
We shouldn’t have to rely off China to provide us with life-saving medical supplies and personal
protective equipment.
It just doesn’t make sense, and certainly doesn’t make sense now that global supply
chains have been severely impacted by the pandemic.
Australian Industry Minister Karen Andrews has supported this idea and recently told
the ABC,
“We can't be all things to all people.
We need to bring businesses and consumers with us and they need to get behind the push
to diversify our supply chains.
We're not going to be able to manufacture everything that we want in Australia, but
I want us to be in a position that we can manufacture everything we need.”
Clearly in 2020, we have entered a new era.
I think the public, and now increasingly the Government, can see the benefit of supporting
the Australian manufacturing industry.
It’s not just there for jobs or the mass production of cheap goods.
We need the Government to protect the industry so that the industry is there when we need it
the most.