SYSPRO APAC CEO on relocating production in Australia

The Australian Made movement is bringing manufacturing back to home shores. But for the reshore strategy to be successful, we need to become more competitive with our progressive Asian neighbors. The need for digital transformation across Australia’s manufacturing sector has never been more critical, especially now that a global recession appears to be looming.

According to the McKinsey & Company Economic Conditions Outlook, the September 2022 survey identified inflation, energy prices, geopolitical instability and rising interest rates as potential risks to economic growth in the Asia-Pacific region over the next 12 months. Rising inflation concerns pushed supply chain disruption worries down to the fifth most cited risk for economies.

Closer to home, the Australian Bureau of Statistics Monthly Business Turnover Indicator, August 2022 found that manufacturing saw a 4.1% increase in business turnover compared to July 2022. It was in the top 3 of 13 industries with the largest monthly sales increases. This follows July data that showed manufacturing sales fell 3.8% after five straight monthly increases.

With COVID completely disrupting the market and rising inflation threatening the economy, manufacturers need to refocus on digital strategies to continue growing their business, be competitive and meet the growing demands of the market. Our ability to compete on a global scale will only be achieved when advanced Industry 4.0 technologies, automation and innovation are widely deployed to help businesses stay strong.

Reinforcing the need to relocate Australian manufacturing

The reshoring trend was sparked by a desire to future-proof critical supply chains due to high market demand and ongoing pandemic-related disruptions. What we have learned from COVID is that those companies already producing goods locally, with advanced manufacturing at their core, have the flexibility to quickly pivot and support Australia’s needs.

That flexibility will prove even more valuable as we head into a recession. However, Ai Group’s Australian Performance of Manufacturing Index (Australian PMIĀ®), September 2022, recorded an increase of 0.9 points to 50.2 points in September 2022 (a reading above 50 points indicates expansion). September is only the second month of stable results since February. While chemicals and machinery and equipment were two of the seven activity indices that did not shrink, inventories were resilient and new orders pointed to strong growth. Sales, shipments and exports were also slightly positive.

Regardless of what industry and economic data shows, it’s important that manufacturers don’t lose sight of the opportunities that challenges can create. For example, the reshoring trend of recent years has created opportunities to reduce production disruptions while maintaining customer satisfaction through better supply chain management.

“Australian Made” can be a sign of manufacturing quality

There has been strong demand for Australian-made goods, particularly since the pandemic began. It opened many people’s eyes to the importance of Australian made products and how we can all play our part by prioritizing Australian products to strengthen the economy and boost our job market.

One area with huge potential for manufacturing is batteries, which is expected to grow as much as 10-fold over the next decade, according to a report by Future Battery Industries CRC for the Australian government. It showed that the battery industry could contribute $7.4 billion annually to the Australian economy by 2030 and create up to 35,000 jobs.

The nation is uniquely positioned to benefit from this growth through our Australian developed battery plan. We should be able to manufacture batteries locally, given the vast natural resources required, including lithium. Most of these resources are currently shipped overseas for processing. Energy storage systems are in high demand from the rest of the world and therefore making the most of this opportunity is crucial.

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