Manufacturing
workforce study
April 2014
Manufacturing workforce study
April 2014
ISBN: 978‑1‑925092‑27‑1 (print) | 978‑1‑925092‑28‑8 (online)
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The Commonwealth of Australia does not necessarily endorse the content of this publication.
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Australian Workforce and Productivity Agency, c/‑ Department of Industry, GPO Box 9839,
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Disclaimer: The material contained in this report has been developed by the Australian
Workforce and Productivity Agency. The agency does not guarantee or accept any legal liability
or responsibility for the accuracy, completeness or usefulness of any information disclosed.
The report can be accessed at www.awpa.gov.au.
Letter to the Minister
Dear Minister
On behalf of the Australian Workforce and Productivity Agency, I am pleased to present our
Manufacturing workforce study. This report is an important part of the agency’s work to help ensure
that Australia has the workforce it needs for the future.
With recently announced closures in, for example, Australia’s automotive subsector, industry and
government have been focused on the future of manufacturing in Australia. Transition isn’t new.
Manufacturing in Australia, and across most other industrialised countries, has been transforming
for decades.
A notable feature of the past 40 years has been the outsourcing of manufacturing tasks to lower
cost economies. This has prompted industrialised countries, including Australia, to examine their
manufacturing sectors to assess how they can generate and maintain a competitive edge in the
global marketplace. A skilled workforce will be critical to the success of Australian manufacturing.
The industry’s future depends on its ability to produce, innovate and manage productively in a
globally competitive environment. Manufacturing plants of the future are more likely to be engaged
in research and development, design, production of prototypes, and the small‑scale manufacture of
complex, high value‑added goods. We need a workforce equipped to meet this new paradigm.
The demand for higher skill jobs, coupled with projected declines in employment for most
manufacturing subsectors in Australia, will place pressure on the sector’s existing workforce.
Relatively low levels of post‑school qualifications and language, literacy and numeracy skills mean
pathways for workers to upskill or retrain will be important. An ageing workforce means businesses
will need to consider how to retain older workers so that their experience and knowledge can be
utilised. To attract young workers and position the sector for the future, industry will need to set up
closer partnerships with the higher education sector and a stronger, more sustainable
apprenticeship model will need to be developed. Improved leadership and management skills are
also necessary for businesses to increase productivity, innovate, adapt to changing business models
and integrate into global supply chains. Innovation, use of higher technology and excellent leadership
are all predicated on a more highly skilled and educated workforce.
This report is informed by extensive consultation with industry, tertiary sector and government
stakeholders who have provided invaluable insights and guidance. I would particularly like to thank
the chair of the Manufacturing workforce study reference group—the chief executive officer of the
Australian Workforce and Productivity Agency, Mr Robin Shreeve, and my colleagues on the board
for assisting the development of this study.
I trust this report, and the recommendations in it, will assist decision‑makers to support and develop
the skilled workforce required to secure the future of Australian manufacturing.
Yours sincerely
Philip Bullock
Chair, Australian Workforce and Productivity Agency
April 2014
Contents
Letter to the Minister
3
List of tables
6
List of figures
7
Abbreviations and acronyms
8
Glossary
9
Overview
13
Skills for competitiveness and productivity
15
Skills pipeline—securing manufacturers of the future
17
The study
19
AWPA’s approach to workforce development
19
Study methodology
20
The report
20
Recommendations
23
Part One: Australia’s place in the global Manufacturing industry
29
Australian manufacturing today
29
Global drivers of change
39
Exchange rate
52
Part Two: Skills for competiveness and productivity
55
State of play—current strengths
55
Innovation and productivity
59
Collaboration for innovation
60
High‑performance work systems
65
Design‑led innovation
68
Management70
Part Three:Positioning the existing workforce for industry transformation
and growth
4
77
Snapshot of the Australian manufacturing workforce
77
Structural adjustment
82
The imperative to upskill and reskill the existing manufacturing workforce
90
Manufacturing workforce study | Australian Workforce and Productivity Agency
Part Four: Skills pipeline—securing manufacturers of the future
99
The role of secondary schools in skills supply
100
Supply of skills from vocational education and training
102
Supply of skills from higher education providers
109
Work‑integrated learning
111
Science, technology, engineering and mathematics skills
114
The role of temporary and skilled migration
116
Increasing the diversity of the manufacturing workforce
117
Conclusion
127
Appendices
Appendix A AWPA modelling of future employment and output
129
Appendix B Manufacturing ANZSIC codes, 2006
130
Appendix C Performance of Australian manufacturing
138
Appendix D Profile of the Australian manufacturing workforce
143
Appendix E Occupational employment numbers
149
Appendix F Replacement demand and projected total job openings to 2025
155
Appendix G Qualification profile of top 30 employing occupations in
manufacturing
158
Appendix H Manufacturing-related training packages managed by
Manufacturing Skills Australia, ForestWorks, Automotive Skills
Australia and Agrifood Skills Australia
161
Appendix I Manufacturing workforce study reference group 163
Appendix J Submissions to AWPA’s Manufacturing workforce study 164
References
Manufacturing workforce study | Australian Workforce and Productivity Agency
167
5
List of tables
Table 1
Australia’s top 20 manufactured goods exports by value, 2012–13
36
Table 2
Manufacturing employment, selected economies, 2002, 2007 and 2012
39
Table 3
Top 12 types of services offered by manufacturing firms, 2008
49
Table 4
Lean manufacturing principles
66
Table 5
Australian manufacturing design scorecard
69
Table 6
VET student commencements in manufacturing‑related training packages,
2007–2012104
Table 7
Contract completion rates, Technicians and Trades Workers, for contracts
commencing in 2008
107
Table 8
Manufacturing employment by state and territory, 2013 (four‑quarter average)
144
Table 9
Top 30 occupations in the Manufacturing industry, 2013 (four‑quarter average)
145
Table 10 Occupational employment numbers, historical and projected growth to 2017–18,
and earnings by occupation, (‘000)
149
Table 11 Replacement demand and projected total job openings to 2025—Long Boom
scenario
155
Table 12 Replacement demand and projected total job openings to 2025—Smart Recovery
scenario
156
Table 13 Replacement demand and projected total job openings to 2025—Terms of Trade
Shock scenario
156
Table 14 Replacement demand and projected total job openings to 2025—Ring of Fire
scenario
157
Table 15 Qualification profile of top 30 employing occupations in Manufacturing industry
158
Table 16 Submissions to AWPA’s Manufacturing workforce study
164
6
Manufacturing workforce study | Australian Workforce and Productivity Agency
List of figures
Figure 1 Percentage of gross value added for selected industries as a percentage of gross
domestic product (chain volume measures), 1975 to 2013
31
Figure 2 Manufacturing value added as a percentage of gross domestic product,
2002, 2007 and 2010
32
Figure 3 Subsector contribution to manufacturing gross value added, 2013, chain volume
measures35
Figure 4 Proportion of manufacturing employment and industry value added by business
size, 2011–12
37
Figure 5 Global trends impacting manufacturing
40
Figure 6 Example of a global value chain—manufacture and assembly of a Boeing 787
Dreamliner42
Figure 7 Change in share of global manufacturing value added, 1998 to 2010
43
Figure 8 Australian exchange rate in US dollars, January 1990 to January 2014
52
Figure 9 Australian trade‑weighted index, January 1990 to January 2014
53
Figure 10 Value added in manufacturing output, by technological intensity classes, 2008
60
Figure 11 Average management performance in manufacturing, selected OECD countries
72
Figure 12 Employment in manufacturing by subsector, 2003 and 2013
78
Figure 13 Employment in manufacturing by occupational classification, 2013
79
Figure 14 Manufacturing employment by skill level, 2003–2013
80
Figure 15 Highest qualification achieved by workers in the Manufacturing industry,
compared to all industries, 2012
81
Figure 16 Proportion of workers with level 3 and above competency in literacy and numeracy;
and level 2/3 competency in problem-solving in technology‑rich environments
95
Figure 17 Publicly funded VET student commencements in manufacturing‑related training
packages, by Australian Qualifications Framework level, 2007 and 2012
103
Figure 18 Publicly funded VET student completions in manufacturing‑related training
packages, by Australian Qualifications Framework level, 2006 and 2011
105
Figure 19 Selected manufactured goods exports, 2012–13, chain volume measures
139
Figure 20 Labour productivity index (hours worked basis) for the Manufacturing industry
and the 12‑industry market sector, 1993–94 to 2012–13
141
Figure 21 Multifactor productivity index (hours worked basis) for the Manufacturing industry
and the 12‑industry market sector, 1993–94 to 2012–13
142
Manufacturing workforce study | Australian Workforce and Productivity Agency
7
Abbreviations and acronyms
ABS
Australian Bureau of Statistics
Ai Group
Australian Industry Group
AMWU
Australian Manufacturing Workers’ Union
ANZSCO
Australian and New Zealand Standard Classification of Occupations
ANZSIC
Australian and New Zealand Standard Industry Classifications
AWPA
Australian Workforce and Productivity Agency
COAG
Council of Australian Governments
CSIRO
Commonwealth Scientific and Industrial Research Organisation
ICT
information and communications technology
LLN
language, literacy and numeracy
MSA
Manufacturing Skills Australia
NCVER
National Centre for Vocational Education Research
OECD
Organisation for Economic Co‑operation and Development
R&D
research and development
RPL
recognition of prior learning
SME
small to medium‑sized enterprise
STEM
science, technology, engineering and mathematics
TAFE
Technical and Further Education
VET
vocational education and training
WIL
work‑integrated learning
8
Manufacturing workforce study | Australian Workforce and Productivity Agency
457 visa
A visa issued under section 457 of the Commonwealth Migration Act 1958.
attraction and
retention
Attraction—policies and practices of a workplace or sector that evoke
interest or are attractive to potential employees.
Glossary
Glossary
Retention—policies and practices undertaken by the employer that increase
the attractiveness of a workplace, resulting in fewer employees leaving the
business (lower turnover). Retention can also refer to strategies to retain
workers within an industry sector, region or supply chain.
ANZSCO
The Australian and New Zealand Standard Classification of Occupations
code (ANZSCO) classifies occupations in Australia and New Zealand.
Occupations are grouped into the levels of major group, sub-major group,
minor group, unit group and occupation.
ANZSIC
The Australian and New Zealand Standard Industrial Classification code
classifies Australian and New Zealand Industries. Industries are grouped in
four levels: division, subdivision, group and class.
Enterprise
Connect
An Australian Government initiative developed to support small and
medium‑sized businesses through business advisory services to industry
sectors.
foundation
skills
A set of skills required for an individual to effectively participate in education
and training, including problem‑solving and logic skills, communication skills
(including literacy, numeracy and oral communication), and employability
and learning skills.
human capital
The knowledge, skills, competencies and attributes embodied in individuals
that facilitate the creation of personal, social and economic wellbeing.
Industry Skills
Council
Eleven independent, not‑for‑profit Industry Skills Councils have been
established by the Australian Government. These councils provide
integrated industry intelligence and advice to government and enterprises
on workforce development and skills needs; actively support the
development, implementation and continuous improvement of high‑quality
training and workforce development products and services, including
industry training packages; and play a central coordination role for
applications to the National Workforce Development Fund.
lean
manufacturing
A systematic approach to identifying and eliminating waste through
continuous improvement, flowing the product at the pull of the customer in
pursuit of perfection.
SMEs
Small to medium-sized enterprises include businesses employing between
one and 199 people.
Manufacturing workforce study | Australian Workforce and Productivity Agency
9
Specialised
Occupations
List
AWPA’s Specialised Occupations List identifies high‑value occupations for
the purposes of determining where workforce planning attention is best
directed. Occupations that meet two of the following three criteria are
included on the list:
➢ long lead‑time—where skills acquisition requires extended learning
and preparation over several years
➢ high use—where there is a strong match between education/training
and occupational outcome
➢ high risk—where potential disruption caused by undersupply is great,
resulting in significant economic or community costs.
In addition, high‑quality information about the occupation must be available
in order to assess the occupation against these criteria. The list is updated
annually and published on AWPA’s website.
workforce
development
Those policies and practices that support people to participate effectively in
the workforce and to develop and apply skills in a workplace context.
Workforce development concerns itself with issues such as recruitment
and retention, job design and career development, as well as skills
formation.
workforce
planning
Process undertaken by an organisation or sector to identify the staffing
needs required to achieve its objectives. Workforce planning includes a
consideration of both the numbers of workers and the skills required. This is
often an early step in preparing a workforce development plan.
10
Manufacturing workforce study | Australian Workforce and Productivity Agency
Australia has a strong manufacturing history, with its share of the national economy peaking in
the 1960s at around 30 per cent, when production was focused on textiles, clothing and
footwear, motor vehicles and whitegoods. Employment grew strongly during this period, and
many jobs were filled by newly arrived European immigrants. Production and jobs were
protected by tariffs and import restrictions in place since before World War II.
Despite recent closures in the automotive subsector, manufacturing can remain a significant
and crucial, albeit smaller, player in the Australian economy. It makes large direct and indirect
contributions to national output, employment, investment and innovation. Manufacturing also
offers a disproportionally large contribution to exports and research and development. It also
has deeply embedded and mutually reinforcing links with other sectors of the economy,
including primary production, utilities, construction and the services sector.
Australia’s current competitive strengths are mainly in low–medium technology manufacturing,
where we are innovators. However, Australia’s manufacturing future will be stronger if it is built
on a more diverse base, with prosperity built on a portfolio of strengths across a number of
regions. The Council of Australian Governments has tasked its new Industry and Skills Council
with fostering internationally competitive high‑end manufacturing in Australia.1 Growth in these
areas will require a focus on advanced manufacturing technologies and knowledge‑intensive
services. Australia’s success in advanced manufacturing is likely to be in specific niches, where
there are many opportunities in high value‑added products and services.
Today, manufacturing is Australia’s fourth‑largest employer, employing 936,400 workers, or
8.1 per cent of total employment. It employs many more indirectly, through outsourcing related
services such as engineering, design, systems integration and marketing. The industry
accounts for 6.6 per cent of Australia’s gross domestic product, 33.5 per cent of merchandise
exports and just under 25 per cent of business expenditure on research and development.
Australian manufacturing has been in transition for many decades in response to a range of
domestic and global forces. Some of the drivers of change include labour productivity growth
associated with increased mechanisation and use of technology in production; tariff cuts, which
exposed the sector to greater international competition; and changing consumer preferences
towards services. More recently, the high Australian dollar, slow productivity growth across the
economy, intense global competition and a focus on sustainable production have placed
additional pressure on the industry.
Despite these challenges, some manufacturing subsectors have experienced relatively strong
export growth, particularly high‑skilled manufacturing such as professional and scientific
equipment and specialised machinery and equipment. These subsectors have adapted their
business models to move into markets demanding these products despite the high Australian
dollar. Strategies used by firms include increasing the use of imports that have become cheaper
due to the exchange rate, or reviewing business practices and withdrawing from export
markets.2
1
Council of Australian Governments (COAG), 2013, COAG communique, 13 December, p. 5.
2
Atkin, T and Connolly, E, 2013, ‘Australian exports: global demand and the high exchange rate’, Bulletin, June
quarter, pp. 8–9, Reserve Bank of Australia, rba.gov.au/publications/bulletin/2013/jun/pdf/bu‑0613.pdf,
accessed 7 February 2014.
Manufacturing workforce study | Australian Workforce and Productivity Agency
13
Overview
Overview
These trends are not unique to Australia. Other industrialised countries have also experienced
declines in manufacturing’s contribution to national employment and output. Globalisation and
the internationalisation of technology and labour markets have seen many manufacturing tasks
outsourced from industrialised countries to lower cost economies, especially East Asia. Many of
these emerging economies are gaining market share not only in traditional manufacturing but
increasingly in high‑technology sectors.
These drivers will continue to shape global manufacturing. In contrast to older industrial models
where products were largely conceived and produced in‑house and only raw materials were
sourced from outside the enterprise, the emergence of global value chains has seen the diffusion
of each stage of production across borders involving countries at all levels of development, from
the poorest to the most economically advanced. The production of goods and services is
increasingly carried out wherever the necessary skills and materials are available at competitive
cost and quality. The result is that the research and development, design, assembly, production
of parts, marketing and branding stages of goods can each take place in a different part of the
world, and under different regulatory conditions.
The nature of manufacturing has also been moving away from the concept of simply ‘making
things’. Manufacturers are increasingly integrating value‑adding services and solutions such as
design, prototyping, installation and maintenance into their business offerings.
As a result of these long‑term structural changes, Australian manufacturing’s relative importance
to economic output has declined significantly, to less than half of what it was four decades ago.
The recently announced closures of the Australian manufacturing operations of Ford, GM Holden,
Toyota and Alcoa are placing further pressure on the industry and will necessarily have major
consequences for employment, particularly in regional labour markets. The loss of the
automotive manufacturing sector has prompted concern and debate on the impact more broadly
across manufacturing. Governments across the country are now looking at mechanisms to
transition and foster internationally competitive high‑end manufacturing in Australia.
Despite these ongoing pressures, manufacturing will remain one of Australia’s largest
contributors to exports, jobs and research and development. As the industry continues to
transform, its size and nature will change accordingly. According to three out of the four most
plausible growth scenarios to 2025 developed by AWPA (detailed in Appendix A), the
Manufacturing industry is expected to account for between 5.2 and 6.8 per cent of gross
domestic product over the year to the June quarter 2025.3
Currently, Australia’s manufacturing workforce is employed across a wide range of subsectors.
However, its competitive strengths are in low–medium technology manufacturing. By 2025, a
greater share of manufacturing output is likely to be in sectors such as pharmaceuticals and
high‑value food and beverage products.
Manufacturers have already carved a niche in some high‑value subsectors such as aerospace,
precision engineering and medical devices. In order to leverage these strengths and be globally
competitive, innovation and productivity will be vital. Innovation is crucial to the development of
new materials, processes and technologies, and will be at the foundation of the sector’s future.
Emerging technologies and automation are already a key source of innovation for the sector,
though the use of non‑technological innovation such as design integration, new business models
and lean manufacturing are equally important to the competitiveness of manufacturing firms.
3
14
These projections come from the Deloitte Access Economics modelling that AWPA commissioned for its Future
focus: 2013 National Workforce Development Strategy.
Manufacturing workforce study | Australian Workforce and Productivity Agency
As Australian manufacturing moves up the value chain, it will be increasingly dependent on a
flexible, adaptable and skilled workforce. A higher skill level, strong foundation skills and greater
recognition of existing skills will assist workers to adapt as the industry continues its transition
towards more advanced manufacturing.
Manufacturers that innovate and use technology effectively are more likely to capture a larger
share of the global market, and move towards creating higher value‑adding products. Significant
competitive advantage can be gained by creating high‑performing and technologically advanced
manufacturing capabilities and by creating and/or acquiring technologies that fully exploit an
integrated approach to design, research and development, and knowledge.
A move to advanced manufacturing will increase the demand for higher skill jobs, but will not
necessarily bring jobs growth. While technology and innovation may result in the loss of some
occupations, it will also change the scope of job roles and create new occupations. Businesses
will generate demand for a wider range of skilled trades workers, technicians and professionals,
particularly in science, technology, engineering and mathematics (STEM) disciplines. The
outsourcing of manufacturing business activities such as marketing, design and logistics also
means that the sector will have growth in non‑traditional occupations, but will continue to be
reliant on the service industry. Job openings in the sector are also expected as a result of the
need to replace workers who transition into retirement, so attracting younger workers into key
manufacturing‑related occupations will be important.
Assistive information technologies and robotics‑based technologies will enhance, rather than
replace, the roles of manufacturing workers. Lightweight assistive systems will facilitate
humans’ work in factories, resulting in jobs with more high‑value tasks and fewer repetitive
tasks and physically demanding activities such as weight lifting and tool picking. Remote
training systems will facilitate continuous on‑the‑job training for workers. For other roles,
integrating new technologies such as in mechanical and electrical manufacturing will mean that
workers need skills to operate and manage computerised and technological advances in
machinery and equipment.
These changes will put pressure on parts of the existing workforce, particularly those in lower
skilled or manual roles. Upskilling the existing workforce—particularly through addressing
language, literacy and numeracy skills, and encouraging a culture of lifelong learning—will
maximise the ability of the workforce to manage change. For some, unfortunately, this may not
be a positive experience. As demand for workers with higher level skills grows, some workers
will find themselves at risk of displacement, particularly if they work in a sector which is
contracting, or in a lower skilled occupation. Forecasts of continued employment decline in the
sector means the risk of displacement for some workers is unavoidable, so strategies that
assist workers to transition to new roles, in combination with assistance packages, will be
important.
A key challenge is to ensure that workers have skills that are transferable and have currency in
the labour market. When completed effectively, recognition of prior learning has the potential to
improve workers’ employability by assisting them to identify and formally recognise their skills
and expertise.
The increased use of collaborative networks and partnerships is also effective in combining the
strong research and development and STEM capabilities of universities and research
organisations with the practical needs of manufacturing firms. Management capabilities,
particularly across the large number of small and medium‑sized manufacturers, will also play a
major role in the imperative to innovate.
Manufacturing workforce study | Australian Workforce and Productivity Agency
15
Overview
Skills for competitiveness and productivity
Smart factories of the future will be configured as highly complex, dynamic and flexible systems.
This means the industry will require employees who are empowered to act as decision‑makers
and quality controllers. The nature of this type of manufacturing is likely to place significantly
higher demands on all members of the workforce. Manufacturing teams will need to be
multiskilled, with all employees able to manage complex production processes and having strong
foundation skills. They will need to show initiative, guide and manage their own workload, solve
problems on the job, and communicate effectively on the shop floor and to customers and other
parts of the global supply chain.
Currently, a large proportion (45.2 per cent) of the manufacturing workforce does not have any
post‑school qualifications. This is particularly significant as it has been estimated that 87 per cent
of available jobs in the industry require a post‑school qualification.4 If this issue is not addressed it
is likely that firm productivity and competitiveness will be severely compromised.
Building the workforce’s skills base, including reskilling some employees in new growth areas,
will require a concerted and coordinated effort. Upskilling should occur in a strategic manner, with
training (formal and informal) aimed at developing capabilities and expertise that reflect the
medium‑ and long‑term needs of the industry. Investment in training to raise capabilities in new
areas such as digital manufacturing and an increased emphasis on skills not traditionally
associated with manufacturing, such as marketing and e‑business, will be needed.
A range of initiatives are currently in place to assist manufacturing firms to build a more highly
skilled workforce, such as structured apprenticeships and traineeships involving an employment
contract, Australian Government funding for language, literacy and numeracy training (such as the
Workplace English Language and Literacy program) and the National Workforce Development
Fund. These national skilling programs are supported by the business advisory services provided
through the government’s Enterprise Connect initiative. States and territories also provide funding
for vocational education and training (VET), including VET in Schools programs, and foundation
skills training.
At the higher education level, a number of universities deliver a range of manufacturing‑related
courses, such as chemistry and production and engineering courses. An increasing number of
dual‑sector institutions offer pathways and articulation arrangements to allow students to
progress from VET qualifications to higher degrees. As the industry seeks to move up the value
chain, the demand for professional, technical and managerial workers is expected to increase and
the need for pathways between VET and higher education will grow.
Australia also has a large number of business schools delivering management qualifications.
However, most are based on the Harvard model, which primarily produces graduates geared for
working in large multinational firms. Given that Australia’s Manufacturing sector is dominated by
small to medium-sized enterprises (SMEs), there is a need for education and training programs
that are tailored to the operations of these firms.
Many employers, however, are unable to articulate their workforce development needs or simply
do not see the potential returns to be gained from investing in training. Improving employers’
perceptions of the value of training is central to increasing their level of investment, particularly in
accredited training. Employers need to be convinced that there will be a return on investment
from training, particularly given the current environment of low margins and high costs. They also
need to consider the investment as an integral part of a broader strategic vision for the future.
4
16
Industry Skills Councils, 2013, No more excuses: an industry response to the language, literacy and numeracy
challenge, p. 39, isc.org.au/pdf/NoMoreExcuses_FINAL%20single%20page.pdf, accessed 11 January 2014.
Manufacturing workforce study | Australian Workforce and Productivity Agency
The industry’s current skills profile suggests that it is facing a challenging transition phase.
Building its resilience through promoting and supporting a culture of structured training and
lifelong learning will require long‑term leadership from industry partners. Concerted,
collaborative effort is required from industry, education and training providers, and governments
to foster, attract and retain the skilled workforce required for a competitive Manufacturing
sector into the future.
To secure this pipeline of future manufacturers, the sector faces some long‑term challenges.
Public perceptions of manufacturing jobs and career opportunities are impacting its ability to
attract skilled workers. Industry has a key role to play to cut through these perceptions and
communicate the varied and rewarding career opportunities in both manufacturing and related
services.
Collaborative effort between industry, secondary schools and tertiary education providers will
be important to encourage young people and students to consider a career in manufacturing,
and to enrol in relevant tertiary courses.
The sector’s workforce has traditionally been male-dominated and full-time, but the changing
nature of jobs in the sector provides industry with an opportunity to tap into previously
under‑represented groups—including young people and women—in the labour force to fill
these roles.
Strategies to encourage employers to invest more in formal training are also required,
particularly in areas that can build and improve management capability.
Manufacturing workforce study | Australian Workforce and Productivity Agency
17
Overview
Skills pipeline—securing manufacturers of the future
The study
The Manufacturing sector has been under pressure from factors such as the high Australian
dollar, slow growth in many other sectors of the economy, such as construction, that purchase
inputs from local manufacturing; competition from overseas competitors in low‑cost economies;
and slow productivity growth across the economy. The sector’s output has not kept pace with the
broader Australian economy and declines in employment levels are projected to continue. The
sector is now confronted with a new challenge as the closure of the Ford manufacturing plant in
2016 and the GM Holden and Toyota manufacturing plants in 2017 will mean a significant
transition for the Australian automotive subsector, and the affected workers and communities.
While these issues potentially cast a shadow over the sector, they are not necessarily a predictor
of the future of manufacturing in Australia. The nature of manufacturing has been moving away
from the concept of simply ‘making things’ to integrate value‑adding services such as design,
prototyping and marketing. This has contributed, and is expected to continue to contribute, to the
sector’s demand for skilled workers. As Australian manufacturing moves up the value chain, it will
be increasingly dependent on a flexible, adaptable and highly skilled workforce.
It is therefore timely to take stock and analyse the skills the industry will need to succeed and
flourish in the future.
AWPA’s approach to workforce development
AWPA believes that workforce development is concerned with:
➢ providing knowledge and skills through tertiary education
➢ matching tertiary provision to the needs of industry, individuals and society
➢ using knowledge and skills effectively at work
➢ further developing knowledge and skills in the workplace.
An effective workforce development strategy requires a collaborative approach between industry,
unions, employer groups, the tertiary education sector and government, as well as a shared
agenda between stakeholders responsible for workforce development.
Workforce development refers to more than just training. It also involves integrating business
strategy, work organisation and job design to facilitate continuous improvement in skills
development and utilisation.
The objective of this study has therefore been to outline strategies for industry, the education and
training sector, and government to attract and retain skilled workers, increase the availability and
supply of specialist skills, improve ongoing skills development and promote the effective
utilisation of skills in the workplace.
Manufacturing workforce study | Australian Workforce and Productivity Agency
19
The study
The Australian Workforce and Productivity Agency (AWPA) is an independent statutory body that
provides advice to the Australian Government on current, emerging and future skills and
workforce development needs. In conjunction with industry, AWPA also analyses sectoral skills
needs to support workforce planning and productivity. This Manufacturing workforce study is an
important part of AWPA’s commitment to ensure that Australia has the workforce it needs for the
future.
Study methodology
This study first identifies a range of trends and issues that are currently impacting on
manufacturing, or are expected to impact on the sector over the next decade. The study then
highlights the consequent impacts on workforce and skills requirements. AWPA has drawn on
the considerable body of research on the sector, and has undertaken extensive consultation
with industry, government and the education and training sector.
The study was overseen by a reference group chaired by AWPA’s chief executive officer,
Mr Robin Shreeve. A full listing of the reference group is at Appendix I. AWPA released an
issues paper on 25 October 2013 to seek feedback from stakeholders, and received
17 submissions from industry, industry groups and the education and training sector.5
The AWPA Secretariat also directly engaged with businesses, industry bodies, research
organisations, state governments, and education and training institutions. Feedback and
key messages from these consultations have helped shape the recommendations outlined
in this report.
The report
Part One of this report profiles the drivers of change in the global and Australian manufacturing
industries as well as the Australian manufacturing workforce. This provides context to discuss
the factors impacting on the demand for future skills and labour in the industry and the
implications for skills and workforce development.
Part Two highlights the skills that will help drive the innovation agenda for manufacturing firms
to increase their competitiveness in the global manufacturing economy.
Part Three discusses the impact of structural change on the sector’s workforce. The nature
of the workforce will necessarily change as the sector moves towards higher value activities.
This will put pressure on parts of the existing workforce, particularly those in lower skilled or
manual roles. Upskilling the existing workforce—particularly through addressing language,
literacy and numeracy skills, and encouraging a culture of lifelong learning—will maximise the
ability of the workforce to manage change.
Part Four highlights the imperative for the industry to cut through public perceptions of
manufacturing careers in order to attract students to study in disciplines or trades that will
underpin the future Australian Manufacturing sector. This will involve increased engagement
between industry and secondary schools and the higher education sector. The VET sector will
continue to play a major role in training skilled trades workers and technicians.
5
20
A list of submissions to AWPA’s Manufacturing workforce study can be found in Appendix J.
Manufacturing workforce study | Australian Workforce and Productivity Agency
Recommendations
Transitioning to a sustainable, globally competitive
manufacturing base
Manufacturing will continue to make an important contribution to the Australian economy.
The future of Australia’s Manufacturing industry will increasingly lie in transitioning to a
manufacturing base that incorporates advanced and niche manufacturing, with firms
participating in global supply chains and offering lifetime services for their products.
Recommendations
A strong manufacturing base will require a focus on innovation, specifically in processes,
markets, products, services, delivery and business and management models. It will need to
incorporate a strong collaborative culture in order to improve its international competitiveness
and productivity. Enterprises, supported by peak industry groups and the Australian
Government, need to drive this transition in order to secure a competitive future.
Recommendation 1
a) That industry work within Australian Government initiatives on manufacturing to
identify linkages that promote collaboration on skills and workforce development to
underpin the agenda to improve productivity and global competitiveness.
b) That the Australian Government continue support for programs that assist firms to
identify and pursue business improvement activities, undertake workforce planning
and development, and address foundation skills to develop and strengthen the skills
and capabilities of their workforce, such as Enterprise Connect and the co‑funded
National Workforce Development Fund and Workplace English Language and
Literacy program.
Enhancing management skills to underpin a competitive
Manufacturing sector
Managers at all levels, from executives through to the shop floor, play an important role in
fostering a high-performing culture. Superior management performance is correlated with
higher levels of innovative activity and increased productivity. Australia’s management
performance is above average, but could be enhanced, especially in light of the emerging
business and management challenges, which are likely to have sustained and disruptive
consequences for established business models and management systems. Improving the
qualification profile of managerial staff, particularly in university-level qualifications, will
strengthen the management capacity of Australian manufacturers. Management training should
reflect the needs and work patterns of managers, particularly those who work in SMEs.
Manufacturing workforce study | Australian Workforce and Productivity Agency
23
Recommendation 2
That the Centre for Workplace Leadership form a taskforce to review management and
leadership capabilities in Australian manufacturing businesses and where appropriate
revise management training to suit contemporary managers in manufacturing, who are
often time-poor and have significant operational responsibilities.
The taskforce should include relevant Industry Skills Councils such as Manufacturing
Skills Australia and Innovation Business Skills Australia; higher education groups such as
Universities Australia and the Australian Business Deans Council; and industry peak
bodies such as the Australian Industry Group, the Australian Chamber of Commerce and
Industry and the Australian Council of Trade Unions.
Positioning the workforce for adjustment and renewal
Manufacturing in Australia is in transition. This transition will be difficult for some workers,
particularly those in declining sectors or jobs that become obsolete. A relatively high proportion
of the workforce do not have formal, industry-recognised qualifications or sufficient language,
literacy and numeracy skills to meet the demands of the modern workplace, which will impact
on their ability to find new jobs.
Strategies that assist vulnerable workers to transition to new roles, in combination with
structural adjustment assistance packages, must be pursued to mitigate the impact of closures
on workers, their families and communities. We are in the fortunate position, particularly in
relation to the closures in the automotive subsector, that we have time to prepare. Action must
start now to best position vulnerable workers to identify new job opportunities and enhance
their existing skills through formal recognition and targeted retraining.
Recommendation 3
a) That the Australian Government Department of Human Services, relevant state and
territory government agencies, Job Services Australia, vocational education and
training providers and other registered training organisations work collaboratively to
help vulnerable workers transition to alternative employment. This should be a
multilayered response that includes the provision of Workplace English Language and
Literacy program training as necessary. Strategies should be based on learning from
previous closures and support initiatives that develop and implement best practice
models.
b) That the National Centre for Vocational Education Research lead an ‘action research’
project on better recognising the existing skills of employees impacted by the
announced closures in the automotive subsector. Action research involves live
participation in the change process and would build on current practice in recognition
of prior learning.
24
Manufacturing workforce study | Australian Workforce and Productivity Agency
Promoting manufacturing as a rewarding career choice
Public perceptions of manufacturing do not bear a close relationship to the contemporary
emergence of creative, high-skilled and interdisciplinary manufacturing jobs. These perceptions
are impacting the sector’s ability to attract skilled workers.
Today’s Manufacturing industry provides career opportunities across a range of disciplines, and
increasingly in high-skill, STEM skills based and other roles. The industry will also offer an
expanding range of opportunities in ‘non‑traditional’ manufacturing careers as more firms look
to add value to their products by bundling services with their goods.
The industry should take a lead role in better identifying and promoting the range of
manufacturing career opportunities, and in taking steps to address negative, limited and
out-of-date perceptions of the sector. Strategies for developing positive and inclusive
promotional channels for manufacturing careers are needed. Strategies should target different
groups, in particular university and secondary school students, parents and career advisers.
Recommendations
Recommendation 4
That peak industry groups, relevant Industry Skills Councils and trade unions work
together with career development advisory groups such as the Career Industry Council
of Australia to promote the range of jobs and career opportunities available in the industry
in order to attract skilled workers and raise public perceptions of manufacturing.
Strategies should include customised print and online resources for students, parents and
teachers.
Guaranteeing a supply of capable apprentices
A strong manufacturing future for Australia will continue to be founded on a core base of skilled
technicians and trades workers. Australian Apprenticeships play a critical role in providing a
recognised entry pathway into these roles. However, industry has raised concerns about
current completion rates for apprentices.
Recommendation 5
That peak industry groups, state training authorities, relevant Industry Skills Councils and
the Australian Government Department of Industry work to improve completion rates for
trade apprentices. Strategies should be targeted at pre‑recruitment, induction and during
training. Areas of improvement should include strengthening employer and apprentice
matching through Australian Apprenticeship Centres; streamlined employer advisory
services; improved apprentice mentoring; and better coordination of apprentice and
employer support at the various levels of government.
Manufacturing workforce study | Australian Workforce and Productivity Agency
25
Increasing engagement with universities to secure a pipeline of
skilled workers
Contemporary manufacturing enterprises need to be innovative, flexible and well led. These
demands are set to increase in the future. Currently, manufacturing employs fewer university
graduates than many other industries. Its engagement with the higher education sector is
underdeveloped and employment of tertiary graduates in Australia lags behind that of other
countries with developed manufacturing sectors. Deeper engagement between manufacturers
and universities will be necessary, as industry will increasingly rely on universities to supply
skilled graduates, research and expertise.
Recommendation 6
a) That a multisectoral working group be established, comprising peak industry groups,
Universities Australia and the Australian Collaborative Education Network, to deepen
engagement with, and increase connections between, manufacturing and universities.
The focus of the working group should cover research, innovation, the supply of
appropriately trained graduates and work-integrated learning. The working group should
build on the work of the Office of the Chief Scientist’s Industry Working Group.
b) That work-integrated learning be promoted, expanded and strengthened to meet
industry demand for work-ready graduates and to enhance linkages with the higher
education sector. Strategies should include engaging more small to medium‑sized
enterprises in work-integrated learning, developing manufacturing-specific case studies
to highlight successful models, and better linking work-integrated learning into course
objectives.
Addressing the demand for science, technology, engineering and
mathematics skills in manufacturing
A well‑educated and well-trained workforce is necessary to support Australia’s Manufacturing
industry as it moves towards producing more sophisticated products and services. As the
industry continues its transition toward more advanced manufacturing, the sector will
increasingly rely on STEM-related disciplines. The industry’s future competitiveness is
dependent on its ability to secure workers with adequate qualitative and quantitative skills
primarily through the recruitment of university graduates and higher level VET graduates.
It has been recognised nationally that Australia’s participation in STEM subjects and disciplines
at secondary school and university is unacceptably low. Industry and the Australian
Government must show commitment to raising STEM skill levels across the country by working
collaboratively and supporting industry‑based training options.
Recommendation 7
That the work of the Office of the Chief Scientist be strongly supported to ensure that
manufacturing has access to workers with sufficient science, technology, engineering and
mathematics capabilities to meet future industry needs.
26
Manufacturing workforce study | Australian Workforce and Productivity Agency
Increasing the diversity of the Australian manufacturing workforce
The future of Australian manufacturing will see the creation of new occupations and career
paths. Drawing on underrepresented groups will give employers the opportunity to draw from
the largest possible pool of skilled workers to fill these future roles. Traditionally, manufacturing
has been male dominated and predominantly full time which can create barriers to employment
for those not within this cohort.
Due to high replacement rates projected within the sector, firms will also need to adopt
strategies to extend the working lives of mature-age workers and limit loss of knowledge due
to retirement. Industry should look to adopt best practice in the area of workplace diversity to
secure a workforce capable of meeting future demands.
Recommendation 8
Recommendations
That peak industry groups and trade unions build employer commitment to improving the
attraction and retention of underrepresented groups within manufacturing. Strategies
should include:
➢ providing advice on how to develop inclusive workplace practices including flexible
working arrangements and safe (mental and physical) working environments for
employees
➢ supporting development and educational opportunities (through job shadowing,
mentoring and formal training) to assist workers to transition to revised or different
roles where required.
Manufacturing workforce study | Australian Workforce and Productivity Agency
27
Part One:
Australia’s place in the global
Manufacturing industry
Part One: Australia’s place in the global
Manufacturing industry
Manufacturing is a significant, and crucial, player in the Australian economy. According to the
latest data, the Manufacturing sector:
➢ is the fourth‑largest employer in the country, employing 936,400 people or 8.1 per cent
of total employment6
➢ is the fourth‑largest contributor to gross domestic product (6.6 per cent)7
➢ accounts for 33.5 per cent of merchandise exports8
➢ invests more than any other industry sector in research and development ($4.5 billion in
2011–12 or 24.4 per cent).9
The central focus of this study is to examine the workforce needs of the sector in the coming
decade. It is therefore important to understand the current and emerging drivers of change in
manufacturing across the globe, and the implications for the workforce and, subsequently, for
skill and workforce planning needs of Australian manufacturers.
Australian manufacturing today
Australia’s Manufacturing sector is diverse. It comprises industries ranging from those
producing commodity products such as some foods and beverages, and other simply
transformed manufactures, to producers of precision, high value‑added products including
aerospace components, machine tools, medical devices, electronics, scientific instruments,
advanced materials and pharmaceuticals. Australian manufactures can be part of both domestic
and global supply chains. Manufacturing is linked to many other key industries in Australia; for
6
Australian Bureau of Statistics (ABS), 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003.
2013, four‑quarter average.
7
ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no 5206.0, Table 6, chain
volume measures, original terms, December quarter 2013. Data is for 2013 and is derived from summing up
quarterly data.
8
ABS, 2014, International trade in goods and services, Australia, cat. no. 5368.0, Table 32a, January 2014.
Figure is for 2013; annual estimate has been derived from summing up monthly data.
9
Department of Industry, Manufacturing data card, http://www.innovation.gov.au/industry/manufacturing/Pages/
ManufacturingDataCard.aspx, accessed 19 March 2014.
10 World Bank, 2013, World development indicators: structure of manufacturing, wdi.worldbank.org/table/4.3#,
accessed 21 January 2014. Figure is for 2011.
11 Australian Government, 2012, Australia in the Asian century, white paper, p. 42.
Manufacturing workforce study | Australian Workforce and Productivity Agency
29
Part One
In global terms, the Australian Manufacturing sector is small, accounting for 1 per cent of global
manufacturing value added.10 As a small global player, the sector is affected by trends
influencing the nature of manufacturing across the world. Trends such as globalisation, diffusion
of technology, changing consumer preferences, exchange rate fluctuations, and the imperative
for increased resource efficiency are shaping manufacturing supply chains across the world,
causing them to be highly interconnected and complex. A notable feature of the past 40 or so
years has been the shift of manufacturing activity from industrialised countries to lower cost
economies, especially in East Asia, which now accounts for almost one‑third of world trade in
manufacturing.11 These trends have prompted many countries, including Australia, to rethink
what the future of manufacturing will look like and assess how they can create a competitive
advantage in the global marketplace.
example, mining, agriculture, services, utilities and transport all play a vital role in the manufacturing
supply chain. The localised or general stagnation of just one of these industries can drag down the
output of linked manufacturing firms, while increased productivity in these industries can have
positive flow‑on effects for manufacturing in Australia.
We are currently seeing growth in some sectors and decline in others. Australia’s Manufacturing
industry currently has a large presence in low–medium technology areas.12 Our suite of national
strengths across resources, food, health, engineering and the environment, when harnessed
effectively, provides a platform for growth that is both uniquely Australian and globally significant.
Such industries enjoy a strong and sustainable comparative advantage for our low–medium
technology areas.13 Success in manufacturing increases the value of our services industries, both
through bundling of services (see page 48) and the drawing of domestic service providers to
successful manufacturing areas. However, this can mean that the closure of manufacturing firms
can have a widespread effect on a regional area. Recognising these concerns, Australian Industry
Group’s 10-point plan for a strong and diversified economy includes ‘lifting manufacturing
performance’ and a ‘successful transition for automotive manufacturing’ as two of its national
economic priority areas.14
Australia is also seeing growth in areas of niche advanced manufacturing. These are areas where we
can overcome some of the structural limitations such as high labour costs, the exchange rate and the
prevalence of SMEs, and where we can maximise our strengths in advanced skills and knowledge.
More than one‑third of intellectual property rights associated with Australian publicly funded research
organisations and their spin‑out companies are from the pharmaceuticals and biotechnology fields.15
The Manufacturing industry underpins economic activity in many parts of regional Australia. In 2013,
33.5 per cent of manufacturing workers were employed in regional and remote areas: slightly below
the all industry average of 34.1 per cent. The relative importance of manufacturing varies across the
country. For example in the Barwon‑Western region (based around Geelong)
9.9 per cent of the workforce is employed in the Manufacturing industry, while at the Sunshine
Coast only 5.3 per cent of workers are employed in the Manufacturing sector.16
The 2012 Smarter manufacturing for a smarter Australia report by the non‑government members of
the Prime Minister’s Manufacturing Taskforce suggests that not only is manufacturing important for
regions, but also a regional focus is an essential element of a successful manufacturing future. In
large countries, one of the key ways to build diversity at the level of the national economy is to
enhance specialisation at the level of regional economies. Such a strategy strengthens the
comparative advantage that different regions hold and can bring additional cluster‑based benefits.
Regional areas also bring practical benefits such as easier logistical considerations when transporting
products or more space to comply with environmental considerations. This regional perspective
highlights the importance of interstate as well as international trade. Averaged across Australia,
interstate trade is roughly of the same magnitude as international trade—that is, around 20 per cent
of state output.17
12 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 8, innovation.gov.au/industry/manufacturing/Taskforce/Documents/
SmarterManufacturing.pdf, accessed 19 December 2013.
13 Ibid., p. 12.
14 Australian Industry Group, Ten point plan for a strong and diversified economy, media release, 6 March 2014,
http://www.aigroup.com.au/portal/site/aig/template.MAXIMIZE/mediacentre/
?javax.portlet.tpst=0328197f3ace113a24afbc100141a0a0_ws_MX&javax.portlet, accessed 11 March 2014.
15 Department of Industry, 2013, Australian innovation system report 2013, p. 54, http://www.innovation.gov.au/science/
policy/Pages/AustralianInnovationSystemReport.aspx, accessed 3 March 2014.
16 Australian Bureau of Statistics, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, four-quarter
average, 2013 data.
17 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 33, innovation.gov.au/industry/manufacturing/Taskforce/Documents/
SmarterManufacturing.pdf, accessed 19 December 2013.
30
Manufacturing workforce study | Australian Workforce and Productivity Agency
Despite perceptions that manufacturing has been in steady decline, the sector experienced
long-term growth in gross value added (chain volume measures) until the global financial crisis
hit in 2008. Average annual growth in gross value added for the Manufacturing industry
between 1993 and 2008 was 1.9 per cent, but then fell to –1.4 per cent in the five years to
2013.18 Growth in the sector has not been as high as in other sectors such as Services and
Mining, so the Manufacturing industry’s relative importance to economic output has declined.
Manufacturing’s share of gross domestic product in 2013 was 6.6 per cent, compared with
13.2 per cent in 1975 (Figure 1).
Figure 1 Percentage of gross value added for selected industries as a percentage of gross
domestic product (chain volume measures), 1975 to 2013
70
16
68
14
66
12
64
62
8
60
58
6
Per cent
Per cent
10
56
4
Part One
54
2
52
0
19
7
5
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
50
Left-hand side axis
Agriculture, Forestry and Fishing
Mining
Manufacturing
Right-hand side axis
Services
Note: The Services sector comprises the following ANZSIC industries: Electricity, Gas, Water and Waste
Services; Construction; Wholesale Trade; Retail Trade; Accommodation and Food Services; Transport,Postal
and Warehousing; Information Media and Telecommunications; Financial and Insurance Services; Rental,
Hiring and Real Estate Services; Professional, Scientific and Technical Services; Administrative and Support
Services; Public Administration and Safety; Education and Training; Health Care and Social Assistance; Arts and
Recreation Services; and Other Services.
Source: ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no. 5206.0,
Table 6, chain volume measures, original terms, December quarter 2013. Annual gross value added estimates
have been derived from summing up quarterly data.
18 ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no. 5206.0, Table 6,
chain volume measures, original terms, December quarter 2013. Annual gross value added estimates have
been derived from summing up quarterly data.
Manufacturing workforce study | Australian Workforce and Productivity Agency
31
This trend is not unique to Australia. Manufacturing’s share of gross domestic product has
declined in most comparable nations, even in those with an increasing share of global
manufacturing activity.19 As in Australia, there have been structural shifts in the industrial
composition of production towards service industries.
Figure 2 shows manufacturing as a percentage of gross domestic product for a range of other
economies. Major manufacturing economies such as Germany, the United States and China
have all experienced a decline in the contribution of manufacturing to their respective
economies. The Republic of Korea is one exception (see the ‘Manufacturing in the Republic of
Korea’ case study on page 33).
Figure 2 Manufacturing value added as a percentage of gross domestic product,
2002, 2007 and 2010
Percentage of gross domestic product
35
30
25
20
15
10
5
at
es
om
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ni
te
d
U
U
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te
d
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s
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G
er
m
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y
in
a
Ch
Au
st
ra
lia
0
2002
2007
2010
Note: Complete data for 2010 and 2012 are not available.
Source: World Bank, World Development Indicators, manufacturing, value added (per cent of gross domestic
product), data.worldbank.org/indicator/NV.IND.MANF.ZS., accessed 22 February 2014.
19 Workplace Research Centre, 2013, International trends in manufacturing, AWPA, Canberra, p. 5.
32
Manufacturing workforce study | Australian Workforce and Productivity Agency
The composition of manufacturing varies greatly between countries. Australian manufacturing
activity is similar to that of countries like Canada and Norway, which also have access to natural
resources. Australia’s Manufacturing sector has competitive advantages in low–medium
technology areas (such as food) and in smaller niche, knowledge‑intensive subsectors (such as
pharmaceuticals and aerospace).20 The United States and Germany have strengths in products
like automobiles and machinery, while Finland has a very balanced distribution across all
technological intensity classes. This is explored more broadly in the ‘Innovation and
productivity’ section in Part Two of this report (see page 59).
Manufacturing in the Republic of Korea
Korea’s economy has expanded rapidly over the past half century.Real gross domestic
product has increased at an average annual rate of about 8 per cent since the early
1960s. It is now the 12th‑largest economy in the world on a purchasing power parity
basis, and the eighth‑largest exporter of goods and services. This economic growth has
been underpinned by the development of a broad‑based, export‑oriented manufacturing
sector from a relatively low base.21
Manufacturing growth
Part One
The share of manufacturing in the Korean economy has increased over the past four
decades. This is in contrast to Japan and the United States, where the manufacturing
share of the economy has declined steadily as production has shifted to lower income
economies. Over the past 40 years, Korean manufacturing activities have shifted towards
steel‑intensive industries, such as transport equipment and metal products. Today, the
main manufacturing industries are electrical and electronic equipment, metal products,
chemicals, transport equipment and machinery.
The growth of manufacturing of transport equipment, machinery and metal products has
been driven by a relatively small number of large, privately owned enterprises (often
family controlled and with strong ties to the government, such as Samsung, Hyundai and
LG) known as chaebol. In the 1970s, government industrial policies were directed
towards developing sectors of the economy perceived to have long‑term potential. This
led the chaebol to focus on the automotive, shipbuilding and electronics industries,
reducing the economy’s reliance on imported capital and intermediate goods. To promote
export growth, some manufacturing industries were initially supported by incentives
such as reduced taxes and tariff exemptions on raw materials imported for export
production.
Another contributing factor to the growth of manufacturing’s share in the Korean
economy was the increase in the domestic content of production, which grew from
around 55 per cent to 65 per cent between the mid‑1990s and mid‑2000s. Much of this
rise stems from the increased use of Korean‑made steel. In contrast, in most East Asian
economies the domestic content of production has decreased over time owing to growth
in intra‑industry regional trade and use of international supply chains.
20 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 8.
21 Cusbert, T, Jääskelä, J and Stenner, N, 2013, ‘Korea’s manufacturing sector and imports from Australia’, Bulletin,
December quarter, pp. 7–14, Reserve Bank of Australia, rba.gov.au/publications/bulletin/2013/dec/2.html,
accessed 23 January 2014.
Manufacturing workforce study | Australian Workforce and Productivity Agency
33
Manufacturing sectors
➢ Automobiles—Korea’s automobile industry accounts for around one‑tenth of
Korea’s manufacturing sector and is the fifth‑largest in the world, representing
around 6 per cent of global production. The majority of vehicles produced in Korea
are exported. Three big manufacturers, Hyundai, GM Korea (formerly Daewoo) and
Kia, collectively account for roughly 90 per cent of automotive production. In the
early 1960s, production consisted of assembling automobile kits primarily
imported from Japan and the United States. Over time, domestic machinery and
automotive parts industries emerged alongside automobile assembly, increasing
the domestic value‑added component of production. Domestic content in
automobiles rose to around 60 per cent in 1972, and was more than 90 per cent by
the end of the 1970s.
➢ Shipbuilding—Korea’s shipbuilding industry became the largest in the world in
2003, surpassing Japan. The Korean shipbuilding industry is highly concentrated,
and is dominated by three large shipbuilders: Hyundai Heavy Industries (the
world’s largest shipbuilding company), Samsung Heavy Industries and Daewoo
Shipbuilding & Marine Engineering. The increased competition from Chinese
shipbuilders has pushed Korean production towards specialised higher value‑added
units, such as liquefied natural gas tankers, in which Korea holds an 85 per cent
market share.
➢ Steelmaking—Korea has the highest production of steel, per capita, in the world,
accounting for around 4.5 per cent of global steel production in 2012. This partly
reflects the intensive use of steel in its manufacturing and export sectors. Korean
steel production has grown rapidly since 2009, increasing twice as fast as both
global and Chinese production. The significant growth of Korea’s steel production
capacity in recent years means that Korea has moved from being a net importer of
steel to a net exporter, with more than half of these exports going to Asia.
Subsector performance
Figure 3 highlights that manufacturing activities in Australia largely reflect the country’s natural
resources. In 2013, the largest subsector contributions to total manufacturing gross value
added (chain volume measures) were Food, Beverage and Tobacco Products22 (23.5 per cent),
Machinery and Equipment23 (20.6 per cent) and Petrol, Coal, Chemical and Rubber Products24
(18.2 per cent).25
22 Comprising ANZSIC 11 (Food Product Manufacturing) and ANZSIC 12 (Beverage and Tobacco Product
Manufacturing).
23 Comprising ANZSIC 23 (Transport Equipment Manufacturing) and ANZSIC 24 (Machinery and Equipment
Manufacturing).
24 Comprising ANZSIC 17 (Petroleum and Coal Product Manufacturing), ANZSIC 18 (Basic Chemical and Chemical
Product Manufacturing) and ANZSIC 19 (Polymer Product and Rubber Product Manufacturing).
25 ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no 5206.0, Table 6, chain
volume measures, original terms, December quarter 2013. Annual gross value added estimates have been
derived from summing up quarterly data.
34
Manufacturing workforce study | Australian Workforce and Productivity Agency
Figure 3 Subsector contribution to manufacturing gross value added, 2013, chain volume
measures
Food, Beverage and Tobacco Products
23.5
Machinery and Equipment
20.6
Petroleum, Coal, Chemical and Rubber Products
18.2
Metal Products
16.5
Wood and Paper Products
6.4
Textile, Clothing and Other Manufacturing
5.4
Non-metallic Mineral Products
5.3
Printing and Recorded Media
4.0
0
5
10
15
20
25
Per cent
Source: ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no. 5206.0,
Table 6, chain volume measures, original terms, December quarter 2013. Annual estimates have been derived
from summing up quarterly data.
The Australian Manufacturing industry as a whole is quite diverse. The only other subsector (at
the Australian and New Zealand Standard Industry Classifications (ANZSIC) three‑digit level)
with a larger share of Manufacturing industry value added is Structural Metal Product
Manufacturing (5.5 per cent). However, the closing of Ford’s, GM Holden’s and Toyota’s
manufacturing operations does sound a warning about the need for Australian manufacturing to
focus on high‑end innovative products and services where we have a competitive advantage.
Export figures help paint a picture of where the sector’s internationally competitive activities lie.
Table 1 shows some of Australia’s key manufactured exports in 2012–13. These goods largely
reflect the structure of the sector, highlighting strengths in processed metals and food
products, as well as elaborately transformed products such as aircraft parts, medical
instruments and civil engineering and telecommunications equipment.
26 ABS, 2013, Australian industry, 2011–12, cat. no. 8155.0, Table 1. Figures are for 2011–12.
Manufacturing workforce study | Australian Workforce and Productivity Agency
35
Part One
The recent announcements by Ford, GM Holden and Toyota of their intention to close
manufacturing operations in Australia from 2016 (Ford) and 2017 (GM Holden, Toyota) has
raised debate about the likely impact of these closures on manufacturing more generally across
the country. The closures will undoubtedly have adverse consequences for employment in the
automotive subsector and in regional labour markets; they also represent a loss in terms of
export dollars and technical capability. However, cessation of manufacturing operations by
these companies does not equate to the end of manufacturing in Australia. Indeed, motor
vehicle manufacturing only accounts for 5.3 per cent of all Manufacturing industry value added
and 5.3 per cent of total manufacturing employment.26
Table 1
Australia’s top 20 manufactured goods exports by value, 2012–13
Good
$ million
Aluminium
3,593.2
Medicaments (including veterinary)
3,416.4
Copper
3,109.6
Alcoholic beverages
1,999.6
Passenger motor vehicles
1,705.6
Milk, cream, whey and yoghurt
1,161.2
Aircraft, spacecraft and parts
1,135.2
Civil engineering equipment and parts
1,031.0
Telecommunications equipment and parts
961.4
Medical instruments (including veterinary)
903.9
Lead
882.5
Zinc
817.3
Measuring and analysing instruments
806.1
Cheese and curd
784.3
Specialised machinery and parts
770.7
Vehicle parts and accessories
717.1
Paper and paperboard
699.2
Inorganic chemical elements
696.4
Nickel
680.5
Miscellaneous manufactured articles (not elsewhere specified)
661.7
Note: Data is based on the United Nations’ Standard International Trade Classification revision 4, at the
three‑digit level. Also included are selected manufactured food products.
Source: Based on Department of Foreign Affairs and Trade, 2013, Composition of trade, Australia, 2012–13,
dfat.gov.au/publications/stats‑pubs/pivot‑tables.html, accessed 21 January 2014.
Size and scale
Australia’s Manufacturing sector is characterised by a large number of small (employing fewer
than 20 people) and medium‑sized (employing fewer than 200 people) businesses. Together,
SMEs account for just over 60 per cent of all manufacturing employment in Australia. As at
June 2012, there were 88,079 manufacturing businesses in Australia, more than 37,000 of
which were non‑employing (42.8 per cent). More than 40,000 businesses employed 1 to 19
people (46.0 per cent); 9,110 businesses employed between 20 and 199 people (10.3 per cent);
and a very small number—666 businesses (0.8 per cent)—employed more than 200 people.
Small businesses contribute 20.7 per cent to the industry value added and medium‑sized
businesses 27.4 per cent. By comparison, large businesses contribute 51.9 per cent to industry
value added. However, as shown in Figure 4, the proportion of manufacturing employment in
36
Manufacturing workforce study | Australian Workforce and Productivity Agency
the Manufacturing sector is relatively balanced between small, medium‑sized and large
businesses. Although only 0.8 per cent of manufacturing businesses employ more than
200 people, they employ 38.9 per cent of the manufacturing workforce.
Figure 4 Proportion of manufacturing employment and industry value added by business size,
2011–12
51.9
200+
Number of employees
38.9
27.4
20–200
31.5
20.7
<20
29.5
0
10
20
30
40
50
60
Proportion of industry value added
Proportion of manufacturing employment
Note: Industry value added data by business size is only available for 2011–12. For comparability, this chart also
shows 2011–12 data for business counts.
Source: ABS, 2013, Australian industry, 2011–12, cat. no. 8155.0, Table 2.1.
The 2012 report by the non‑government members of the Prime Minister’s Manufacturing
Taskforce, Smarter manufacturing for a smarter Australia, noted that Australia’s small
manufacturers are additionally constrained by small markets:
Australia’s small and dispersed internal markets and remoteness from larger markets,
explain why Australian manufacturing firms are small by global standards. This is a
systemic constraint that makes it harder to penetrate global value chains within which
much of manufacturing’s value is created.27
The large number of sole operators (42.8 per cent, or 37,513 businesses) have a unique set of
skills needs. Owner–operators will often need to be multiskilled, managing all operational,
strategic and technical aspects of their businesses. They are likely to operate boutique or small
family businesses such as clothing, micro‑breweries, bakeries, printing, and wooden products
and furniture.
27 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 14.
Manufacturing workforce study | Australian Workforce and Productivity Agency
37
Part One
Per cent
It is more difficult for SMEs to collaborate, innovate, coordinate with research and development
organisations and partake in large supply chains. Many international businesses do not wish to
deal with companies the size of many Australian SMEs,28 while SMEs that are part of supply
chains may find themselves vulnerable to decisions by larger firms in the chain. This may hinder
their ability to compete globally, increasing the need for larger manufacturing firms to play a key
role in global supply changes. The role for industry associations in assisting small businesses to
collaborate is explored in Part Two. The challenges for Australia’s SMEs are increased because
of the relative remoteness of our firms. Scale linked to remoteness has decreased our
opportunities for trade, knowledge transfer and relationship building. Australia’s scale and
remoteness work against competition, innovation and export growth, and produce a unique
industrial structure: large multinationals in resources and food, large domestic services
oligopolies and a long tail of SMEs.29
Manufacturing employment
Employment in the Manufacturing industry declined by 10.2 per cent over the past 10 years
(2003 to 2013, four‑quarter average), or around 106,600 jobs. In 2013, there were 936,400
workers in the sector, which comprised 8.1 per cent of the total workforce.30
Table 2 shows a reduction in the total number of persons employed in the Manufacturing sector
in a number of countries between 2002 and 2012. The decline in the industry’s employment
share, and the structural adjustment faced by the manufacturing regions and their workers, are
key challenges facing industry policy for many governments across the globe. Australia’s
9.5 per cent decrease over the decade is markedly smaller than other developed nations,
particularly the Netherlands, Canada and the United Kingdom. It should be noted that
manufacturing in Australia held a relatively smaller share of total employment at the start of
2002 than in all of the countries listed in Table 2. The relative size of the Manufacturing industry
reflects a variety of different factors.31 However, apart from the Republic of Korea, none of
these countries has returned to pre–global financial crisis levels of manufacturing
employment.32
28 Ibid., p. 45.
29 Ibid., p. 15.
30 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003. Data is for 2013 (four‑quarter
average).
31 Manyika, J et al., 2012, Manufacturing the future: the next era of global growth and innovation, McKinsey Global
Institute, p. 19, mckinsey.com/insights/manufacturing/the_future_of_manufacturing, accessed 7 January 2014.
32 Workplace Research Centre, 2013, International trends in manufacturing, p. 5.
38
Manufacturing workforce study | Australian Workforce and Productivity Agency
Table 2
Manufacturing employment, selected economies, 2002, 2007 and 2012
2002
(’000)
2007
(’000)
2012
(’000)
Change
2007–2012
(%)
Change
2002–2012
(%)
Australia
1,068
1,043
967
–7.3
–9.5
Canada
2,288
2,029
1,784
–12.1
–22.0
France
4,234
3,966
3,321
–16.3
–21.6
Germany
8,504
8,391
7,915
–5.7
–6.9
Japan
11,990
11,670
10,300
–11.7
–14.1
Korea, Rep. of
4,241
4,014
4,105
2.3
–3.2
Netherlands
1,128
1,054
854
–19.0
–24.3
New Zealand
296
272
246
–9.6
–16.9
United Kingdom
3,808
3,223
2,890
–10.3
–24.1
United States
17,233
16,302
14,686
–9.9
–14.8
Source: US Bureau of Labor Statistics, 2013, International comparisons of annual labor force statistics,
1970–2012, Table 2‑4.
Global drivers of change
Figure 5 summarises work that the Commonwealth Scientific and Industrial Research
Organisation (CSIRO) has undertaken on megatrends and how they are impacting on
manufacturing. Globalisation and the shift of manufacturing activities to lower cost economies
have heightened the importance of Australian manufacturers producing innovative offerings and
increasing productivity. The shift also brings opportunities as Australia increases its proximity to
global value chains and growing domestic demand in Asia. It is important to understand these
trends, as they have influenced—and will to continue to influence—the sector’s demand for
skilled workers.
Manufacturing workforce study | Australian Workforce and Productivity Agency
39
Part One
As highlighted above, the changing role of manufacturing in Australia is being echoed across
other industrialised countries. Trade liberalisation, the globalisation of supply chains, intensifying
competition, and changing consumer demand are expected to continue to shape global
manufacturing.
Figure 5 Global trends impacting manufacturing
Drive for
heightened
productivity
Drive for green
growth and
increased
resource
efficiency
Disruptive
technologies
and ICT enabling
advanced
manufacturing
Globalisation of
supply chains
More from less
A world of limited
resources
iWorld
Digital and natural
convergence
A personal touch
Personalisation
of products and
services
On the move
Urbanising and
increased mobility
Divergent
demographics
Older, hungrier and
more demanding
Global competition
from lower cost labour
markets
Blurring boundary
between
manufacturing and
service solutions,
not just products
Move from mass
productisation
to mass
customisation
Emergence of BRIC
economics and emergent
middle class driving demand
for products
Source: Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report
of the non‑government members, p. 26.
Global value chains
Global value chains have become a dominant feature of the world economy and create an
important policy imperative to ensure Australia benefits from greater involvement in these sorts
of international production networks.
Value chains refer to high‑level supply and production chains, whereby raw materials are
received as inputs, value is added through various processes, and the goods are supplied to the
market and to the eventual end consumer. With globalisation and the internationalisation of
40
Manufacturing workforce study | Australian Workforce and Productivity Agency
technology and labour markets, we saw the emergence of global value chains in the late 1990s,
which have both ‘fragmented production processes across countries and continents and
boosted network trade’.33
In contrast to older industrial models in which products were largely conceived and produced
in‑house and only raw materials were sourced from outside the enterprise, global value chains
involve the diffusion of each stage of production across borders and include countries at all
levels of development, from the poorest to the most economically advanced.
The production of goods and services is increasingly carried out wherever the necessary skills
and materials are available at competitive cost and quality. The result is that the research,
development, design, assembly, production of parts, marketing and branding stages of goods
can each take place in a different part of the world, and under different regulatory conditions.34
This fragmentation of production across borders, otherwise known as the vertical
disintegration of production,35 is largely driven by changes in the business and regulatory
environment, by the systematic liberalisation of trade and investment, and by new technologies,
which have reduced trade and coordination costs and shifted corporate thinking. There is
strong competition between countries to attract foreign direct investment in manufacturing.
Many countries establish areas, often referred to as export processing zones, with special
administrative and regulatory status to promote trade and investment. In 2006, the latest
year for which estimates are available, 3,500 export processing zones were operating in
130 countries.36
Part One
The production of the new Boeing 787 Dreamliner is an example of a value chain in the
aerospace sector, where various components of the aircraft are constructed at different sites
across the globe (Figure 6). The moveable trailing edges of the wings are designed and
manufactured in Melbourne, a contract worth approximately $4 billion over 20 years.37
33 Banga, R, 2013, ‘Measuring value in global value chains’, background paper no. RVC‑8, Unit of Economic
Cooperation and Integration among Developing Countries, United Nations Conference on Trade and
Development, May, unctad.org/en/PublicationsLibrary/ecidc2013misc1_bp8.pdf, accessed 18 December 2013.
34 Gurría, A, 2012, ‘The emergence of global value chains: What do they mean for business?’, G20 Trade and
Investment Promotion Summit, Mexico City, Organisation for Economic Co‑operation and Development,
5 November.
35 Gereffi, G, Jiang, X and Milberg, W, circa 2012, Industrial policy in the era of vertically specialized industrialization.
36 World Trade Organization (WTO) and Institute of Developing Economies, 2011, Trade patterns and global value
chains in East Asia: from trade in goods to trade in tasks, p. 21, wto.org/english/res_e/booksp_e/stat_tradepat_
globvalchains_e.pdf, accessed 18 December 2013.
37 Department of Foreign Affairs and Trade, 2013, Trade at a glance 2013, pp. 24–25, dfat.gov.au/publications/
trade/trade‑at‑a‑glance‑2013/, accessed 13 February 2013.
Manufacturing workforce study | Australian Workforce and Productivity Agency
41
Figure 6 Example of a global value chain—manufacture and assembly of a
Boeing 787 Dreamliner
Source: Department of Foreign Affairs and Trade, 2013, Trade at a glance 2013, pp. 24–25.
Growth in the international trade of manufacturers greatly exceeds the growth of global
manufacturing output. This is because global value chains are often coordinated by
multinational companies and a significant share of the trade in goods and services takes place
within their network; however, the global value chains also encompass independent buyers and
suppliers, including domestic small and medium‑sized firms involved in the production of inputs
that ultimately reach foreign consumers embodied in final goods and services. As a result,
competition between countries to attract foreign direct investment in manufacturing (by
becoming part of a global value chain) is an essential component of industry policy strategies to
lift per capita income in developing countries.38
The increasing significance of East Asia
The fragmentation of manufacturing activities across global value chains has seen a shift in
global manufacturing activity towards East Asia, particularly China. Many firms (typically from
industrialised countries) have moved labour‑intensive activities towards lower cost economies
in the region. This movement, or ‘offshoring’, of activities is usually undertaken to lower
production costs, but some firms are also looking to tap into new markets and the growing
domestic demand from these countries.
World Bank data highlights the increasing significance of East Asian manufacturers. In 1998,
11 countries (Australia, China, Germany, Indonesia, India, Japan, the Republic of Korea, the
Netherlands, the United Kingdom, the United States and Norway) accounted for 64.8 per cent
38 Rodrik, D, 2009, ‘Industrial policy: don’t ask why, ask how’, Middle East Development Journal, vol. 1, no. 1,
pp. 1–29.
42
Manufacturing workforce study | Australian Workforce and Productivity Agency
of global manufacturing value added. This share had dropped to 63.7 per cent by 2010. In this
period, the United States was the largest global manufacturer. However, China has rapidly
increased its manufacturing value added and in 2010 had the largest share of global
manufacturing (19.0 per cent). Between 1998 and 2010, the United States’ share of global
manufacturing fell by 8.4 percentage points from 25.2 per cent in 1998 to 16.8 per cent in
2010. Further, in 2011, according to the World Trade Organization, China had become the main
trading nation for almost all regional nations.39
Figure 7 demonstrates that there were changes to a majority of the 11 countries’ shares of
global production between 1998 and 2010, but Australia’s share remained unchanged during
this period.40
Figure 7 Change in share of global manufacturing value added, 1998 to 2010
10
St
d
te
ni
U
Ja
p
an
Ki
U
ni
te
d
an
y
m
er
G
s
nd
lia
rla
he
et
Au
s
ea
.o
fK
or
a
di
In
tra
N
–5
Re
p
a
si
ne
do
In
Ch
in
a
0
at
ng
es
do
m
5
Part One
Chance in share (percentage point change)
15
–10
Source: World Bank, World Development Indicators, data.worldbank.org/indicator/NV.IND.MANF.CD, accessed
22 February 2014.
Increasingly, countries have become specialised in particular manufacturing activities.
Specialisation is no longer based on the overall balance of competitive advantage of countries in
producing a final good, but on the competitive advantage of tasks that these countries
complete at a specific step along the global value chain. Reflecting their particular roles in global
value chains, some countries, like Japan and the Republic of Korea, specialise in the export of
products involving high‑ or medium‑skilled labour, while others, such as China and Vietnam,
focus on low‑skill, labour‑intensive activities.41
39 WTO and Institute of Developing Economies, 2011, Trade patterns and global value chains in East Asia: from
trade in goods to trade in tasks, pp. 80–89.
40 Workplace Research Centre, 2013, International trends in manufacturing, p. 4. Note that the data does not reflect
fluctuations in exchange rates, which could considerably impact value, or distinguish between the composition
of manufacturing industries in each country.
41 WTO and Institute of Developing Economies, 2011, Trade patterns and global value chains in East Asia: from
trade in goods to trade in tasks, pp. 4–7.
Manufacturing workforce study | Australian Workforce and Productivity Agency
43
Changing consumer demands and expectations
Emerging markets are creating new sources of rapidly growing demand for products and
services from both consumers and businesses. For many countries, future growth in
manufacturing is likely to depend on successfully selling to new customers in rapidly growing
Asian markets. Conservative estimates suggest that increasing non‑resource exports to Asia
could provide the Australian economy with an additional $60 billion to $115 billion over
10 years.42 As manufactured products currently represent around 76 per cent of Australian
merchandise exports, excluding mining,43 a substantial part of this potential export opportunity
could be available to Australian manufacturers. Industry is already aware of this; for example,
food and beverage manufacturers are looking to seize opportunities created by the growth in
the middle class in Asia by focusing on the food commodities projected to be most sought after
in Asia by 2050 (beef, wheat, dairy products, sheep meat and sugar).44
At the same time, consumer tastes in established markets are not fixed. Australians are now
more conscious about the quality of their products and the methods used to produce them, and
are becoming more aware of production methods—in particular, worker conditions and
environmental sustainability. For example, the public backlash to the recent tragedy in Savar,
Bangladesh—when a garment factory building collapsed with a reported death toll of more than
1,120 and many more injuries—forced the formation of the Bangladesh Accord. Since its
establishment, more than 100 companies worldwide have signed up to the accord, including six
companies with global headquarters in Australia.45 At a global level, governments and
organisations have recognised the need to transition to clean or environmentally sustainable
modes of production to ensure that large‑scale environmental disasters do not occur.46
In this context, all manufacturers need to operate in a way that is increasingly resource efficient
and bound by energy constraints. This will be a key driver of costs and an operating principle in
product design, engineering and life‑cycle management, and the development and use of
production processes and technologies.47
Technology and innovation
Globally, innovation is becoming an increasingly important source of growth. At the same time,
some traditional sources of growth are decreasing in importance. For example, declining
growth in populations has reduced the role of labour input in long‑term economic growth.48
Innovation is a systemic process, ‘a highly interactive, multi‑disciplinary process which
increasingly involves cooperation and partnerships between a growing and diverse network of
42 Asialink Taskforce, 2012, Developing an Asia capable workforce—a national strategy, Asialink, University of
Melbourne.
43 ABS, International trade in goods and services, Australia, cat. no. 5368.0.
44 Linehan, V, Thorpe, S, Andrews, N and Beaini, F, 2012, Food demand to 2050: opportunities for Australian
agriculture, Outlook conference paper no. 12.4, Australian Bureau of Agricultural and Resource Economics and
Sciences, Canberra, March, adl.brs.gov.au, accessed 4 March 2014.
45 Smith, K, 2014, Who has signed the Bangladesh safety accord—update, just‑style.com, 18 February,
just‑style.com/analysis/who‑has‑signed‑the‑bangladesh‑safety‑accord‑update_id117856.aspx, accessed
25 February 2014.
46 Potsdam Institute for Climate Impact Research and Climate Analytics, 2012, Turn down the heat: why a 4ºC
warmer world must be avoided, World Bank, Washington DC.
47 South East Melbourne Manufacturers Alliance, 2011, Future of manufacturing in south east Melbourne, p. 65.
48 Organisation for Economic Co‑operation and Development (OECD), 2011, The OECD innovation strategy: getting
a head start on tomorrow, p. 9, oecd.org/sti/45302349.pdf, accessed 6 February 2014.
44
Manufacturing workforce study | Australian Workforce and Productivity Agency
organisations and individuals’.49 As such, innovation relates to a range of elements. An
internationally recognised definition is ‘the implementation of a new or significantly improved
product (good or service), process, new marketing method or a new organisational method in
business practices, workplace organisation or external relations’.50
At its core, innovation is about market experimentation by business, involving the acceptance or
tolerance of the risk of failure. This outlook is underpinned by the acknowledgement that firms
will learn from these mistakes. Innovation is often equated to research and development
(R&D); however, in reality, innovation is much broader.51 Specifically, three types of innovation
have been identified:
➢ product innovation (a new or significantly improved good or service)
➢ process innovation (a new or significantly improved production or delivery method)
➢ marketing innovation (introduction of a new marketing method to better address
customer needs, open new markets or reposition an enterprise’s product in the
market).52
Innovation is important for firms’ performance for a number of reasons. Businesses that
actively innovate are characterised by increased profitability, high‑level export market targets,
increased ranges of products and services, and greater income from sales of goods and
services.53
Across developed economies, manufacturing industries account for a large share of business
expenditure on innovative activity, in particular the research and development component of
innovation. However, it is highly concentrated in a few industries and firms. For example, in
Canada, Finland, Ireland, the United States and the United Kingdom, more than 60 per cent of
all manufacturing R&D was accounted for by high‑technology industries in 2007.55
Historically, manufacturing has driven innovation and technological change in Australia.
Australian manufacturing allocates $4.5 billion each year to R&D, or one‑quarter of total private
sector expenditure. This funding focuses on adapting current technologies and developing new
ones.56
49 Department of Industry, Innovation, Science and Research, 2011, Australian innovation system report 2011, p. 80.
50 OECD, 2005, Oslo Manual: guidelines for collecting and interpreting innovation data, 3rd edition, OECD and
European Commission.
51 Department of Industry, 2013, Australian innovation system report 2013, p. 13, http://www.innovation.gov.au/
science/policy/Pages/AustralianInnovationSystemReport.aspx, accessed 3 March 2014.
52 Toner, P, 2011, Workforce skills and innovation: an overview of major themes in the literature, OECD education
working papers, no. 55, p. 16, oecd.org/science/inno/46970941.pdf, accessed 6 February 2014.
53 Department of Industry, Innovation, Science, Research and Tertiary Education, 2012, Australian innovation
system report 2012, p. 5.
54 OECD, 2011, The OECD innovation strategy: getting a head start on tomorrow, p. 9.
55 OECD, 2007, ‘Manufacturing ideas’, OECD Observer, no. 261, May, oecdobserver.org/news/archivestory.php/
aid/2219/Manufacturing_ideas.html, accessed 6 February 2014.
56 Green, R and Toner, P, 2011, ‘Does manufacturing have a future in Australia?’, The Conversation, 30 August,
theconversation.com/does‑manufacturing‑have‑a‑future‑in‑australia‑3098, accessed 5 November 2013.
Manufacturing workforce study | Australian Workforce and Productivity Agency
45
Part One
Innovation is already an important driver of growth in some countries. Firms in several OECD
countries now invest as much in intangible assets—for example, R&D, software and skills—as
in physical capital, such as equipment. In fact, it is estimated that between 1995 and 2006,
innovation was the primary source of growth in Austria, Finland, Sweden, the United Kingdom
and the United States.54
Rapid technological change has profoundly influenced manufacturing, creating both
opportunities and challenges. Lean manufacturing processes (discussed in Part Two), which
focus on removing non‑value‑adding activities, are now used throughout the world. Technology
plays an important role in further increasing competitiveness across global supply chains by
supporting innovation, driving product development and spurring on enhancements in
manufacturing performance and productivity.
Underpinning technologies such as information and communications technology (ICT),
advanced materials and biotechnology have already altered the way in which the global
manufacturing industry operates and produces goods. For example, the pervasiveness of ICT
has impacted on information management, increasing opportunities for manufacturers to
market their goods internationally and improving work organisation from production to customer
through the use of ‘smart’ logistics that use tracking to receive real‑time data about products.
In the future, secondary technologies such as robotics and additive manufacturing and
automation will use underpinning technologies to further enable mass customisation and
personalisation of products; digitised manufacturing value chains with digital connections
between customers, manufacturers and suppliers; greater freedom of design; and the delivery
of new products and services.
Manufacturers that innovate and use technology effectively are most likely to capture a larger
share of the global market, and move towards creating higher value‑added products. Significant
competitive advantage can be gained by creating high‑performing and technologically advanced
manufacturing capabilities and by creating and/or acquiring technologies that fully exploit an
integrated approach to design, R&D and knowledge. In recognition of this, China’s 12th
Five‑Year Plan (2011–2015) aims to reduce dependence on foreign technology and pursue
global technology in seven strategic industries, including high‑end equipment manufacturing.57
Many countries, including emerging economies, are building or have already built national R&D
bases and state‑of‑the‑art manufacturing facilities to take advantage of existing and emerging
technologies.58 For example, China and India are each undertaking collaborative research
programs that include government, academia and industrial companies.59 Similarly, in 2011, the
United States launched the Advanced Manufacturing Partnership, a private sector lead body
that brings together research, business and political groups to plan a ‘course for investing and
furthering the development of the emerging technologies’.60
In Germany, there is a strong system of private and public collaboration in R&D. For example,
the Fraunhofer‑Gesellschaft is a key partner for industry, working with German businesses to
57 Industry–Science Research Alliance, 2013, Securing the future of German manufacturing industry:
recommendations for implementing the strategic initiative INDUSTRIE 4.0, final report of the Industrie 4.0
Working Group, Federal Ministry of Education and Research, p. 70, acatech.de/fileadmin/user_upload/
Baumstruktur_nach_Website/Acatech/root/de/Material_fuer_Sonderseiten/Industrie_4.0/Final_report__
Industrie_4.0_accessible.pdf, accessed 18 December 2013.
58 Foresight, 2013, The future of manufacturing: a new era of opportunity and challenge for the UK, The
Government Office for Science, London, p. 70, bis.gov.uk/assets/foresight/docs/
manufacturing/13‑809‑future‑manufacturing‑project‑report.pdf, accessed 18 December 2013.
59 World Economic Forum, 2012, The future of manufacturing: opportunities to drive economic growth, World
Economic Forum report in collaboration with Deloitte Touche Tohmatsu Limited, p. 10, deloitte.com/assets/
Dcom‑Global/Local%20Content/Articles/Manufacturing/dttl_WEF_The‑Future‑Manufacturing_4_20_12.pdf,
accessed 18 December 2013.
60 Industry–Science Research Alliance, 2013, Securing the future of German manufacturing industry, p. 70.
46
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promote and safeguard their market leadership and reinforce their competitive strength by
developing technological innovations and systems solutions.61
A report by the McKinsey Global Institute estimated that the combined application of
12 technologies (mobile internet; automation of knowledge work; the ‘internet of things’; cloud
technology; advanced robotics; autonomous and near‑autonomous vehicles; next‑generation
genomics; energy storage; 3D printing; advanced materials; advanced oil and gas exploration
and recovery; and renewable energy) could have a potential economic impact of between
$14 trillion and $33 trillion a year in 2025.62 This figure relates to new income that companies
could generate and the value that individuals will personally derive from an innovation they do
not need to pay for. For example, the report forecasts that in 2025, the ‘internet of things’63
will have a predicted scope of $47 trillion in global manufacturing operating costs and a
potential reach of 2.5 to 5.0 per cent savings in operating costs, including maintenance and
input efficiencies.64
The potential benefits of new technology can be lost if it is not adopted when it becomes
available. A range of factors can affect its adoption, such as the perception of relevance,
degree of risk aversion and ease of integration into existing systems.65 In Australia, the
predominance of SMEs in the Manufacturing sector may in some cases be a factor in terms
of capacity to invest.
Decreasing global employment levels in manufacturing, outlined previously, can be partially
attributed to a trend towards greater automation in manufacturing operations to replace
labour‑intensive roles. However, it should be noted that automation is not limited to traditionally
labour‑intensive or dangerous work. Advanced robotics, combined with advances in automation
of knowledge work, means some entire tasks or skills could be displaced by machines and
software.68 Furthermore, increased automation may bring additional benefits to firms as they
might be able to redeploy employees more productively elsewhere, maximising the use of their
employees’ skills.
61 Fraunhofer‑Gesellschaft, 2014, Fraunhofer‑Gesellschaft as a collaborative partner, fraunhofer.de/en/
about‑fraunhofer/mission/collaborative‑partner.html, accessed 7 February 2014.
62 Bisson, P, Bughin, J, Chui, M, Dobbs, R, Manyika, J and Marrs, A, 2013, Disruptive technologies: advances that
will transform business and the global economy, McKinsey Global Institute,
mckinsey.com/insights/business_technology/disruptive_technologies, accessed 17 December 2013.
63 The ‘internet of things’ refers to the use of sensors, actuators and data communication technology built into
physical objects—such as shipments and machinery—that enable the objects to be tracked, coordinated or
controlled across a data network on the internet. Definition taken from ibid., p. 52.
64Ibid.
65 Australian Workforce and Productivity Agency, 2013, Food and beverage workforce Issues Paper, p. 36,
http://www.awpa.gov.au/publications/Documents/Food%20and%20beverage%20workforce%20issues%20
paper.pdf, accessed 4 March 2014.
66 Australian Venture Consultants, 2012, Rise of the machines?, Resources Industry Training Council.
67 Foresight, 2013, The future of manufacturing: a new era of opportunity and challenge for the UK, p. 6.
68 Australian Workforce and Productivity Agency, forthcoming, Industry transformation—a discussion paper, p.13.
Manufacturing workforce study | Australian Workforce and Productivity Agency
47
Part One
New technology also creates challenges for some manufacturing subsectors. Companies and
their workers will be required to be innovative and adaptive. Skills, work patterns, leadership
models and culture might need to change to support an integrated operations approach to
optimising the benefits from technology.66 Products and processes will need to be more
sustainable, with built‑in re‑use, remanufacturing and recycling for products reaching the end of
their useful lives. A higher level of skills will be needed. There will be a need for leaders and
managers who have both commercial and technical acumen.67
While technology and innovation may result in the loss of some occupations, it will also change
the scope of job roles and create new occupations. CSIRO considers that lightweight robotics
and advanced ICT‑based systems will be integral to creating smart, flexible factories of the
future. In its white paper on the value of lightweight assistive manufacturing solutions, it argues
that assistive information technologies and robotics‑based technologies will enhance, rather
than replace, the roles of some manufacturing sector workers.69 Lightweight assistive systems
will facilitate humans’ work in factories, resulting in jobs with more high‑value tasks, and fewer
repetitive tasks and physically demanding activities such as weight lifting and tool picking.
Remote training systems will facilitate continuous on‑the‑job training for workers.70 For other
roles, integrating new technologies, such as in mechanical and electrical manufacturing, means
that workers will need skills to operate and manage computerised and technologically advanced
machinery and equipment. Mechatronics is not new, but as new technology rolls out, the
precise skills involved change.
Bundling of services
The line between manufacturing and services is becoming blurred. Manufacturing has always
included a range of activities in addition to production, such as research and development, sales
and marketing, and customer support.71 Many manufacturers tend to outsource the business
service functions they once held in‑house, such as accounting, engineering, marketing and
logistics. Given the interdependency between manufacturers and service providers, the
significance of manufacturing to Australia and other (typically) industrialised countries is likely to
be understated.72
Australian Bureau of Statistics data indicates that professional, scientific and technical services
used in the production process (intermediate use) across Australia’s Manufacturing industry
increased from $8.3 billion (3.3 per cent of total intermediate use) in 2006–07 to $10.8 billion
(4.1 per cent of total intermediate use) in 2009–10.73
Manufacturers are also increasingly offering services, in addition to manufactured goods, to
improve the value proposition of their products and are therefore competing on value for
money, not purely on cost. Services offered include design and development services, systems
and solutions, and retail and distribution services. Many firms are recognising that the inclusion
of such services allows them to diversify their business income, with services often offering
more consistent revenue streams. Manufacturers are increasingly offering related services such
as maintenance and repair, upgrades and training to accompany their manufactured product.74
Table 3 highlights the top 12 types of services being offered by manufacturing firms in
25 countries in 2008, based on analysis undertaken by the University of Cambridge.
69 Brea, E et al., 2013, An initiative to enhance SME productivity through fit for purpose information and robotic
technologies: the value of lightweight assistive manufacturing solutions, white paper, CSIRO.
70 Ibid., p. 12.
71 Manyika, J et al., 2012, Manufacturing the future: the next era of global growth and innovation, p. 7, mckinsey.
com/insights/manufacturing/the_future_of_manufacturing, accessed 7 January 2014.
72 Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE), 2012, Manufacturing works:
a strategy for driving high‑value manufacturing in South Australia, South Australian Government, p. 47.
73 Australian Bureau of Statistics, Australian national accounts: input–output tables, cat. no. 5209.0.55.001,Table 8,
2007–08 and 2009–10.
74 Barclays Corporate, 2011, Servitisation and the future of manufacturing: the power to help you succeed, p. 2,
cambridgeservicealliance.org/uploads/downloadfiles/2011‑Neely‑ServitizationAndTheFutureOfManufacturing.
pdf, accessed 19 December 2013.
48
Manufacturing workforce study | Australian Workforce and Productivity Agency
Table 3
Top 12 types of services offered by manufacturing firms, 2008
Percentage of firms
offering service
Number of firms
offering service
Design and development
22
2,312
Systems and solutions
16
1,660
Retail and distribution
12
1,278
Maintenance and support
12
1,256
Installation and implementation
5
534
Financial
4
399
Property and real estate
4
389
Consulting
3
280
Outsourcing and operating
2
178
Procurement
1
121
Leasing
1
105
Transportation and trucking
0
22
Service offered
Note: Results are based on analysis of manufacturing firms, incorporated across 25 different countries, from
the OSIRIS public company database.
Source: Neely, A, 2009, ‘Exploring the financial consequences of the servitization of manufacturing’,
Operations Management Research, vol. 2, no. 1, Table 3, p. 32.
The imperative for bundling of services with firm offerings will affect the skills required by the
Manufacturing industry. Successful firms will capitalise on new business models to facilitate
their transformation. In this context, business strategy and business management skills will
have an increased importance for Australian manufacturing, as firms seek to maintain
competitive advantage in the global marketplace. Further, the trend towards capturing value
from attaching services to manufactured goods will result in a widening of the manufacturing
skills base, with skills such as sales, marketing and customer relations becoming progressively
more important to business models and strategies.
75 DMITRE, 2012, Manufacturing works: a strategy for driving high‑value manufacturing in South Australia, p. 28.
76 Barclays Corporate, 2011, Servitisation and the future of manufacturing, p. 5.
Manufacturing workforce study | Australian Workforce and Productivity Agency
49
Part One
A key feature of firms that have successfully linked services to products is their ability to
personalise offerings to meet client needs, which is often marketed as customised solutions.
The combination of product and service systems can be adapted to apply across global value
chains and for differing international customers.75 As technology advances, in particular ICT and
sensor technologies, it is likely that there will be growth in the identification and development
of service opportunities.76
Flexible manufacturing
A growing strategy to gain advantage in the global marketplace is to move towards mass
customisation of products, where goods are designed specifically to meet clients’ needs.
Complementary customer services, as described under ‘Bundling of services’ (page 48),
can also be offered to provide another layer of customisation. A manufacturing assembly line
can have the same general model going down the line, but each model is customised to meet
the needs of buyers depending on the options they choose. Mass customisation allows
manufacturers to exploit scale economies of mass production while at the same time gaining
market advantage through product differentiation. Depending on the level of customisation,
smaller batches of highly customised products, with higher per‑unit costs, may be produced.
To capitalise on the opportunities presented by mass customisation, an understanding of
consumer needs, strong design skills and flexible manufacturing processes are required. Good
work organisation is critical to ensure that workers are trained in quality assurance, and
manufacturing processes need to be adaptable and configured to short, low‑volume production
runs. This mode of manufacturing is not suitable for all products, especially commodity
products, where success depends on cost reduction via automation to lower labour costs and
ensure consistent, high‑quality output.
New advances in technology will complement this flexible manufacturing process by enabling
the sharing of data (product designs and customer and product information), which will in turn
allow smaller Australian manufacturers to operate at a larger scale across geographical
boundaries. A future challenge for firms adopting flexible manufacturing will be to deliver more
value by coordinating more efficient manufacturing processes, although operations may be
undertaken in collaboration with others—even with overseas counterparts or suppliers.77 Lean
manufacturing processes and design‑led integration, in combination with the adoption of new
technologies, will be critical to achieving this.
Smart factories of the future will be configured as highly complex, dynamic and flexible
systems. This means that the Manufacturing industry will require employees who are
empowered to act as decision‑makers and quality controllers. The nature of this type of
manufacturing is likely to place significantly higher demands on all members of the workforce.
Manufacturing teams will need to be multiskilled and all employees will need to manage
complex production processes and have strong foundation skills. They will need to show
initiative, guide and manage their own workload, solve problems on the job, and communicate
effectively on the shop floor with customers and other parts of the global supply chain.78
This work environment will provide opportunities for workers to enrich their work lives as it
promotes greater autonomy and opportunities for creativity and self‑development.
77 Foresight, 2013, The future of manufacturing: a new era of opportunity and challenge for the UK, p. 94.
78 Industry–Science Research Alliance, 2013, Securing the future of German manufacturing industry, p. 70.
50
Manufacturing workforce study | Australian Workforce and Productivity Agency
Magic Mobility—a flexible manufacturer
Magic Mobility79 is an example of a manufacturing firm that has been successful in
low-volume production, manufacturing a range of high-quality, customised wheelchairs
for clients around the world. Key to the company’s success is the use of flexible
manufacturing to differentiate its products from those of competing companies.
Magic Mobility was established nearly 20 years ago when the founders recognised there
was a place in the market for better quality and more versatile wheelchairs than those
imported from low-cost economies such as China.
To meet this demand, Magic Mobility designed a range of durable wheelchairs that gave
people off-road ability. Increased durability meant that the wheelchairs could take people
places other wheelchairs were not able to go. The off-road durability also means superior
access to some of the challenges in daily life such as steep gutters, potholes, and steps
into shops and restaurants.
Since every client’s disability and personal aspirations are different, Magic Mobility’s
wheelchairs are individually customised to meet their particular needs and life goals
(joining family on walks, horse riding, going to the footy). After the base components are
manufactured, modifications are made to the various parts of the wheelchair, including
changing the seat size, leg lengths, arms and headrest as necessary. Post-sale
modifications are also made to accommodate whatever changes the client goes through
over time; for example, changes to a client’s disability or physique.
Part One
While producing smaller batches of highly customised products can result in higher
per-unit production costs, Magic Mobility has undertaken the transition to being a ‘lean
enterprise’ to improve efficiency. The lean enterprise starts with engineering design and
is then facilitated through flexible manufacturing processes. The business adapted its
manufacturing processes and reorganised the layout of its factory floor. These changes
have resulted in improved efficiencies throughout the product assembly process.
Despite producing low volumes of wheelchairs (under 1,000 per year), Magic Mobility
has been able to expand and build a strong presence in overseas markets, with exports
accounting for around 70 per cent of its business. The company now has sales agents
working across Australia and export bases in the United States, United Kingdom, France
and New Zealand and growing markets in other European countries who are key to
ensuring international customers receive the same high-level service as domestic clients.
79 Australian Business Journal, Magic Mobility, http://www.australianbusinessjournal.com.au/
magic‑mobility‑moving‑in‑the‑mobility‑world/, accessed 3 March 2014, AWPA’s consultation with Jill Barnett,
General Manager, Magic Mobility.
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51
Exchange rate
The exchange rate has presented a considerable structural challenge to Australia’s
Manufacturing sector. While our mining boom has presented opportunities for manufacturers to
supply capital equipment to the resources sector, it has also strengthened the Australian dollar,
negatively affecting the competitiveness of Australian manufacturing.80 However, the strong
Australian dollar has also lowered the cost of capital equipment, making investment in this area
more feasible.
Figure 8 illustrates that with the exception of the global financial crisis, Australia’s exchange rate
in US dollars rose steadily from 2001, until its peak in mid‑2011.
Figure 8 Australian exchange rate in US dollars, January 1990 to January 2014
1.2
1.0
US dollar
0.8
0.6
0.4
0.2
Ja
n
1
Ja 990
n
1
Ja 991
n
19
Ja 92
n
1
Ja 993
n
1
Ja 994
n
1
Ja 995
n
1
Ja 996
n
1
Ja 997
n
19
Ja 98
n
1
Ja 999
n
2
Ja 000
n
2
Ja 001
n
20
Ja 02
n
2
Ja 003
n
2
Ja 004
n
2
Ja 005
n
2
Ja 006
n
2
Ja 007
n
2
Ja 008
n
20
Ja 09
n
2
Ja 010
n
2
Ja 011
n
20
Ja 12
n
2
Ja 013
n
20
14
0.0
Source: Reserve Bank of Australia, rba.gov.au/statistics/hist‑exchange‑rates/index.html, monthly data.
Similarly, the Australian trade‑weighted index has followed an upward trend from 2001,
dropping slightly in 2013, indicating the relative disadvantage Australian manufacturers have
faced in both export opportunities and through import competition from lower cost economies
(Figure 9). Keeping inflation low and stable will give manufacturers greater certainty in
decisions relating to their operational processes.81
80 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 31.
81 Reserve Bank of Australia, 2012, The changing structure of the Australian economy and monetary policy,
rba.gov.au/speeches/2012/sp‑dg‑070312.html, accessed 21 February 2014.
52
Manufacturing workforce study | Australian Workforce and Productivity Agency
Figure 9 Australian trade‑weighted index, January 1990 to January 2014
90
80
70
Index
60
50
40
30
Ja
n
19
Ja 90
n
1
Ja 991
n
19
Ja 92
n
19
Ja 93
n
19
Ja 94
n
19
Ja 95
n
19
Ja 96
n
1
Ja 997
n
19
Ja 98
n
1
Ja 999
n
20
Ja 00
n
2
Ja 001
n
20
Ja 02
n
20
Ja 03
n
20
Ja 04
n
20
Ja 05
n
20
Ja 06
n
2
Ja 007
n
20
Ja 08
n
20
Ja 09
n
20
Ja 10
n
2
Ja 011
n
20
Ja 12
n
20
Ja 13
n
20
14
20
Note: The trade‑weighted index is the weighted average value of the Australian dollar in relation to the
currencies of Australia’s trading partners. The base level was set at 100 in May 1970.
Source: Reserve Bank of Australia, rba.gov.au/statistics/hist‑exchange‑rates/index.html, monthly data.
82 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 19.
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53
Part One
However, the strong Australian dollar has also lowered the cost of imported inputs. Therefore,
investment in capital equipment is more feasible in the current economic climate.82 Firms can
look to capitalise on technological advances to differentiate their products and services from
those of their competitors.
Part Two:
Skills for competiveness
and productivity
Part Two: Skills for competiveness and productivity
Australian manufacturers will be affected by the global changes outlined in Part One in a
number of ways. The structure of the domestic industry, the type of products we make, and
the way goods are produced—including both the use of process technologies and the
organisation of work around the use of those technologies—will change.
Governments across the country have outlined a vision for manufacturing in Australia to
transition towards high‑end manufacturing with strong export potential. The sector has already
carved a niche in some high‑value sectors such as pharmaceuticals, precision engineering and
medical devices. In order to leverage these strengths and be globally competitive, innovation
and productivity will be key.
Innovation is crucial to the development of new materials, processes and technologies, and will
be at the foundation of the sector’s future. Emerging technologies and automation are an
important source of innovation for the sector, though the use of non‑technological innovation
such as design integration, new business models and lean manufacturing are equally important
to the competitiveness of manufacturing firms. The increased use of collaborative networks
and partnerships are also effective in combining the strong R&D and STEM capabilities of
universities and research organisations with the practical needs of manufacturing firms.
Management capabilities, particularly across the large number of small and medium‑sized
manufacturers, will also play a major role in the imperative to innovate.
State of play—current strengths
Growth in manufacturing exports may also provide a clue to where the future opportunities lie
for the sector. Manufactured goods exports between 2002 and 2012 changed significantly.
The largest increases in real exports over the decade were in scientific instruments (largely
medical), and medicinal and pharmaceutical products. Machinery, chemicals, paper products
and fertilisers also grew strongly.85 Many of these industries are also characterised by a
relatively higher skilled workforce.
In its December 2013 communique, the Council of Australian Governments acknowledged the
substantial transition the industry will need to make over the coming years and tasked its new
83 Ibid., p. 8.
84 DMITRE, 2012, Manufacturing works: a strategy for driving high‑value manufacturing in South Australia, p. 16.
85 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 23.
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Part Two
A number of recent reports highlight that Australia’s current competitive strengths are in
low–medium technology manufacturing. For example, the 2012 report of the non‑government
members of the Prime Minister’s Manufacturing Taskforce identified food manufacturing and
upstream processing in extractive, forestry and agricultural industries as areas for potential
growth.83 State‑based strategies, such as South Australia’s Manufacturing Works strategy, have
emphasised the need to diversify manufacturing by reducing the proportion that is low skilled
and low value‑added.84 These sentiments were echoed throughout AWPA’s consultations for
this report.
Industry and Skills Council with developing joint proposals to facilitate this transition and foster
internationally competitive, high‑end manufacturing in Australia.86
Growth in these areas will require a focus on advanced manufacturing technologies and
knowledge‑intensive services. For some of these technologies, Australia is already a leader and
innovator; for example, according to AusBiotech, Australia is a key location in the Asia–Pacific
region for biotechnology and bioscience companies. It has 900 biotechnology companies
(primarily in the human therapeutics area) and between 500 and 900 medical technology
companies.87
The need for strong STEM skills is apparent, as manufacturing will be more engaged in R&D,
the production of prototypes, and small‑scale runs of complex products, and will increasingly
look to use advanced technologies. Workers across all levels of a firm will also require hybrid
skills—that is, a combination of foundation skills such as problem-solving, communication and
teamwork, and technical skills and competencies—to make production processes run
efficiently.
The capacity to manage change as products move through their life cycle will also be important.
In addition, a proportion of the workforce will be professional engineers or skilled trades
workers who have specific, technician‑level skills.88 It has been identified that tradespeople and
technicians are a primary source of incremental innovation within the Australian Manufacturing
sector, indicating their importance to the future of Australian manufacturing.89 There will also be
an increasing need for workers with a wide range of skills, including those not traditionally
connected to the Manufacturing industry. For example, the imperative to move up the value
chain and build on brand equity will require employees with skills such as marketing, sales and
customer relations.
86 COAG, 2013, COAG communique, 13 December, p. 5.
87 AusBiotech, 2014, About biotechnology: industry overview, ausbiotech.org/content.asp?pageid=25, accessed
6 January 2014.
88 Foresight, 2013, The future of manufacturing: a new era of opportunity and challenge for the UK, p. 29.
89 National Centre for Vocational Education Research (NCVER), 2013, Fostering enterprise: the innovation and skills
nexus—research readings, p. 131, http://www.ncver.edu.au/wps/wcm/connect/ccb44121‑9e69‑4ab8‑a351‑43d
c50d1bbbd/2367.pdf?MOD=AJPERES&CACHEID=ccb44121‑9e69‑4ab8‑a351‑43dc50d1bbbd, accessed
6 February 2014.
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Manufacturing workforce study | Australian Workforce and Productivity Agency
Advanced manufacturing
As this report outlines, Australian manufacturers are well positioned to compete in the
area of high‑end, high‑value or advanced manufacturing.
Experts have identified a number of trends that have been instrumental in the shift from
traditional labour‑intensive processes to advanced technology–based processes.90 These
trends include a ubiquitous role for information technology, a reliance on modelling and
simulation in the manufacturing process, and an acceleration of innovation in global
supply chain management.
What is advanced manufacturing?
One of the most widespread definitions of advanced manufacturing can be found in a
paper published by the US President’s Council of Science and Technology. It states that
advanced manufacturing is:
a family of activities that (a) depend on the use and coordination of information,
automation, computation, software, sensing, and networking, and/or (b) make
use of cutting edge materials and emerging capabilities enabled by the physical
and biological sciences, for example nanotechnology, chemistry, and biology.91
As this definition implies, advanced manufacturing has applications across a number of
the traditional industrial sectors of the economy. For this reason, AWPA has chosen to
examine the applications of advanced manufacturing not in specific industry sectors, but
rather in the context of the following products, processes and technologies.
Part Two
➢ Advanced materials—Advanced materials are essential building blocks in everything
from household products to defence‑critical applications. They comprise a relatively
new approach to integrating materials information with computational tools,
engineering performance analysis and process simulation. Advanced materials can be
found in applications such as magnesium alloys, where research has been extensively
motivated by application in the automotive and aerospace industries.
➢ Additive manufacturing, 3D printing—Additive manufacturing refers to a set of
technologies that create a three‑dimensional object from computer‑aided design files
through a sequential layering process in both polymers and high‑technology metal
alloy powders. Methods of additive manufacturing technologies include 3D polymer
printing, selective laser melting and direct laser metal deposition.
➢Biotechnology/nanotechnology—Biological materials and processes and
nanotechnology are used to solve industrial and environmental problems, create new
sources of fuel and advance medical biotechnology. These technologies bring
together the academic and scientific disciplines of chemistry, physics, biology and
materials science to manipulate molecular‑scale matter.
90 Shipp, S, Gupta, N, Lal, B, Scott, J, Weber, C, Finnin, M, Blake, M, Newsome, S and Thomas, S, 2012,
Emerging global trends in advanced manufacturing, Institute for Defense Analyses, Virginia, US.
91 President’s Council of Advisors on Science and Technology, 2011, Report to the President on ensuring American
leadership in advanced manufacturing, p. ii, whitehouse.gov/sites/default/files/microsites/ostp/
pcast‑advanced‑manufacturing‑june2011.pdf, accessed 1 March 2014.
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57
➢ Medical technologies—Medical technologies refer to the production of high‑value
manufactured medical products, including assistive devices, instruments, lasers,
implants and pharmaceuticals.
➢ ICT and knowledge‑intensive business services—Knowledge‑intensive business
services refer to the group of activities that include electronics and computer systems
design; information and media telecommunications; professional, scientific and
technical research and support; design and simulation technologies; and a diverse
range of manufacturing applications including digital 3D printing and 3D software.
➢ Aerospace—Through links to the defence sector and firms such as Boeing, Australia
forms part of the global supply chain of aerospace products. Aerospace as a sector
also provides numerous applications for a number of the technologies outlined above.
Skills required to compete in advanced manufacturing
The types of skills needed to support advanced manufacturing will depend on the style
of manufacturing businesses and their aspirations. However, there are a number of
shared elements. Importantly, there will be a strong need for the businesses to be agile,
so they can adapt their skills faster as markets change. To drive competitiveness in this
context, there is a need to increase the skills base in high‑technology research and
development and product innovation, together with skills required in advanced
manufacturing processes, including relatively highly skilled engineers at graduate and
intermediate levels. The transition to advanced manufacturing will also see a greater
requirement for skills in digital techniques, computing, numeracy, analytical thinking,
human–machine ergonomics and interface development, risk analysis and understanding
methodologies (including design for manufacture, design for assembly and design for
automation).92
At this early stage, outside of the aerospace sector and medical technologies and
products, most Australian‑based applications of advanced manufacturing remain
confined to research bodies (CSIRO, Cooperative Research Centres) and universities.
Alongside these skilled knowledge workers will be a requirement for technical workers
with knowledge of advanced materials and capable managers with a range of
professional business skills.
92
Davis, C, Hogarth, T and Gambin, L, 2012, Sector skills insights: manufacturing, evidence report 48,
UK Commission for Employment and Skills, pp. 26–28.
58
Manufacturing workforce study | Australian Workforce and Productivity Agency
Innovation and productivity
Innovation is a key contributor to productivity, both through technological and business model
improvements and the improvement of human capital.93 The 2012 Australian innovative system
report found that innovative Australian businesses are:
➢ 23 per cent more likely to report increased productivity
➢ 24 per cent more likely to report increased profitability
➢ more than three times more likely to increase the number of export markets targeted.94
Innovation is generally classed in two ways: radical and incremental. Radical innovations are
substantial, game‑changing advances that often have significant implications for the economy.
These innovations are difficult to predict and may take a great deal of time to be fully exploited
by the wider economy.95 By contrast, incremental advances are typically developed on the back
of existing technologies and processes, and are far more predictable in terms of workforce
implications. Distinguishing between these two innovation models is important as they require
‘a very different mix of knowledge inputs and have very different consequences for the
economy and the firms which make them’.96 The Australian Manufacturing sector is
characterised largely by incremental innovation. The 2011 Australian innovation system report
found that Australian firms are almost three times less likely to produce new‑to‑market
products when compared to the OECD average, and fewer than 1 per cent of reported
innovations developed in Australia were new to the world.97
Innovation and technology are often perceived as synonymous, though there are many
non‑technological strategies contributing to innovation, such as improving management
capabilities and the use of business model innovation. As shown in Figure 10, a greater
proportion of Australian manufacturing firms operate in low–medium technology sectors when
compared to other OECD countries. Due to this, leveraging non‑technological innovations will
be essential in increasing the competitiveness and productivity of the sector.98
Part Two
93 Department of Industry, Innovation, Science, Research and Tertiary Education, 2012, Australian innovation
system report 2012, p.1, http://www.innovation.gov.au/science/policy/AustralianInnovationSystemReport/
AISR2012/index.html,accessed 3 March 2014.
94 Ibid.
95 Toner, P, 2010, ‘Innovation and vocational education’, Economic and Labour Relations Review, vol. 21, no. 2,
p. 77.
96 Freeman, C, 1994, ‘The economics of technical change’, Cambridge Journal of Economics, vol. 18, no. 5,
pp. 463–514.
97 Department of Industry, Innovation, Science and Research, 2011, Australian innovation system report 2011, p. 57.
98 Toner, P, ‘Innovation and vocational education’, p. 79.
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Figure 10 Value added in manufacturing output, by technological intensity classes, 2008
90
80
70
60
50
40
30
20
10
(2
00
7)
(2
00
Ca
7)
na
da
(2
00
6)
Ita
ly
(2
00
M
ex
7)
ic
o
(
2
N
00
or
7)
w
N
a
y
et
(
20
he
07
rla
nd
)
s
(2
Au
0
07
st
ra
)
lia
(2
00
5)
an
y
G
er
m
nc
e
Fr
a
Fi
nl
a
High-technology
Ja
pa
n
0
nd
(2
00
Ko
7)
re
a
(2
00
U
ni
6)
te
d
S
Sw
ta
U
te
ed
ni
s
te
e
n
d
(2
Ki
00
ng
7)
do
m
(2
00
7)
Percentage of manufacturing value added
100
Medium-high technology
Medium-low technology
Low-technology
Source: Department of Industry, 2013, Australian innovation system report 2013, p. 27,
http://www.innovation.gov.au/science/policy/Pages/AustralianInnovationSystemReport.aspx,
accessed 3 March 2014.
The use of advisory services such as Enterprise Connect’s tailored advisory service has been
cited by a number of stakeholders as a highly effective tool to reduce company waste, improve
productivity and fine‑tune company goals and objectives. Enterprise Connect’s focus on small
enterprises is particularly relevant to Australian manufacturing, as SMEs tend to lag behind
larger companies on innovation. The National Workforce Development Fund is also an
important enabler for funding innovation strategies.
Collaboration for innovation
Strengthening the ties between universities and Australian manufacturers will help to improve
the innovative capacity of the sector. Utilising the expertise of universities and R&D
organisations will assist Australian manufacturers to develop innovative technologies, products
and processes. AWPA received reports during consultation on this study, that universities have
limited capacity to forge connections, which are often quite arduous. Government may have a
role to play to assist networking in this area.
In Australia, collaboration is serendipitous rather than systemic—at the very time that
personal relationships and social norms of collaboration are becoming key ingredients
for successful innovation industries and regions.99
99 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 48.
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Collaborative innovation with research organisations has been shown to more than triple the
likelihood of business productivity growth.100 Despite this, universities, government agencies
and publicly funded research organisations continue to make minimal contributions to business
innovation.101 Collaborative efforts between researchers and businesses may be stifled by the
lack of incentives for commercialisation within research organisations, which often value pure
research above industry application of innovative projects. Shifting research and development
to a demand‑driven system will provide an incentive for collaborative innovation projects
between manufacturing firms and research and higher education institutions.
Industry representatives and large manufacturing firms will have a role to play in creating
collaborative partnerships with supplier companies, which often will not have the same levels
of resources to develop innovative ideas and processes. The large proportion of small
enterprises within Australian manufacturing presents a barrier to the development of innovative
projects with the sector, as these companies often struggle to fund R&D.102 Multinational
corporations can utilise their resources to raise the innovative capacity of smaller supplier firms.
Business clustering is also an effective mechanism to improve the innovative capacity of
smaller firms. Clusters can be arranged horizontally on a regional basis, or vertically, through
supply chain linkages.103
A number of government initiatives use collaborative arrangements to improve the innovative
capacity of the Australian Manufacturing sector. The Australian Government has recently
announced $31 million in funding for a new Rail Manufacturing Cooperative Research Centre.
This centre will be responsible for the development of technology, assisting in the development
of networks across the supply chains, and for increasing the competitiveness of the rail
industry. The Rail Manufacturing Cooperative Research Centre will help to forge partnerships
between businesses, universities and R&D bodies whose combined skills and knowledge
provide opportunities to develop intellectual property in the next generation of technologies,
products and processes.104
100 Department of Industry, 2013, Australian innovation system report 2013, p. 53.
101 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 46.
102 Ibid., p. 45.
103 Ibid., p. 41.
104 CRC Australia, Cooperative Research Centres, http://www.crc.gov.au/Selection‑Rounds/16th‑Selection‑Round/
Pages/Successful‑Applicants‑Information‑Sheet.aspx, accessed 24 February 2014.
105 The Coalition, 2013, The Coalition’s policy to boost the competitiveness of Australian manufacturing,
nationals.org.au/Portals/0/2013/policy/0821x33‑Manufacturing.pdf, accessed 30 January 2014.
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Part Two
The Australian Government intends to introduce Strategic Growth Action Agendas to promote
investment in Australian manufacturing and boost the sector’s competitiveness.105 These
agendas will involve key stakeholders in manufacturing subsectors collaborating with
government to develop and implement strategies and incentives for greater investment and
jobs growth within the sector. Action agendas will also act to remove current and future
regulatory burdens to reduce the costs on Australian manufacturers.
The Australian Government has also has announced support for the Industry Innovation
Precincts program, developed to improve collaborative networks between industry, research
organisations and universities.106 The manufacturing precinct, known as Manufacturing
Excellence Taskforce Australia, was opened in May 2013 and is located at the Australian
Synchotron in Melbourne. It works to facilitate projects of relevance to the competitiveness
of Australian manufacturers.107 Also part of the Industry Innovation Precincts program is
Food Innovation Australia Ltd, developed to accelerate commercially-driven collaboration and
innovation in the Australian food industry.108
Recommendation 1
a) That industry work within Australian Government initiatives on manufacturing to
identify linkages that promote collaboration on skills and workforce development to
underpin the agenda to improve productivity and global competitiveness.
b) That the Australian Government continue support for programs that assist firms to
identify and pursue business improvement activities, undertake workforce planning
and development, and address foundation skills to develop and strengthen the skills
and capabilities of their workforce, such as Enterprise Connect and the co‑funded
National Workforce Development Fund and Workplace English Language and
Literacy program.
In addition, the Australian Research Council has established the Linkage Projects scheme,
which provides funding to support collaborative R&D projects between higher education
researchers and other parts of the national innovation system.109 Enterprise Connect’s
Researchers in Business initiative also acts to develop collaboration for innovation, through
supporting the placement of researchers from universities or public research agencies into
firms that wish to develop a new idea with commercial potential.110 Successful applicants
receive up to 50 per cent of salary costs, to a maximum of $50,000, for a timeframe of
between two and 12 months.
106 Balinski, B, 2013, ‘Macfarlane could make announcement on Innovation Precincts before Xmas’, Manufacturers’
Monthly, 23 November, manmonthly.com.au/news/macfarlane‑could‑make‑announcement‑on‑innovation‑p,
accessed 29 January 2014.
107 Manufacturing Excellence Taskforce Australia, About META, meta.org.au/about, accessed 29 January 2014.
108 Food Innovation Australia Ltd, http://fial.com.au/, accessed 18 March 2014.
109 Australian Research Council, Linkage Projects, arc.gov.au/ncgp/lp/lp_default.htm, accessed 16 January 2014.
110 Enterprise Connect, Researchers in Business Grant, enterpriseconnect.gov.au/ecservices/rib/Pages/default.
aspx, accessed 16 January 2014.
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Textor Technologies
Textor Technologies111 is a Victorian‑based company that produces highly specialised
fabrics for a number of industries, including agribusiness, health care and hygiene and
food packaging.
The company has used Enterprise Connect’s Researchers in Business program, drawing
on expertise from a number of sources, including researchers from CSIRO and consumer
company Kimberly‑Clark to increase their understanding of man‑made fibres. The
in‑depth knowledge provided by CSIRO personnel, coupled with the industrial
knowledge of Textor staff, has resulted in an innovative advance in fabric technology
called 3D UltraAbsorb, which has now been incorporated into multinational company
Kimberly‑Clark’s Huggies nappies line. This new product has allowed Textor to draw on a
global market by differentiating its offerings from those of its competitors.
Textor’s managing director, Phil Butler, explains how collaborative arrangements can be
mutually beneficial: ‘One of the problems with researchers, though, is that they don’t
have a lot of industrial experience. So actually, other researchers sitting inside your
company for 12 months is a transformational experience for both parties.’
As well as providing expert knowledge in the area of fabrics, CSIRO was able to provide
a facility to pilot products, which reduced downtime, improved customisation, and
removed risks associated with testing new innovative processes. Phil Butler states that
the success of the company’s collaboration boils down to the trust between the three
organisations.
Peer‑to‑peer collaboration and networking is also crucial in the dissemination of innovative
solutions. The use of study tours of overseas operations will aid this form of collaboration, and
may also present supply chain opportunities.113 Viewing implementation of innovative processes
firsthand will also help firms adopt best practice in their own workplace. Integration into global
supply chains will also assist the adoption of innovative ideas and practices.114 In its submission
to AWPA’s Manufacturing workforce study, the ForestWorks Industry Skills Council
111 Balinski, B, 2013, ‘Textor, Kimberly‑Clark and CSIRO cooperation led to new product’, Manufacturers’ Monthly,
20 March, manmonthly.com.au/features/textor‑kimberly‑clark‑and‑csiro‑cooperation‑featur, accessed
15 January 2014; Australian Financial Review, 2012, ‘Thinking big pays off for textile survivor’, 16 February,
afr.com/p/national/work_space/thinking_big_pays_off_for_textile_aaHhbK8Yp2jJlKmXngOUAJ, accessed
15 January 2014; Insights to Excellence, Textor Technologies Pty Ltd, i2e.org.au/event.php?id=64, accessed
16 January 2014.
112HunterNet.com, About us, hunternet.com.au/page12037/About‑Us.aspx, accessed 12 December 2013.
113 Food, Fibre and Timber Industries Training Council (WA), 2013, submission to AWPA’s Manufacturing workforce
study, p. 9.
114 Department of Industry, 2013, Australian innovation system report 2013, p. 60.
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Part Two
Another initiative working to improve collaborative opportunities within Australian
manufacturing is HunterNet, a not‑for‑profit cooperative of manufacturing, engineering and
consulting SMEs located in the Hunter region of New South Wales. HunterNet uses the
combined capability of its network of members to provide training opportunities and promote
the Hunter as a manufacturing and engineering region of excellence.112
emphasises the need for manufacturers to ‘learn from the best and partner with the best to
progress ideas that add value to the business and align with the business vision/strategy’.115
As noted in Part One, increasing the skills base of the manufacturing workforce will improve
the sector’s innovative capacity, both through the provision of formal qualifications and by
increasing foundation skills.116 A 2012 World Economic Forum report found that the greatest
driver for manufacturing competitiveness is talent‑driven innovation.117 Increasing human capital
through workforce upskilling will help to strengthen the innovative capacity of the Australian
Manufacturing sector.
Role of intermediaries in innovation
Intermediaries can play an important role in collaboration for innovation, particularly for SMEs.118
They are seen as generally independent third parties that play an integral part in collaborative
activities supporting any aspect of the innovation process. Intermediaries can play a key role in
the ‘market for knowledge’ in relation to the transfer and translation of knowledge and
technologies from creators to users in a commercial context. In this sense, creators include
universities, other research organisations and other businesses. An intermediary might serve as
a consultant, broker, mediator, resource provider, or a combination of these roles.
Intermediaries might take the form of industry associations, government organisations or
private businesses. The important role that intermediaries play is reflected in the South
Australian Government’s jobs plan, Building a stronger South Australia, in response to the
announced closures of the Ford and GM Holden factories.119 This plan makes reference to the
need to assist SMEs in sharing knowledge and networking for collaboration.
Cooperation and collaboration with businesses and research organisations along the value chain
inevitably involves high levels of trust. Due to the nature of the marketplace, there is often a
requirement to collaborate with another business or organisation that also maintains the
potential to be a competitor. Trust may take many years to establish—and can be easily
dissipated. Trusted advisers and intermediaries have a key role in building trust in market‑based
transactions. Intermediaries can perform a critical role in establishing trust‑based relationships:
they make referrals, provide references and make recommendations about potential business
partnerships.
A successful intermediary for a business has to be exceptionally well networked across
industry and the research sector, and also has to possess a good reputation, integrity and
credibility with business, research organisations and government program managers.
A major difficulty for small to medium‑sized businesses is the gaps in their knowledge about
consultant intermediary capabilities and how to go about finding a person and/or organisation
that has the skills, qualifications and experience that will deliver value. There is also an
information asymmetry in relation to service requirements and quality expectations, and the
promise or offer provided by a consulting intermediary. A key role exists here for industry
associations to assist businesses in finding trusted intermediaries, if they themselves do not
provide this service.
115 ForestWorks Industry Skills Council, 2013, submission to AWPA’s Manufacturing workforce study, p. 9.
116 Manufacturing Skills Australia (MSA), 2013, submission to AWPA’s Manufacturing workforce study, p. 27.
117 World Economic Forum, 2012, The future of manufacturing: opportunities to drive economic growth, p. 60.
118 Howard Partners, 2007, Study of the role of intermediaries in support of innovation, Department of Industry,
Tourism and Resources, Canberra.
119 South Australian Government, 2014, Building a stronger South Australia: our jobs plan, p. 18.
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Intermediaries may play a crucial role as the Manufacturing industry embraces more advanced
manufacturing. One of the important gaps in the Australian innovation system is an absence of
knowledge of available technologies and capabilities in Australian and overseas research
organisations that could be adopted and applied in business contexts. There are many
databases in Australia that provide information on discoveries, inventions and capabilities.
However, electronic knowledge exchanges are of limited value without provision for personal
contact. People do not purchase technologies ‘sight unseen’ and inventors are unwilling to risk
compromising intellectual property rights by putting too much information online. Trusted
intermediaries, such as industry associations, would play a strong role in connecting businesses
with new advances in technology.
High‑performance work systems
Productivity and innovation can be increased through firm‑specific work organisation patterns.
One form of work organisation, high‑performing workplace systems, has been shown to
improve incremental innovation and efficiency within firms. While in reality there is great
variation in the extent to which firms implement high‑performance work practices, there are a
number of features central to the operation and definition of this form of organisational
structure.
Lean manufacturing provides an example of a high‑performance work system, which has
emerged through AWPA’s consultation as an effective mechanism for raising overall firm
productivity. Lean manufacturing can be defined as a ‘systematic approach to identifying and
eliminating waste through continuous improvement, flowing the product at the pull of the
customer in pursuit of perfection’.120 The implementation of lean manufacturing involves
adherence to a number of principles, outlined in Table 4.
Part Two
120 Kilpatrick, J, 2003, Lean principles, Utah Manufacturing Extension Partnership, p. 1, mhc‑net.com/whitepapers_
presentations/LeanPrinciples.pdf, accessed 16 December 2013.
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Table 4
Lean manufacturing principles
Concept
Traditional organisation
Lean organisation
Inventory
An asset, as defined by
accounting terminology
A waste—ties up capital and
increases processing lead‑time
Ideal economic order quantity
and batch size
Very large—run large batch sizes
to make up for process downtime
One—continuous efforts are
made to reduce downtime to zero
People utilisation
All people must be busy at all
times
As work is performed based
directly on customer demand,
people might not be busy
Process utilisation
Use high‑speed processes and
run them at all times
Processes need to only be
designed to keep up with demand
Work scheduling
Build products to forecast
Build products to demand
Labour costs
Variable
Fixed
Work groups
Traditional (functional)
departments
Cross‑functional teams
Workplace assembly
Straight assembly line
U‑shaped ‘work cells’, for
improved communication
Quality
Inspect/sort work at the end of
process to make sure we find
all errors
Processes, products and services
are designed to eliminate errors
Source: Kilpatrick, J, 2003, Lean principles, Utah Manufacturing Extension Partnership, mhc‑net.com/
whitepapers presentations/LeanPrinciples.pdf, accessed 16 December 2013.
Lean manufacturing differs from traditional production methods in a number of ways. For
example, rather than producing excess stock ahead of time (as is the case in traditional
manufacturing techniques), lean manufacturing requires the continuous endeavour to reduce
batch size. In addition, employees incorporate cross‑functional roles in a lean organisation,
therefore requiring greater emphasis on soft skills such as teamwork and communication. The
use of visual controls to provide information on workplace operations is also unique to the lean
implementation process. These visual cues ensure that processes are easily understood,
therefore improving overall firm efficiency and productivity.121 Employees in lean firms also
incorporate the use of quality assurance measures into internal processes to eliminate errors
from production methods.
Consultations highlighted that some businesses have been unsuccessful in their lean
implementation process. Failed attempts may have occurred due to lack of backing from senior
management, an essential prerequisite to any company’s pursuit of lean manufacturing.
Sustaining lean practices also requires buy‑in from all staff to its principles; ‘lean process
cannot be imposed, it must be embraced’.122 Lack of success was considered to be partly due
to consultants or training providers merely checking off training competencies without applying
it to specific workplace contexts.
121 Ibid., p. 3.
122 Corporate Partners, 2013, Corporate partners process, corporatepartners.com.au/corporate‑partners‑process/,
accessed 11 December 2013.
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The Competitive Systems and Practices training package has been identified as an effective
suite of qualifications to provide firms with improved innovative capacity through the adoption
of lean manufacturing. A number of companies that AWPA consulted have reported significant
productivity gains from a whole‑of‑workplace adoption of the qualification, as well as a number
of less tangible benefits, such as improved morale, confidence and workplace communication.
The Competitive Systems and Practices package was developed by Manufacturing Skills
Australia in conjunction with industry, and is available from Certificate II through to an
advanced diploma.123 The qualification focuses on a whole‑of‑business reform, applying a
range of efficiency‑improvement techniques to raise productivity and reduce waste.
The qualifications are relevant to all members of the manufacturing value chain, not just
technical workers, and they emphasise many of the softer skills such as communication,
teamwork and problem-solving, which have been identified as highly important to increasing
productivity and innovation.124 Consistent with the implementation of lean principles, the
effectiveness of Competitive Systems and Practices is highly dependent on buy‑in at the
chief executive and senior management level.
Part Two
123MSA, Training packages: competitive systems and practices, mskills.com.au/info/
competitive‑systems‑and‑practices, accessed 11 December 2013.
124 Department of Education, Employment and Workplace Relations, 2012, MSS40312 Certificate IV in Competitive
Systems and Practices, training.gov.au/TrainingComponentFiles/MSS11/MSS40312_R1.pdf, accessed
10 December 2013.
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Milspec Manufacturing
Milspec Manufacturing125 is an Albury-based medium-sized manufacturing business,
founded in 2002 by co‑owners David and Wendy Cooper. Milspec specialises in the
precision engineering of industrial, commercial and military products and offers full
end-to-end service, from the inception of an idea, to research and development, through
to full production and post‑production testing and analysis.
Milspec is recognised as a key electromechanical integrator to the defence world and
services international customers in, for example, the United States, Southeast Asia,
New Zealand and Europe.
An integral part of Milspec’s success was the company’s decision to adopt lean
principles through a whole-of-business upskilling in Competitive Systems and Practices
qualifications. Transitioning to lean manufacturing took nine months in total and required
all employees to undergo training, including senior management. Ensuring that all
company members undertook Competitive Systems and Practices training was crucial to
the program’s efficacy, and also helped to achieve buy‑in from staff throughout the
business.
The company reports that the outcomes of its adoption of Competitive Systems and
Practices training were overwhelmingly positive. Delivery performance under new lean
production methods was greatly improved, from 60 per cent to 95 per cent. The process
also had a profound impact on staff turnover, which decreased from 55 per cent to
1 per cent in one year. Giving staff autonomy over their workplace processes also led to
an overall improvement in worker morale, leading to increased retention and productivity.
Design‑led innovation
Design‑led innovation has emerged as a way in which companies can increase their global
competitiveness, with many countries adopting policies and programs that support its
introduction and application by business. A recent report by Bucolo and King examined
design‑led innovation within an Australian context and has used the voice of industry to support
the introduction of design‑led innovation by Australian companies.126
Design‑led innovation is a whole‑of‑business strategy, encompassing the entire supply chain to
improve productivity and competitiveness. It focuses on the role of the customer, emphasising
marketing, branding and networking skills to produce diverse and customised solutions. As
Table 5 describes, the design‑led innovation process involves a partnering of designing for
creation (making things) with designing for value capture (business model design), with the use
of non‑technological innovation such as management capability and business model innovation
as key mechanisms to increase firm competitiveness.127
125 AWPA consultations with Milspec Manufacturing on 17 October 2014.
126 Bucolo, S and King, P, 2013, Design for future manufacturing competitiveness, Australian Design Integration
Network.
127 Australian Design Integration Network, 2013, Design for future manufacturing competitiveness.
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Table 5
Australian manufacturing design scorecard
Ability of Australian
manufacturers
Available strategies
Value outcomes
Technology
e.g. nanotechnology,
social media,
biotechnology
Strong
Technology‑based R&D
Innovations that
create value
Efficiency
e.g. operational,
engineering, financial
systems, lean
manufacturing
Strong
Efficiency‑based
business transformation
frameworks
Offering design
e.g. user‑centred,
behaviour‑changing,
marketing
Weak
Design‑led innovation
Business model
e.g. stakeholders,
distribution,
partnerships, revenue
models, branding
Weak
Effectiveness
improving
e.g. provision of tailored
products and
customer‑focused
solutions
Weak
Type of innovation
Innovations that
capture value
Source: Australian Design Integration Network, 2013, Design for future manufacturing competitiveness,
p. 11 (adapted from Roos, G, 2012, Manufacturing into the future).
Part Two
In their analysis of design‑led innovation, Bucolo and King conclude that effective
implementation involves the application of five key principles:
➢ Clarity of purpose—organisations need to have a clear purpose that is communicated
openly, internally and externally, to ensure cultural alignment.
➢ Become your market—organisations need to immerse themselves in the world of their
customers, and customers’ customers, and stakeholders to achieve key competitive
insights resulting in opportunities for market disruption.
➢ Be the disruptor—in order to be globally competitive, organisations need to create
business models that envisage future markets and services, as well as future products.
➢ Integrated business model—organisations that innovate through integration along the
value chain will be globally competitive.
➢ Own the change experience—organisations need to be dynamic, agile and flexible and
embrace change in order to remain relevant in the face of fierce global competition.
Successfull implementation of design‑led innovation requires firms to possess a number of skill
sets, including strong managerial capabilities, and the combination of business, and science and
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technology‑based expertise.128 The importance of management capability in the adoption of
design‑led innovation is a potential challenge for manufacturing firms, as recent studies have
identified a number of gaps in Australia’s management performance.129
A number of design‑based programs have emerged in recent years across the globe identifying
the need to adopt this capability to retain international competitiveness.130 Specific programs
include New Zealand’s Better by Design program, which has achieved proven benefits for the
nation’s Manufacturing sector,131 as well as the Design Singapore Council, a devoted hub for
design‑based innovation.132 A number of design‑based initiatives, policies and promotion
strategies are present across the European Union, though these strategies are inconsistent at
present, indicating that a comprehensive approach in Australia would give Australian
manufacturers a competitive advantage.
In building a pathway for the take‑up of design‑led innovation more broadly across Australia,
Bucolo and King’s research has introduced an integrated framework for industry, the education
and research sector and government to work together with a common objective of ‘ensuring
Australia’s manufacturing competitiveness’. The report also features a quick reference guide for
businesses to undertake their own design‑led innovation process. The provision of specific
design thinking courses and/or incorporation of design strategies into existing courses in both
VET and higher education will also assist manufacturers’ ability to utilise design‑led innovation
in their workplaces.133 Design capability can also be increased through the integration of
design‑led innovation principles into business audits, mentoring programs, and industry
leadership forums and programs.
To further the take‑up, understanding and promotion of design‑led innovation, CSIRO and the
University of Technology, Sydney have led the way in developing the Australian Design
Integration Network. This nascent grouping of leaders in the development and application of
design‑led innovation is creating pathways for the take‑up of design‑led innovation to increase
industry competitiveness in Australia.
Management
AWPA’s literature reviews and consultation process have highlighted management and, to a
lesser degree, leadership as crucial to the competitiveness of the Australian Manufacturing
sector. Consultations emphasised the importance of management skills throughout the entire
workforce—from the shop floor to the chief executive officer—as well as the need for
employers to lift their gaze beyond the immediate operational demands of their business.
Strong management and leadership skills are correlated with increased innovation and
productivity, as well as overall increased employee engagement and satisfaction.134 Future
management capabilities will be shaped by drivers of change within the sector, including
changes in technology, global supply chains and the emergence of low‑cost economies.
128 Roos, G, 2012, Manufacturing into the future, p. 36, http://www.thinkers.sa.gov.au/roosreport/, accessed
4 March 2014.
129 Green, R, 2009, Management matters in Australia: just how productive are we?, p. 23, innovation.gov.au/
Industry/ReportsandStudies/Documents/ManagementMattersinAustraliaReport.pdf, accessed 3 March 2014.
130 Australian Design Integration Network, 2013, Design for future manufacturing competitiveness, p. 12.
131 New Zealand Trade and Enterprise, Better by Design, betterbydesign.org.nz, accessed 16 January 2014.
132 Design Singapore Council, designsingapore.org/Home.aspx, accessed 16 January 2014.
133 Australian Design Integration Network, 2013, Design for future manufacturing competitiveness, p. 25.
134 Green, R, 2009, Management matters in Australia: just how productive are we?, p. 37.
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Strong managerial capabilities will be central in firms’ capacity to exploit future manufacturing
opportunities. Strong leadership and management are essential for manufacturing firms to
capitalise on opportunities in global supply chains:
Improving leadership and management capability will also be an essential part of
Australia’s performance in the Asian Century requiring not only the development of
broader leadership and management so that the organisation’s strategy and culture
are fit for purpose but also specific skills required for engagement with emerging
economies.135
While leadership and management are often referred to jointly, they are distinct. Management
refers to specific workplace processes such as planning, budgeting, structuring and filling jobs,
measuring performance and solving problems. Leadership, on the other hand, is associated
with a broader strategic vision. Leadership is about vision, a shared purpose, empowerment
and, most of all, producing useful change.
Management performance of Australian manufacturers
The 2009 report Management matters in Australia: just how productive are we? examined the
management performance of Australian manufacturing firms, assessing their practices across
18 dimensions, corresponding to three categories of management capability: people,
performance and operations.136 The report found that the management performance of
Australian manufacturers is above average, but lags behind top performers, such as the United
States, Japan and Germany (Figure 11).
Part Two
135 Australian Industry Group, 2013, submission to AWPA’s Manufacturing workforce study.
136 Green, R, 2009, Management matters in Australia: just how productive are we?.
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Figure 11 Average management performance in manufacturing, selected OECD countries
China
Greece
India
Brazil
Ireland
Portugal
Poland
Scale: 1 = worst, 5 = best
Italy
United Kingdom
France
Australia
Canada
Germany
Japan
Sweden
United States
2.5
2.6
2.7
2.8
2.9
3
3.1
3.2
3.3
3.4
Management score
Source: Green, R, 2009, Management matters in Australia: just how productive are we?, p. 15.
Australian management performance indicates that Australian firms require most improvement
in people management metrics, and ‘instilling a talent mindset’.137 People management also
includes strategies to attract and retain talented staff members, as well as effective
development of human capital. Recent studies have found that Australian high‑performing
workplaces consistently prioritise people management, indicating that Australian manufacturers
should look to develop in this area to compete on a global scale.138
Managers in Australia’s Manufacturing sector have one of the lowest proportions of tertiary
qualifications across surveyed countries. The research suggests that this weakens the
performance of companies, and as such hampers Australia’s ability to participate effectively as
a high‑cost economy in global markets and supply chains.139 Companies that scored four or
above on their management performance had more than double the proportion of managers
with a university degree than those scoring only two.140 Strongly managed companies were
also characterised by a higher proportion of non‑managers with university degrees. Therefore,
improving the management qualifications within the Manufacturing sector, and a general
upskilling of the workforce, are both effective mechanisms to increase management
performance.
137 Ibid., p. 24.
138 Boedker, C et al., 2011, Leadership, culture and management practices of high performing workplaces in
Australia: the high performing workplaces index, Society for Knowledge Economics, Sydney, p. 44,
ske.org.au/download/Boedker_Vidgen_Meagher_Cogin_Mouritsen_and_Runnalls_2011_High_Performing_
Workplaces_Index_October_6_2011.pdf, accessed 30 December 2013.
139 Green, R, 2009, Management matters in Australia: just how productive are we?, p. 23.
140 Ibid., p. 32.
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University of Tasmania’s pathways programs
To address the low level of qualifications held by management staff in the Tasmanian
Manufacturing sector, the University of Tasmania (UTAS) has developed a variety of
pathways141 to improve participation in higher education. These include new pathways
which are co‑delivered with VET providers, including the state’s public provider TasTAFE
and a number of private registered training organisations, to provide a smoother transition
for students from the VET sector through to university.
One of these pathways offers managers from the Manufacturing industry access to
two units from the Graduate Certificate in Business (UTAS) to be taken as part of an
advanced diploma in management, through a recognition of prior learning process.
Completion of the units counts towards students’ existing diploma/advanced
diploma-level qualifications and allows them to transition to a Graduate Certificate
of Business, and further onto a Master of Business, if they wish.
Also commencing in 2014 is a new postgraduate program in lean/continuous
improvement for managers. The four lean/continuous improvement units can also be
counted towards a Graduate Certificate in Business, a Master of Business, or a Master
of Applied Science qualification. The program is delivered by industry experts in intensive
two‑day workshops, incorporating an applied workplace project for the final unit. This
provides direct access to relevant industry knowledge, in a mode that is accessible for
full‑time professionals, and is directly applicable to the business.
Part Two
For those wishing to move towards university-level engineering qualifications, there is
also a new pathway being delivered through UTAS in partnership with Tasmania’s public
VET provider, TasTAFE, which provides a graded pathway from a diploma-level
engineering qualification to a university-level engineering qualification, through the
Bachelor of General Studies (Engineering Pathway). This pathway enables project
managers and technical staff to become fully qualified engineers. More recently, UTAS in
partnership with five other universities and TAFEs has been awarded a national Office of
Learning and Teaching grant to develop a platform of shared units and courses to
facilitate access to an associate degree in engineering (as a pathway to a Bachelor of
Engineering) for those living and working in remote and regional communities.
These programs and initiatives demonstrate the benefits of universities partnering with
industry to respond to skills challenges and to address the lack of integration between
VET and higher education that currently exists in the Australian education system. They
not only support skills development and workforce planning in the Manufacturing sector,
but also create local value by building competitive advantage in regional areas.
141 Allison, J, Broun, D and Lacey, J, 2013, The rise of new manufacturing: implications of game changing
approaches for productivity, skills and education and training—final report.
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Organisational size plays a role in firm management performance. Overall, large companies
tend to be much better managed than small ones. This is particularly relevant for Australian
manufacturing, which has a larger proportion of small firms than almost all other OECD
countries.142 Ownership arrangements are also important; for example, research has found that
multinational corporations tend to implement strong management practices; publicly listed
companies perform well; but family‑run businesses tend to struggle in the area of management
performance.
Encouragement of networks between small enterprises and multinational corporations,
whether it is formal such as through supply chains, or informal, can assist the diffusion of
knowledge and practices relating to leadership and management. This is an important area to
focus on, particularly given that the structure of the Australian Manufacturing sector is
dominated by SMEs and sole operators.
Providing incentives for firms to participate in training and advisory programs related to
leadership and management may help raise awareness of the importance of these skills in
improving firm competitiveness.
AWPA’s consultation process highlighted the importance of chief executive and senior
management involvement in the development of strong business practices and a productive
workplace culture. Many of the businesses that AWPA consulted have stated that chief
executive involvement is the driving force behind effective implementation of workforce
development programs. Without support from above, a clear company‑wide vision is more
difficult to attain.
While the importance of upper‑level management should not be understated, the presence of
leadership at all organisational levels is necessary for increased efficiency and productivity.
Creating a whole‑of‑organisation leadership structure requires a workplace culture where staff
members are empowered, are given greater autonomy, and are encouraged to communicate
with their peers.143 Implementing models such as lean manufacturing has been demonstrated
as an effective mechanism to create high‑performing workplaces.144
Submissions to AWPA’s Manufacturing workforce study highlighted the need for employers to
lift their gaze to the horizon, beyond short‑term business demands.145 Many stakeholders have
stated that managers fall into the habit of working ‘in’, rather than ‘on’ their business. This is
particularly the case for those in small enterprises, who often work more directly with
workplace processes.
In its submission to the Manufacturing workforce study, the Australian Industry Group stresses
the need for Australian manufacturers to ‘move away from short one‑off training programs to
collaborating on customised leadership interventions that are more closely linked to
organisational strategy and are based on a partnership approach between the business, the
employee and the leadership education provider’.146
142 Ibid., p. 23.
143 Ibid., p. 36.
144 Toner, P, 2011, Workforce skills and innovation: an overview of major themes in the literature, p. 53.
145 Australian Manufacturing Workers’ Union (AMWU), 2013, submission to AWPA’s Manufacturing workforce
study.
146 Ai Group, 2013, submission to AWPA’s Manufacturing workforce study, p. 10.
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Management training
The high concentration of SMEs in Australian manufacturing has also led to concerns regarding
the curriculum structure for management qualifications. While Australia has a large number of
business schools, most are based on the Harvard model, which produces graduates for
working in large multinational firms.147 Given that our Manufacturing sector is dominated by
small enterprises, there is a need for education and training programs that are tailored to the
operations of smaller firms. Consultations emphasised the need for any management programs
to incorporate face‑to‑face teaching, involve real‑life challenges in the workplace (action
learning), and be tailored to the Australian environment, which tends to have a more operational
focus, rather than many Harvard‑style management programs that are more applicable to large
multinational operations.
Throughout consultations, stakeholders voiced support for programs such as Leadership 21,
delivered by Mt Eliza Executive Education.148 Leadership 21 also acts as an effective networking
opportunity for SMEs to collaborate with larger companies, and adopt leadership and
management capabilities in this way. The use of peer‑to‑peer learning has been raised by
stakeholders as an effective strategy to disseminate knowledge regarding leadership and
management. Enterprise Connect clients are eligible for subsidised participation in the program.
Given the significant industry support for this program, AWPA considers that continued support
for SME manufacturing managers to participate in the program is worthwhile.
The Centre for Workplace Leadership, located in the Faculty of Business and Economics at the
University of Melbourne, is an Australian Government initiative, run through the Department of
Employment. The centre aims to improve the management capabilities of Australian firms
through the distribution of information such as practical case studies and diagnostic tools to be
utilised by Australian workplaces.149
Recommendation 2
Part Two
That the Centre for Workplace Leadership form a taskforce to review management and
leadership capabilities in Australian manufacturing businesses and where appropriate
revise management training to suit contemporary managers in manufacturing, who are
often time-poor and have significant operational responsibilities.
The taskforce should include relevant Industry Skills Councils such as Manufacturing
Skills Australia and Innovation Business Skills Australia; higher education groups such as
Universities Australia and the Australian Business Deans Council; and industry peak
bodies such as the Australian Industry Group, the Australian Chamber of Commerce and
Industry and the Australian Council of Trade Unions.
147 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
148 Ai Group, 2013, submission to AWPA’s Manufacturing workforce study.
149 Centre for Workplace Leadership, http://www.workplaceleadership.com.au/about, accessed 3 March 2014.
Manufacturing workforce study | Australian Workforce and Productivity Agency
75
Part Three:
Positioning the existing
workforce for industry
transformation and growth
Part Three: Positioning the existing workforce for
industry transformation and growth
The manufacturing workforce will play a key role in securing the competitiveness of the sector.
A highly skilled workforce is necessary to support Australia’s Manufacturing industry as it
moves towards producing more sophisticated products and services. A higher skill level, strong
foundation skills and greater recognition of skills will assist workers to adapt as the industry
continues its transition towards more advanced manufacturing.
For some, unfortunately, this may not be a positive experience. As demand increases for
workers with higher level skills, some workers will find themselves at risk of displacement,
particularly if they work in a subsector with declining employment levels, or in a lower skilled
occupation.
This is not a new situation. The Australian Manufacturing industry has been undergoing
structural adjustment for a number of years. It has experienced large‑scale redundancies over
time, with employment over the last decade (2003 to 2013) declining by 10.2 per cent, or
106,600 jobs. Declines in employment levels have been experienced across most subsectors
to varying degrees.150
Forecasts of continued employment decline in the sector mean the risk of displacement for
some workers is apparent and so strategies that assist workers to transition to new roles, in
combination with assistance packages, must be developed.
A key challenge is to ensure that workers have skills that are transferable and have currency in
the labour market. Lower skilled workers, in particular those with low language, literacy and
numeracy skills and/or no post‑school qualifications are more vulnerable to long‑term
unemployment as a result of structural adjustment. When completed effectively, recognition of
prior learning has the potential to improve workers’ employability by assisting them to identify
their skills and expertise and have those skills formally recognised.
Snapshot of the Australian manufacturing workforce
The profile of the industry and its workforce has consequences for how well positioned it is to
manage the global trends outlined in Part One and to transition to internationally competitive
high‑end manufacturing.
150 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003.
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77
Part Three
Currently, Australia’s manufacturing workforce is employed across a wide range of subsectors.
However, its competitive strengths are in low–medium technology manufacturing. Figure 12
shows the level of employment across the subsectors since 2003. Over the past decade, only
five subsectors experienced employment growth (Petroleum and Coal Product Manufacturing
(3.1 per cent); Beverage and Tobacco Product Manufacturing (20.0 per cent); Primary Metal
and Metal Product Manufacturing (14.2 per cent); Machinery and Equipment Manufacturing
(8.9 per cent); and Food Product Manufacturing (12.1 per cent)). Together, the Food Product
Manufacturing and Beverage and Tobacco Product Manufacturing subsectors accounted for
almost a quarter of manufacturing employment, and grew by 32.1 per cent between 2003 and
2013. Beverage and Tobacco Product Manufacturing experienced the highest growth
(20 per cent) over this period, followed by Primary Metal and Metal Products (14.2 per cent),
the third‑largest subsector. Further discussion of historical employment and growth by
subsector can be found in Appendix D.
Figure 12 Employment in manufacturing by subsector, 2003 and 2013
Food Product
Machinery and Equipment
Primary Metal and Metal Product
Transport Equipment
Manufacturing, nfd
Fabricated Metal Product
Furniture and Other
Printing (including the Reproduction of Recorded Media)
Basic Chemical and Chemical Product
Textile, Leather, Clothing and Footwear
Wood Product
Non-Metallic Mineral Product
Polymer Product and Rubber Product
Beverage and Tobacco Product
Pulp, Paper and Converted Paper Product
Petroleum and Coal Product
0
50
100
150
200
250
Employment (’000)
2013
2003
nfd = not further defined
Source: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, original, four‑quarter
average.
While there are notable differences between the subsectors in relation to the qualification, age
and gender profile of their workforces, some key characteristics of the workforce as a whole (at
2013, four‑quarter average)151 are that:
➢ it is predominantly male (73.3 per cent compared to 54.2 per cent for all industries). This
proportion has remained steady for the past 15 years
➢ the percentage of females varies greatly across subsectors, from a low of 9.8 per cent in
Primary Metal and Metal Product Manufacturing to 61.9 per cent in Textile and Clothing
Manufacturing
➢ a significant proportion of employment is full-time (85.3 per cent)
151Ibid.
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➢ it is slightly older, with a median age of 41 years compared to the all‑industries median of
39 years. Over the past decade, the proportion of the workforce aged 45 years and over
increased from 34.4 per cent in 2003 to 42.5 per cent in 2013
➢ the majority of the workforce are employed in Victoria (30.5 per cent) and New South
Wales (30.3 per cent).
Occupation and skills profile
There is a broad range of occupations across the manufacturing workforce, as well as great
variations in skill levels. Perceptions of manufacturing jobs often lean towards the traditional
trades. This is understandable given that around 41 per cent of the manufacturing workforce
are generally engaged in transformative processes ( Technicians and Trades Workers, and
Machinery Operators and Drivers), as highlighted in Figure 13. However, a large proportion of
the workforce is employed in occupations that people may not readily associate with the
Manufacturing industry. These include occupations that often provide related services such as
marketing, sales, engineering and design.
Figure 13 Employment in manufacturing by occupational classification, 2013
Managers
14.9
Professionals
9.5
Technicians and Trades Workers
27.7
Community and Personal Service Workers
0.7
Clerical and Administrative Workers
10.6
Sales Workers
5.3
Machinery Operators and Drivers
13.5
Labourers
17.9
0
5
10
15
20
25
30
Part Three
Per cent
Source: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, four‑quarter average.
The wide range of manufacturing occupations highlights that the sector employs people at all
skill levels. In 2013 (four‑quarter average), almost a quarter (24.4 per cent) of manufacturing
workers were classified as ‘high skilled’ (Managers and Professionals), an increase from
19.8 per cent in 2003 (four‑quarter average).
Figure 14 demonstrates that the increase in high‑skilled workers during the period from 2003 to
2013 paralleled a decline in lower skilled workers (Machinery Operators and Drivers and
Manufacturing workforce study | Australian Workforce and Productivity Agency
79
Labourers).152 With subdued growth and declines in most manufacturing occupations expected
over the long term, Figure 14 indicates that lower skilled workers may have difficulty finding
replacement work in their current occupations.
Such difficulties will be prevalent among the labourer, manual operator, and driver occupations,
such as Meat Boners and Slicers, and Slaughterers; Metal Engineering Process Workers;
Timber and Wood Process Workers; and Plastics and Rubber Production Machine Operators.
These occupations have experienced strong declines over the past five years, a trend which is
expected to continue in the medium and long term. Conversely, it also implies that high‑skilled
occupations are the least likely to be impacted by structural adjustment of the sector.
Figure 14 Manufacturing employment by skill level, 2003–2013
500
450
400
350
‘000
300
250
200
150
100
50
0
2003
2004
2005
2006
High skill
2007
2008
Medium skill
2009
2010
2011
2012
2013
Low skill
Source: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, four‑quarter average, custom
request.
Qualification profile
The qualification profile of the Manufacturing industry varies somewhat from the
economy‑wide average (Figure 15). Almost a third of the workforce hold Certificate III or IV
qualifications (compared to 20.3 per cent for all industries), driven by the base of trades
workers and technicians. University qualifications are substantially lower than the national
average, at 14.5 per cent of the manufacturing workforce compared to 27.2 per cent for all
industries. A large proportion (45.2 per cent) of the manufacturing workforce does not have any
152 Ibid., custom request.
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post‑school qualifications. This is particularly significant, as it has been claimed that 87 per cent
of available jobs in the industry require a post‑school qualification.153
Figure 15 Highest qualification achieved by workers in the Manufacturing industry, compared
to all industries, 2012
3 8 .7
No post-school
qualifications
4 5 .2
3 .2
Other certificate
2 .7
2 0 .3
Certificate III/IV
2 9 .8
10 .5
Advanced diploma/diploma
7.9
2 7.2
Bachelor degree or higher
14 .5
0
5
10
15
20
25
30
35
40
45
50
Per cent
All industries
Manufacturing
Source: Department of Education, Employment and Workplace Relations, 2012, Australian jobs 2012 (ABS 2011
Census data). Excludes ‘Level of education not stated’ from total.
Of the top 30 employing occupations, 16 have an ANZSCO skill level of 4 or 5 (lower skilled),
and 18 occupations have more than 45 per cent of workers without any post‑school
qualifications. The occupations where qualifications are most common are generally among
153 Industry Skills Councils, 2013, No more excuses: an industry response to the language, literacy and numeracy
challenge, p. 39, isc.org.au/pdf/NoMoreExcuses_FINAL%20single%20page.pdf, accessed 11 January 2014.
154 ABS, 2005, ANZSCO —Australian and New Zealand Standard Classification of Occupations, information paper,
cat. no. 1221.0, pp. 3–4.
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Part Three
Appendix G provides further detail on qualification data for the top 30 employing occupations in
manufacturing. It also highlights the skill level, as defined in the Australian and New Zealand
Standard Classification of Occupations (ANZSCO), for each occupation. The greater the range
and complexity of the set of tasks performed in a particular occupation, the greater the skill
level of an occupation. The skill levels range from 1 (highly skilled and requiring a bachelor
degree or above) to 5 (unskilled). ANZSCO does not measure the skill level of an individual;
rather, it refers to the level of skill that is typically required to competently perform the tasks of
a particular occupation. Skill level is measured operationally by the level or amount of formal
education and training, the amount of previous experience in a related occupation and the
amount of on‑the‑job training.154
manager and trade and technician occupations. Most of the trade and technician occupations
(seven of the top 30 occupations) are rated with a skill level of 3 (medium skill), and workers in
this group generally hold Certificate III or IV qualifications. Further details can be found in
Appendix G.
Structural adjustment
Transition and change are not new concepts to an industry that is continually required to
interact with advances in technology. Employment over the last decade has been declining
steadily in the majority of its subsectors, and it has experienced large‑scale redundancies over
time.155 During the last decade, Australia’s Manufacturing industry was the recipient of the
largest tranche of financial assistance in the form of structural adjustment packages.156
Modelling commissioned by AWPA to create a range of possible scenarios for Australia to 2025
forecasts declines in manufacturing employment by 1.0 to 1.5 per cent per year within the three
most plausible scenarios. Only Food, Beverage and Tobacco Manufacturing and Primary Metal
and Metal Product Manufacturing are predicted to grow in all scenarios. The scenarios do not
take into account recent developments in the automotive subsector discussed in the following
section. Forecasts of continued decline in overall employment numbers indicate that strategies
to transition workers at risk of displacement to new roles, in combination with assistance
packages, must be developed as soon as possible for at‑risk subsectors. A more detailed
discussion of AWPA’s growth scenarios can be found in Appendix A.
The negative impacts of structural adjustment can be exacerbated by large‑scale firm closures,
as they often involve large groups being retrenched simultaneously in small labour markets.
While the automotive vehicle subsector accounts for around 5 per cent of manufacturing
employment, the announced closures of the Australian manufacturing operations of Ford,
GM Holden and Toyota will also have major consequences for employment in other subsectors,
particularly Transport Equipment, and for regional labour markets. The impending loss of the
automotive subsector has prompted debate on the subsequent impact throughout
manufacturing, and governments across the country are now looking at mechanisms to
transition to and foster internationally competitive high‑end manufacturing in Australia.
Experience has shown, however, that if such closures are handled proactively, the effect on the
community can be mitigated. For example, the effective strategy undertaken preceding and
following BHP’s closure of its 84‑year‑old steelworks in Newcastle cushioned the impact of the
closure on the local economy, allowing it to transition from a largely manufacturing‑based
economy to one focused on tourism and services.157
A key challenge is to ensure that workers have skills that are transferable and have currency in
the labour market. Lower skilled workers, in particular those with low language, literacy and
numeracy skills and/or no post‑school qualifications, are more vulnerable to long‑term
unemployment as a result of structural adjustment. Further, research has shown that older
155 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 16.
156 Beer, A, 2013, ‘Structural adjustment programs in Australia: community impacts and outcomes’, presentation to
the Canberra workshop on structural adjustment research, July, adelaide.edu.au/churp/presentations/Structural_
Adjustment_presentation_for_Canberra_PDF_Version.pdf, accessed 13 December 2013.
157 Hunter Valley Research Foundation, 2011, Diversification of the Hunter economy—post BHP, hvrf.com.au/
images/HVRF_Publications/Diversification_of_the_Hunter_Economy_Post_BHP.pdf, accessed 16 December
2013.
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workers are often less skilled and are therefore more likely to experience longer periods of
unemployment.158
Some commentators criticise the current competency‑based training approach that underpins
VET and the labour market, particularly for low‑ and medium‑skill jobs. They suggest that the
creation of knowledge based on ‘vocational streams’ is a more coherent way to group skills than
in competency‑based training as it increases the ability of workers to adapt to changing labour
market conditions. Vocational streams emerge where there are commonalities in the nature of
work and in the knowledge, skills and attributes required to work in a particular field. As
vocational streams consist of linked occupations within broad fields of practice, each occupation
can lead to a number of jobs. Commentators argue that vocations can mitigate the negative
effects of industry structural adjustment because workers are not as limited to defined trades
and professions. As such, the ability of workers to adapt is enhanced because they are able to
capitalise on a broad range of job opportunities as they emerge and they adjust quickly to being
redeployed as labour market conditions change.159
When completed effectively, recognition of prior learning has the potential to improve workers’
employability by assisting them to identify and formally obtain recognition of their skills and
expertise.
Australia’s automotive industry
Australia’s automotive industry has undergone significant structural change over recent decades.
Exposure to increased international competition has been exacerbated by the recent strong
Australian dollar and the growth of car manufacturing in low‑wage nations such as China and
Thailand.
Following the closure of Nissan in 1992 and the cessation of Mitsubishi Motors Australia’s
domestic operations in 2008, three major car manufacturers—Ford, GM Holden and Toyota—
will be operating in Australia over the next two or three years. All are foreign‑owned subsidiaries
of global companies with affiliates in a number of countries. In addition, there are hundreds of
parts manufacturers, ranging from small Australian producers to companies that are also
subsidiaries of very large multinationals.
158 Spoehr, J, Barnett, K and Parnis, E, 2009, Experience works: the mature age employment challenge, National
Seniors Australia, p. 10.
159 Buchanan, J, Moodie, G and Wheelahan, L, 2012, Revitalising the ‘vocational’ in flows of learning and labour,
NCVER, Adelaide, ncver.edu.au/wps/wcm/connect/1ea7bd72‑9332‑4ae9‑ab20‑c3d1ccc395ab/2535.
pdf?MOD=AJPERES&CACHEID=1ea7bd72‑9332‑4ae9‑ab20‑c3d1ccc395ab, accessed 20 February 2014.
160 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003 (four‑quarter average).
161 ANZSIC 350 (Motor Vehicle and Motor Vehicle Parts Wholesaling); ANZSIC 391 (Motor Vehicle Retailing); ANZSIC
392 (Motor Vehicle Parts and Tyre Retailing); and ANZSIC 941 (Automotive Repair and Maintenance).
162 Australian Automotive Aftermarket Association, 2013, submission to the Productivity Commission review of the
Australian automotive manufacturing industry, pc.gov.au/__data/assets/pdf_file/0003/134193/
subpp247‑automotive.pdf, accessed 19 February 2014, quoted in Productivity Commission, 2013, Australia’s
automotive manufacturing industry: Productivity Commission preliminary findings report, p. 27, pc.gov.au/__data/
assets/pdf_file/0005/131396/automotive‑preliminary.pdf, accessed 19 February 2014.
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Part Three
In 2013, around 44,200 people in Australia were employed in the manufacture of cars, trucks and
buses, as well as automotive engines, automotive electrical components and products for the
automotive aftermarket.160 A further 259,100 people were employed in the repair, maintenance
and wholesaling of motor vehicles and parts, as distinct from the development or production of
motor vehicles or automotive components.161 There is a complex logistical supply chain of about
160 businesses that are involved in the engineering, design, tooling and manufacturing of
automotive components and there are at least 260 businesses that manufacture components
and accessories for the aftermarket.162
Over the past decade, employment in the Motor Vehicle and Motor Vehicle Part Manufacturing
subdivision (ANZSIC 231) declined by 40.4 per cent compared with the Manufacturing industry
as a whole, which declined by 10.2 per cent.163
Currently, Ford employs around 3,250 workers in Australia, including contractors.164 Toyota has
an Australian workforce of approximately 4,200, including 2,500 direct manufacturing
employees. It also supports another 20,000 jobs through its direct supplier base.165 GM Holden
employs 1,900 workers in Victoria and 1,760 in South Australia, not including dealers and
service centres.166
In May 2013, following a comprehensive review process, Ford announced its plans to cease
local vehicle manufacturing in October 2016. At the same time, it stated that it would retain its
Australian‑based product development capability as a lead source for the design and
development of future global vehicle programs. Post‑2016, Ford expects to employ around
1,500 highly skilled employees, plus a significant number of additional specialist contractors, in
its ongoing operations.
In December 2013, GM Holden announced it would cease manufacturing in Australia in 2017.
The closure announcement follows a number of redundancy rounds over recent years, which
has seen GM Holden’s South Australian workforce reduce by more than 40 per cent.
Subsequently, in February 2014, Toyota announced that it would end vehicle and engine
production in Australia by the end of 2017. Furthermore, Toyota is considering reducing the
scale of operations of its Toyota Technical Center Australia, its design and development base in
Notting Hill, Victoria. The company cited a number of reasons for the decision, including
‘forecasts of a reduction in the total scale of vehicle production in Australia’.167
The closures of GM Holden, Ford and Toyota will necessarily have major consequences for
employment in the sector and for regional labour markets. Further, modelling by Monash
University’s Centre of Policy Studies forecasts the closures will also have negative short-term
effects on the Australian economy, with the short-term adjustment resulting in worsening
unemployment until 2018. After 2018 it is estimated the adjustment will continue with falling
real wages forecast to take effect.168 Regional employment will be hardest hit in the Victorian
regions of Greater Dandenong, Ballarat, Hume, Greater Geelong and South East Melbourne,
and Playford in northern Adelaide.
163 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003. Comparison is from 2003 to 2013
using four‑quarter average data.
164 Ford Motor Company of Australia, 2013, submission to the Productivity Commission review of the Australian
automotive manufacturing industry, pc.gov.au/__data/assets/pdf_file/0010/130222/sub065‑automotive.pdf,
accessed 19 February 2014, quoted in Productivity Commission, 2013, Australia’s automotive manufacturing
industry, p. 3.
165 Toyota Motor Corporation Australia, 2013, submission to the Productivity Commission review of the Australian
automotive manufacturing industry, pc.gov.au/__data/assets/pdf_file/0011/130124/sub031‑automotive.pdf,
accessed 19 February 2014, quoted in Productivity Commission, 2013, Australia’s automotive manufacturing
industry, p. 7.
166 GM Holden, 2013, submission to the Productivity Commission review of the Australian automotive
manufacturing industry, pc.gov.au/__data/assets/pdf_file/0008/130211/sub058‑automotive.pdf, accessed
19 February 2014, quoted in Productivity Commission, 2013, Australia’s automotive manufacturing industry,
p. 37.
167 Toyota Motor Corporation, 2014, Toyota to end production in Australia by the end of 2017, media release,
14 February, www2.toyota.co.jp/en/news/14/02/0210.pdf, accessed 18 February 2014.
168 Allen Consulting Group, 2013, The strategic role of the Australian automotive industry, report to the Federal
Chamber of Automotive Industries, pp. 46–55, http://www.acilallen.com.au/cms_files/ACILAllen_FCAI_
September2013.pdf, accessed 23 January 2014.
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The number of businesses that rely on automotive-related work is much larger now than it was
in the 1980s after tariff cuts because in the 1980s restructuring for lean production consisted of
outsourcing non-core activities. The Ford, GM Holden and Toyota closures are likely to make
some of the major suppliers uneconomic, with the threat that Australia will lose its supply chain
capability. A 2013 report by the Allen Consulting Group highlighted the extent to which
Australian component manufacturers are reliant on the domestic production of cars.169
Submissions to the Productivity Commission’s review of Australia’s automotive industry noted
that automotive job losses would have multiplier effects in South Australia and Victoria through
the lost spending by workers in local communities.
Motor vehicle manufacturers account for 59 per cent of component manufacturers’ revenue
and parts dealers account for 28 per cent of their revenue, whereas exports make up 13 per
cent.170 While some component manufacturers have already closed or diversified their
businesses to move into other industries or export markets, a portion remain reliant on vehicle
production in Australia. For example, TI Automotive, a subsidiary of a specialist global firm,
reported to the Productivity Commission that its Australian operations are totally reliant on the
assembly of passenger vehicles in Australia.171 Any rationalisation of the number of automotive
component businesses will lead to further job losses in the subsector.172
The spectrum of skills used in automotive manufacturing ranges from Certificate I through to
doctorates, including highly skilled designers, program planners, electrical engineers, metal
fitters and machinists, toolmakers and product assemblers.
The subsector is also acknowledged for its significant contribution to research and
development, technology adoption and innovation systems, providing business and employees
with capabilities and skills that are transferred to other advanced and complex manufacturing
processes (including design, metallurgy, machining, electronics, software, robotics and
chemicals), as well as engineering, technical, organisational and logistical skills.
The automotive manufacturing subsector has provided the foundations for critical flow‑on
capabilities to other sectors including lean manufacturing principles and senior management
capabilities and contributes a proportionally greater share to total manufacturing research and
development than its share of employment and industry value added.
As Ford, GM Holden and Toyota wind down their Australian operations over the next two to
three years, the imperative is to transition affected workers to other sectors of the economy
where their skills can be utilised.
169 Ibid., p. 22.
170 Nuguid, A, 2012, Automotive parts and accessories manufacturing in Australia, IBISWorld industry report C2819,
http://www.ibisworld.com.au/industry/default.aspx?indid=253, accessed 4 March 2014.
171 Productivity Commission, 2014, Australia’s automotive manufacturing industry: Productivity Commission position
paper, p. 7, pc.gov.au/__data/assets/pdf_file/0006/132981/automotive‑position.pdf, accessed 10 February
2014.
172Ibid.
173 Ibid., p. 19.
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Part Three
Lower skilled workers, particularly older workers and those with poor English language skills,
are likely to face the greatest difficulty in transitioning to other occupations or industries and are
most likely to be at risk of unemployment. Automotive manufacturing employees have, on
average, an employment history of lower skill jobs. In 2011, 34 per cent were employed in
lower skilled occupations such as Labourers and Machinery Operators. This was similar to the
overall manufacturing workforce but double the average for all industries (16 per cent).173 The
workforce also has lower educational attainment and lower English proficiency compared to the
average for all industries. In 2011, 3.7 per cent of automotive employees reported poor English
language skills, compared to an average of 1.3 per cent for all industries.174 Given the regional
concentration of automotive employment in disadvantaged labour markets in Victoria and South
Australia, the majority of displaced workers will require targeted assistance to retrain and find
alternative employment.
Following its announcement in 2013 that it would close its manufacturing facilities, Ford has begun
a three‑year process to support its employees, suppliers and other stakeholders through the
transition. Directly affected employees will receive entitlements in line with the prevailing
workplace agreements and Ford is working constructively with employees and their
representatives on transitional arrangements, including upskilling, training and placement
opportunities.
Given the combined impact of the closures of Ford, GM Holden and Toyota on the Manufacturing
sector, it is important that the process of assisting workers to adjust is put in place now, based
on learnings from other major closures and downsizing in the automotive and related subsectors
over recent decades. Examples include the 1999 closure of BHP’s steelworks in Newcastle,
the 2004 closure of Mitsubishi Motors’ foundry and engine plant at Lonsdale in South Australia,
the 2010 closure of the Bridgestone tyre manufacturing plant in Salisbury, South Australia, and the
2011 closure of Bluescope Steel’s production plant in Port Kembla, New South Wales.
While displaced workers tend to be absorbed by growth in other industries, labour markets take
time to adjust, in part due to the need for workers to reskill and because the impact of larger scale
job losses at a sub‑metropolitan level depends on local resources and the diversity of local
economies. Workers who wish to remain employed locally may have to accept reduced pay and/or
invest in acquiring new qualifications, affecting income and spending power.
A key principle in any form of adjustment assistance is that it is specifically targeted at workers,
especially those with skills made obsolete or redundant by structural changes and those with
low language, literacy and numeracy skills who are most at risk of becoming long‑term
unemployed as a result of structural adjustment. Assistance should also include measures
designed to strengthen the capacity of regional businesses and organisations to anticipate and
adapt to adjustment pressures.
Any assistance should also seek to support recognition of prior learning, as many of the skills that
manufacturing workers possess are not formally recognised or do not make up a formal
qualification.
Programs should be specific and well targeted. A comprehensive and multilayered package of
structural adjustment assistance measures would include programs designed to:
➢ assist workers made redundant by structural change within the industry with job search,
counselling, training and retraining programs
➢ assist regions negatively impacted by industry adjustment to find new economically
sustainable industries to maintain overall levels of employment and economic wellbeing
➢ improve connectivity from regions impacted negatively by industry adjustment to other
regions in order to speed adjustment.
Some useful lessons learned from previous plant closures follow.
174Ibid.
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Preparation for retraining
➢ Early notice to workers of impending closures allows employees time to think about
future career options.
➢ Career advice and placement support require careful planning.
➢ Support is needed to map skills and identify training needs.
➢ Recognition of prior learning plays a key role in successful transitions.
➢ Guidance should be provided about what jobs are in demand beyond vacancy lists.
Retraining
➢ Informal linkages are as important as formal institutional arrangements.
➢ Local employment coordinators are important to success.
➢ Training needs to be combined with on‑the‑job experiences to increase employability.
➢ Retraining needs to offer a pathway to alternative employment rather than premature
retirement.
Existing support structures
➢ Job Services Australia providers can be driven by incentive structures and these can
result in job placements that are unsuitable or unsustainable.
➢ Mainstream services to unemployed people do not translate well to people who are
made redundant. Employment and support services should be tailored to meet the
needs of the workers involved.
➢ Multi‑agency, multidisciplinary casework approaches are warranted to deal with shorter
and longer term social, health, housing and psychological impacts.
These structural adjustment packages have come under recent reconsideration since
GM Holden’s announcement of its intention to close its Australian operations.175 Much of the
previous structural adjustment investment has come in the form of regional adjustment (such
as that employed before and after the BHP and Mitsubishi shutdowns), as distinct from
ongoing transitional assistance programs. In 2012, the Productivity Commission noted that the
automotive manufacturing industry and other heavy manufacturing industries may benefit from
assistance targeted at the level of individual workers (especially in the case of a large number of
retrenchments due to a facility downsize or shutdown).176
Part Three
175 Macfarlane, I, Minister for Industry, 2013, Statement on Holden, media release, 11 December,
minister.innovation.gov.au/ministers/macfarlane/media‑releases/ministers‑statement‑holden, accessed
16 December 2013.
176 Productivity Commission, 2012, Trade and assistance review, 2010–11, Productivity Commission annual report
series, chapter four, http://www.pc.gov.au/__data/assets/pdf_file/0004/117292/
trade‑assistance‑review‑2010‑11.pdf, accessed 10 January 2014.
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In its November 2013 issues paper on Australia’s automotive manufacturing industry, the
Productivity Commission raised the question of what form industry assistance, if any, may take,
specifically:
the nature and effectiveness of past structural adjustment assistance programs,
including longitudinal evaluation of labour and resource reallocation after the exit of
motor vehicle and automotive component manufacturers from Australia, and any
lessons for future adjustment support for structural change in Australia.177
In its position paper, released on 31 January 2014, the Productivity Commission highlights that
structural change is frequently costly for retrenched workers and families, and can involve job
search and training costs.178 It notes that the information on past programs suggests that they
have had limited success in assisting displaced automotive manufacturing workers to find
future employment; however, the advance notice of Ford’s, GM Holden’s and Toyota’s plant
closures means that there is time to prepare for the change and to learn from previous
programs.179
The position paper also highlights that automotive component manufacturers may not receive
the same degree of notice or the same level of help as the GM Holden, Ford and Toyota plant
workers. It will be important to ensure that generally available services are sufficient to support
them. In cases where government assistance appears to be insufficient, component
manufacturing workers may merit particular consideration for additional assistance.180
The Australian Government has committed to the development of a $100 million growth fund,
to start in 2014–15, to support economically responsible initiatives in regions facing pressure in
their manufacturing sectors. The fund will complement the direct support available to
GM Holden and Toyota workers available under existing Australian Government schemes, such
as the Automotive Industry Structural Adjustment Program, and GM Holden assistance
schemes. The Prime Minister has indicated that retraining and upskilling automotive workers
will be important, and pledged to work to ensure that automotive workers have their skills and
competencies recognised and certified.181
Recognition of prior learning
Recognition of prior learning (RPL) has been a longstanding policy initiative in the VET
landscape. In the context of structural adjustment, it has the potential to increase the mobility
and employability of manufacturing workers who do not hold post‑school qualifications by
officially recognising the value of skills acquired through informal and non‑formal learning.
However, its take‑up has been modest, with the national aggregate for successful up‑front RPL
(at time of enrolment) remaining at around 4 per cent of VET students. The rate of take‑up also
varies between equity groups.182
177 Productivity Commission, 2013, Review of the Australian automotive manufacturing industry: Productivity
Commission issues paper, pp. 5–6, pc.gov.au/__data/assets/pdf_file/0003/128946/automotive‑issues.pdf,
accessed 16 December 2013.
178 Productivity Commission, 2014, Australia’s automotive manufacturing industry, p. 2.
179 Ibid., p. 26.
180 Ibid., p. 20.
181 Abbott, T, Prime Minister and Macfarlane, I, Minister for Industry, 2013, Securing Australia’s manufacturing
future, joint media release, 18 December, pm.gov.au/media/2013‑12‑18/
securing‑australias‑manufacturing‑future, accessed 8 January 2014.
182 Hargreaves, J, 2006, Recognition of prior learning at a glance, NCVER, p. 4, ncver.edu.au/publications/1662.
html, accessed 8 January 2014.
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Studies on RPL have consistently identified a number of barriers to its take‑up, including a lack
of awareness of RPL, the complexity and overly bureaucratic nature of the process, limited
learner understanding of their own skills, and learner inability to articulate their life experiences
in a way that meets RPL requirements.183 These barriers were also raised in a number of
submissions. Given the significant proportion of manufacturing workers with limited language,
literacy and numeracy skills, the capacity of workers to identify and articulate the skills they
possess is of particular concern.
Transferability of skills across the manufacturing industry and from manufacturing to
other industries has been identified by MSA’s stakeholders as a major issue facing the
manufacturing industry.184
The key to transitioning people from either disadvantage or structural adjustment in
our experience is an entitlement to supported skills recognition and recognition of prior
learning to establish a datum for capability and to determine options and interests.185
Stakeholders have expressed dissatisfaction with RPL delivery. The ForestWorks Industry Skills
Council has identified skills recognition and training as a gap in service provision of the
workforce development and planning programs available to the Manufacturing industry.186
Manufacturing Skills Australia echoed these sentiments during consultations, noting that the
VET sector lacked incentives to undertake RPL and as a result it was underutilised. Further, the
Australian Manufacturing Workers’ Union (AMWU) highlighted that past experience
demonstrated that many workers participating in plant closures are often not prepared or
emotionally equipped to navigate complex RPL processes.187 Unfortunately, many of the recent
studies on RPL in Australia use data dating back to the late 1990s or early 2000s, so there is
little documented evidence to determine how well RPL delivery is currently operating.
Ensuring RPL processes are candidate focused and support people to accurately identify and
describe their skills is considered best practice. Registered training organisations already have
fully articulated models and many assessment tools and other resources to draw on to
implement this approach.188 However, the feedback received implies that more could be done
to better support registered training organisations to develop and implement RPL programs that
are effective and consistently applied. In relation to displaced workers, it is preferable that
programs are implemented early, before the redundancies occur. The use of tools such as the
Australian Core Skills Framework to assess workers’ language, literacy and numeracy levels and
Core Skills for Work to assess their employability skill levels may help ensure that all workers
receive properly targeted support.
183 Clayton, B and Smith, L, 2009, Recognising non‑formal and informal learning: participant insights and
perspectives, research report, NCVER, pp. 13–14, ncver.edu.au/publications/2084.html, accessed
8 January 2014.
184 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
185 AMWU, 2013, submission to AWPA’s Manufacturing workforce study.
186 ForestWorks Industry Skills Council, 2013, submission to AWPA’s Manufacturing workforce study.
187 AMWU, 2013, submission to AWPA’s Manufacturing workforce study.
188 COAG, 2009, COAG recognition of prior learning program: final program report, Department of Education,
Employment and Workplace Relations, p. viii, deewr.gov.au/Skills/Documents/COAGRPLProgramRpt.pdf,
accessed 18 September 2012.
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Part Three
Given the Australian Government’s commitment to ensure that automotive workers’ skills and
competencies are recognised and certified, there is an opportunity to conduct further analysis
into RPL, building on work that will be done with GM Holden employees. In particular, the
project could develop a body of evidence on how RPL can be delivered more effectively and
efficiently, including for vulnerable cohorts, so it can be maximised. It is likely that such a
project would provide the Manufacturing industry with industry‑specific insights into how to
better implement RPL in the industry. This would be advantageous in light of the predicted
decline in employment across many subsectors.
Recommendation 3
a) That the Australian Government Department of Human Services, relevant state and
territory government agencies, Job Services Australia, vocational education and
training providers and other registered training organisations, work collaboratively to
help vulnerable workers transition to alternative employment. This should be a
multilayered response that includes the provision of Workplace English Language and
Literacy program training as necessary. Strategies should be based on learning from
previous closures and support initiatives that develop and implement best practice
models.
b) That the National Centre for Vocational Education Research lead an ‘action research’
project on better recognising the existing skills of employees impacted by the
announced closures in the automotive subsector. Action research involves live
participation in the change process and would build on current practice in recognition
of prior learning.
The imperative to upskill and reskill the existing manufacturing
workforce
It is clear that global drivers of change, as outlined in Part One, will increase pressure on
Australian manufacturers to move their offerings up the global value chain. Australia’s current
competitive strengths are mainly in low–medium technology manufacturing. However, the
Council of Australian Governments has tasked its new Industry and Skills Council with fostering
internationally competitive high‑end manufacturing in Australia.189 Growth in these areas will
require a focus on advanced manufacturing technologies, knowledge‑intensive services and
higher level skills.
This will continue the trend away from low‑skill jobs to high‑skill jobs and intensify the need for
firms to get more out of their workforces to drive productivity and evolve in response to a
changing manufacturing environment. A key element to achieving this will be building the
workforce’s skills base, including reskilling some employees in new growth areas.
As previously noted, a high proportion (45.2 per cent) of the current workforce does not hold a
post‑school qualification. If this issue is not addressed, it is likely that firm productivity and
competitiveness will be affected. A common theme raised through the submission process
was that the range of skills needed by the manufacturing workforce to succeed in global supply
chains was varied and included a range of new technological and logistical skills. AWPA
acknowledges that upskilling should occur in a strategic manner, with training (formal and
informal) aimed at developing capabilities and expertise that reflect the medium‑ and long‑term
needs of the industry. This concept was also raised in the AMWU submission to the
Manufacturing workforce study. For this to occur, investment in training to raise capabilities in
189 COAG, 2013, COAG communique, 13 December, p. 5.
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new areas such as digital manufacturing and an increased emphasis on skills not traditionally
associated with manufacturing, such as marketing and e‑business skills, will be needed.
Australian Government initiatives have an important role to play in providing funding to assist
enterprises in their workforce development, including by upskilling and reskilling, for example,
the Australian Government Skills Connect Fund and the National Workforce Development Fund.
Both funds form part of the Australian Government’s Skills Connect initiative, which is designed
to link employers and industries to funding for whole‑of‑workforce (including language, literacy
and numeracy training and mentoring of Australian apprentices) planning and development. The
funds use an industry‑driven model that enables businesses to co‑invest with the Australian
Government to train, reskill and upskill workers in targeted areas. Industry contributions operate
on a sliding scale, with large enterprises contributing up to 66 per cent of training costs, and
SMEs contributing between 33 and 50 per cent.190
Stakeholders raised concerns that many manufacturing employers, particularly SMEs, are
unable to assess or articulate their workforce development needs. In addition, the vast amount
of government and non‑government information on workforce development was often
described as overwhelming for SMEs, and can act as a disincentive for firms to access funding
for training. Given the increasing complexity of manufacturing jobs and the skills required, this
could be a barrier to firms effectively capitalising on opportunities to make higher value
products and services.
Manufacturing Skills Australia facilitates the skilling of Manufacturing industry workers and
business functions through the National Workforce Development Fund, working with
organisations to develop and train staff to increase their performance and contribution to the
productivity and profitability of the enterprise. Manufacturing Skills Australia, in partnership
with the AMWU and the Australian Industry Group, offers the Manufacturing Workforce
Development Service, which involves expert advisers providing a free service to SMEs to
create workforce development plans by identifying critical skills needs in the business.
They also provide guidance on implementing the plan and preparing National Workforce
Development Fund applications.191
Part Three
Similarly, Enterprise Connect business advisers and networks assist businesses in the
Manufacturing sector with an annual turnover of between $1.5 million and $100 million.
The program offers eligible businesses a free comprehensive, confidential and independent
business review to help them reach their potential. The program has helped to build lasting
capability and address gaps for large numbers of manufacturing businesses that do not have
their own in‑house business strategy and/or human resource capability.192 AWPA consulted
with a number of businesses that did not have a workforce and skills development plan prior
to having it recommended through the business review. Many also noted that before their
involvement with Enterprise Connect, they did not have a long‑term business strategy, which
meant they were unable to forecast which skills their business would require to remain
competitive and grow.
190 Australian Government, 2013, Skills Connect Fund, skillsconnect.gov.au/, accessed 4 December 2013.
191 MSA, 2013, Manufacturing Workforce Development Service, mskills.com.au/
workforce‑planning‑and‑development/info/manufacturing‑workforce‑development‑service, accessed
5 December 2013.
192 Australian Government, 2013, Enterprise Connect industry support: manufacturing, enterpriseconnect.gov.au/
industrysupport/manufacturing/Pages/default.aspx, accessed 5 December 2013.
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Delta Hydraulics
Delta Hydraulics193 is an Australian-owned company that was founded in 1975 and now
employs around 120 people. The company is a supplier and exporter of precision
manufactured components and products to the power generation, processing, transport,
mining and defence industries. It supplies components to the United States, China and
Thailand plants of its major customer, which is a major global distributor of machinery
and equipment.
Delta is embarking on an extensive upskilling program to improve productivity and meet
quality targets for its main client. The program will involve upskilling all shop floor staff to
a Certificate III in Competitive Manufacturing (now a Competitive Systems and Practices
training package), as well as all management staff in a Certificate IV in this package.
Delta has received Australian Government co‑funding for its upskilling project through
the National Workforce Development Fund.
Training was undertaken onsite and has been customised to take account of Delta’s
unique products, processes and customer demands. Onsite training is viewed as a highly
important factor of the training program for Delta’s senior management, as it allows
course curriculum to be applied practically to workplace processes.
While Delta’s training program is not yet complete, the firm says it is already seeing
productivity gains. Staff are reporting less reworking of jobs due to quality defects,
through the increased teamwork their upskilling has instilled in employees. Additional
improvements from the upskilling program include greater commitment from the
company’s global networks. Delta plans to evaluate training at the completion of its
upskilling program, as part of its commitment to workforce development.
It is important to note that many of the structural forces currently affecting the Manufacturing
sector can also cause a polarisation of skills, not just the requirement for overall upskilling. The
widespread technological change currently occurring in the Manufacturing sector has resulted
in an increased demand for high‑level skills, while simultaneously increasing the need for
unskilled roles, generally at the labourer level. An explanation for this polarisation is that both
non‑routine high‑level and low‑level skills are complementary to ICT investment, whereas ICT
substitutes for mid‑level skills.194
The routine tasks in which technology can substitute for human labour include jobs
like craft manual jobs and book‑keeping, jobs that require precision and, hence,
were never the least skilled jobs in the labour market. The non‑routine tasks which
are complementary to technology include ‘skilled’ professional and managerial jobs
but also many of the most ‘unskilled’ jobs such as shelf filling that rely on hand–eye
coordination and virtually all humans find easy but machines find enormously difficult
… The impact of technology will be to lead to rising relative
193 AWPA consultation with Viv Woodward, Production Administrator, Delta Hydraulics on 1 October 2013.
194 Toner, P, 2011, Workforce skills and innovation: an overview of major themes in the literature, p. 41.
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demand in well‑paid skilled jobs (that typically require non-routine cognitive skills) and
in low-paid least skilled jobs (that typically require non‑routine manual skills) and falling
relative demand in the ‘middling’ jobs that have typically required routine manual and
cognitive skills.195
Skills polarisation is particularly relevant to the Manufacturing sector, as it is often routine
medium‑skill jobs that are outsourced to low‑cost economies, while the decline in the real cost
of low‑skill services has led to increased overall demand for such services and increased
output.196 This has increasingly been the case for Australian manufacturing.
Types of training by the industry
Upskilling programs in Competitive Systems and Practices are the most popular development
priorities undertaken via the National Workforce Development Fund by manufacturing
enterprises, with more than 80 per cent of applications in 2012 targeting Certificate III and IV
qualifications from the training package.197 Generally, these qualifications have been effective in
improving firm productivity and innovation. Training in lean manufacturing practices has often
been cited by firms as positively impacting on employees’ soft skills, such as problem‑solving
capabilities and strategic thinking, and also encouraging increased staff engagement in the
business.
Submissions from the Food, Fibre and Timber Industries Training Council (Western Australia)
and New South Wales Furniture Design and Manufacturing Industry Training Advisory Board
commented that onsite training is preferable.198 This is particularly important for SME
employees, who are often time-poor, so training delivered via the classroom may prove to be
out of reach, and may even act as a disincentive to undertaking training.
A number of stakeholders highlighted the important role of short‑course accredited training in
addressing skills gaps.199 This form of training can be highly customised and provide a
mechanism for businesses to efficiently upskill existing staff in new technologies:
in some sectors [short courses or skill sets are] the preferred option. In particular,
enterprises in the flooring technology and the textiles, clothing and footwear sectors
prefer to use targeted short courses and/or skill sets to ensure that their workers have
the skills they need.200
Part Three
National Centre for Vocational Education Research data reports that 38.8 per cent of
manufacturers undertook unaccredited training and that 92.9 per cent of manufacturing
employers using unaccredited training indicated that they were satisfied that this type of
training meets their needs.201 In its submission to the Manufacturing workforce study,
195 Goos, M and Manning, A, 2003, Lousy and lovely jobs: the rising polarization of work in Britain, working paper,
Centre for Economic Performance, London School of Economics and Political Science.
196 Goos, M and Manning, A, 2010, Explaining job polarization in Europe: the roles of technology, globalization and
institutions, discussion paper no. 1026, Centre for Economic Performance, London School of Economics and
Political Science.
197 MSA, 2013, 2013 environmental scan: a new era for manufacturing, p. 22, mskills.com.au/DownloadManager/
downloads/MSA%20Environmental%20Scan%202013%20report.pdf, accessed 11 December 2013.
198 Food, Fibre and Timber Industries Training Council (WA) and NSW Furniture Design and Manufacturing Industry
Training Advisory Board, 2013, submissions to AWPA’s Manufacturing workforce study.
199 Ai Group, Food, Fibre and Timber Industries Training Council (WA), MSA, and R.E. Daison Pty Ltd, 2013,
submissions to AWPA’s Manufacturing workforce study.
200 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
201 NCVER, 2013, Employers’ use and views of the VET system 2013, pp. 10, 13, http://www.ncver.edu.au/wps/
wcm/connect/7f2e540b‑e002‑49ab‑8d4f‑7b9230eef5dc/2013‑employers‑use‑and‑views‑2675.
pdf?MOD=AJPERES&CACHEID=7f2e540b‑e002‑49ab‑8d4f‑7b9230eef5dc, accessed 3 March 2014.
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Manufacturing Skills Australia indicated that it does not advocate the use of short courses or
skill sets in the place of full qualifications, particularly where the learner does not hold a
post‑school qualification.202 In particular, research has shown that workers who have
undertaken unaccredited short courses or not completed a full qualification are most at risk of
long‑term unemployment later in their careers.203
Submissions highlighted a trend whereby an increasing number of manufacturers seek and
secure technical training on new technologies via the technology suppliers by either having
experts visit the workplace or sending employees offsite to work and learn in workplaces
where the technology is already in operation.204
Submissions noted a general reluctance by employers to pay for short‑course training.
Improving employers’ perceptions of the value of training is central to increasing their level of
investment, particularly in accredited training.
Before business will get motivated about job design and workforce development,
they need to see/believe they’ll receive a good return on investment (ROI) for training
undertaken. It’s the training value proposition which is the impediment here.205
In the course of Manufacturing Skills Australia’s return on investment project on the
Enterprise‑Based Productivity Places Program, surveyed employers stated that indirect costs
were incurred as a result of becoming involved in the training program. They also commented
that the program’s co‑contribution model was an important factor in firms deciding to
participate and that in many cases training would not have occurred without financial support.206
Employers need to be convinced that there will be a return on investment for training,
particularly given the current environment of low margins and high costs. They also need to
consider the investment as an integral part of a broader strategic vision for the future. For these
reasons, the Australian Industry Group is currently undertaking a project to determine the
extent of return on investment outcomes for employers who invest in language, literacy and
numeracy training through the Workplace English Language and Literacy program.207
This issue is not limited to the Manufacturing industry. AWPA’s 2013 Food and beverage
workforce study found that the business case for investing in training at the enterprise level
appears to be poorly understood by many employers in the agrifood industry.208 AWPA has
commissioned a research project to develop a body of evidence to identify the return on
investment experienced by firms across the food supply chain. The project will build on work
already undertaken by AgriFood Skills Australia to determine the conditions under which the
return on investment in skills and workforce development can be quantified and maximised.209
As the consultation process for this manufacturing study has highlighted that some
manufacturing firms remain unconvinced that training delivers a return on investment,
202 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
203 Karmel, T, 2008, A peripatetic research perspective on older persons and VET, NCVER, ncver.edu.au/wps/wcm/
connect/900bb5b3‑7a71‑42ec‑afff‑115ca8e8de3c/olderpersonsvet_tk.pdf?MOD=AJPERES&CACHEID=
900bb5b3‑7a71‑42ec‑afff‑115ca8e8de3c, accessed 11 February 2014.
204 ForestWorks Industry Skills Council, 2013, submission to AWPA’s Manufacturing workforce study.
205 Bureau Veritas, 2013, submission to AWPA’s Manufacturing workforce study.
206 MSA, 2012, Manufacturing Skills Australia’s return on investment project: Enterprise Based Productivity Places
Program (EBPPP) survey report, pp. 7–10.
207 Ai Group, 2013, Building employer commitment to workplace literacy programs, aigroup.com.au/portal/site/aig/
education/buildingemployer, accessed 6 December 2013.
208 AWPA, 2013, Food and beverage workforce study, p. 136, awpa.gov.au/our‑work/sector‑specific‑skill‑needs/
Documents/Food%20and%20beverage%20workforce%20study.pdf, accessed 6 December 2013.
209Ibid.
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AWPA will build on this study to develop case studies across the Manufacturing industry to
encourage employers to invest in lifelong learning in the workplace and develop
high‑performing workplaces.
Improving language, literacy and numeracy skills
A number of submissions to the Manufacturing workforce study indicated that language,
literacy and numeracy (LLN) skills were impacting on firm productivity and innovation. Without
addressing LLN, the sector is at risk of neglecting vulnerable cohorts such as workers at risk of
displacement, and being unable to achieve the skills deepening that the industry needs.210
The 2013 Programme for the International Assessment of Adult Competencies survey found
that the literacy and numeracy competencies of the manufacturing workforce were lower than
average (Figure 16). In addition, only 22.5 per cent of manufacturing workers have
competencies in problem-solving in technology‑rich environments at an adequate level to
properly function in the workplace, well below the national average of 34.2 per cent for all
industries.211 Initial industry consultations highlight that a marked improvement in the LLN levels
of the manufacturing workforce may be required to encourage and promote innovation.
Figure 16 Proportion of workers with level 3 and above competency in literacy and numeracy;
and level 2/3 competency in problem-solving in technology‑rich environments
70
60
Per cent
50
40
30
20
10
Literacy
Numeracy
Manufacturing
Part Three
0
Problem-solving in
technology-rich
environments
All industries
Source: ABS, 2013, Programme for the International Assessment of Adult Competencies, Australia, 2011–12,
cat. no. 4228.0, Table 10.
210 AWPA, 2013, Manufacturing workforce issues paper, p. 33, awpa.gov.au/publications/Documents/
Manufacturing%20workforce%20issues.pdf, accessed 4 December 2013.
211 ABS, 2013, Programme for the International Assessment of Adult Competencies, Australia, 2011–12,
cat. no. 4228.0, abs.gov.au/AUSSTATS/[email protected]/Lookup/4228.0Explanatory%20
Notes12011‑12?OpenDocument, accessed 16 October 2013.
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The Workplace English Language and Literacy program is the Australian Government’s primary
program for addressing LLN skills in the workplace. Feedback on the program received through
AWPA’s submission and consultation process was mixed. While it was often cited as an
effective mechanism for LLN skills development, the Australian Industry Group submission
raised concerns that it does not allocate funding strategically. The Australian Industry Group and
AMWU submissions called for the use of workplace champions to act as ambassadors for
training, including LLN training. This is in line with action suggested under the National
Foundation Skills Strategy for Adults, and mirrors a recommendation made by AWPA (yet to be
taken up) in its Future focus: 2013 National Workforce Development Strategy.212
It is widely accepted that there is a strong correlation between low VET course completion
rates and LLN capabilities. Many registered training organisations have recognised that
addressing learners’ LLN skills development needs is a key element to delivering high‑quality
learning outcomes and raising completion rates. A number of organisations are using online
LLN diagnostic tools to assess learners’ LLN levels. For example, the South Western Sydney
Institute of TAFE has introduced the RU Ready? program, which involves an initial assessment
using multiple‑choice questions that evaluate the student against the Australian Core Skills
Framework. A diagnostic test is then run based on the learner’s level. The diagnostic test
identifies specific areas in need of development. The software has the ability to suggest which
workbooks the student should study to help improve their knowledge. The workbooks are
contextualised to the area of study. The diagnostic testing can be re‑run after support
interventions to determine whether there has been improvement in the learner’s knowledge.
To date, a number of students undertaking manufacturing‑related courses—including
cabinet‑making, fabrication, furniture, glass and glazing, soft furnishing, upholstery, engineering,
and fitting and machining—have participated in the program.213 Feedback from staff and
students has been positive. While the RU Ready? program is primarily for new entrants into the
Manufacturing industry, it provides a good example of how the VET system can help ensure
that training responds to the learning needs of students, and could be extended to other types
of training used to upskill the existing workforce.
Lifelong learning
As indicated throughout this report, the industry’s current skills profile suggests that it is facing
a challenging transition phase. Building the industry’s resilience through promoting and
supporting a culture of structured training and lifelong learning (also referred to as ‘continuous
learning’ by some stakeholders) will require long‑term leadership from industry partners.
Strong continuous learning programs are essential for the capability development, skill
enhancement and knowledge expansion of the manufacturing workforce. Changing
economic conditions affecting the manufacturing industry requires workers to engage
in continuous learning programs to ensure individuals’ skills are aligned to industry
needs.214
Further, an emphasis on lifelong learning, centred on providing employees with formal and
informal opportunities to build and/or update their skills, is considered to be an effective
strategy to support workers who are at risk of displacement from the industry.215
212 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy, p. 92.
213 Information provided to AWPA by the South Western Sydney Institute of TAFE on 23 October 2013.
214 Business SA, 2013, submission to AWPA’s Manufacturing workforce study.
215Ibid.
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Business SA notes that lifelong learning programs should be supported by an individual learning
plan that is customised to the individual’s and organisation’s needs.216 A common theme raised
through the submission process is that the manufacturing workforce will increasingly need
skills that can be applied across different subsectors and to other industries. As such, a best
practice example of a learning plan would aim to enhance an employee’s current capability
through the development of specialised skills that could be more broadly applied. Similarly,
ForestWorks Industry Skills Council believes that effective continuous learning programs are
those that are built around a strong understanding of business vision and have demonstrated
strong links to skills development to support career pathways.217
Caterpillar Underground Mining
Caterpillar Underground Mining218 manufactures underground mining machines for a
number of customers in Africa, Europe, Asia, North and South America and Australia.
The company, established in 1979, comprises 500 employees and spans seven facilities
in Burnie, Tasmania. Caterpillar has developed a comprehensive program to ensure it will have the skills and
knowledge required for future operations. Each employee has a career development plan
that spans 10 years and covers at least three roles. These development plans represent
the commitment Caterpillar has made to the continuous development of its employees.
Staff have been upskilled in a number of areas, including technical skills needed for
workplace operations and managerial skills for factory floor supervisors.
Caterpillar reports that a number of positive benefits are flowing from its career
development plan, including increased awareness and responsibility among staff relating
to safety, leading to increased efficiency and reduced downtime. Managerial training for
supervisors has also resulted in improved productivity and performance within teams.
The company distributes an employee opinion survey to ensure staff members play an
active role in identifying gaps in skills and knowledge across the company.
Caterpillar has recognised that in order to compete globally, it is necessary to ensure all
staff have access to the training required to realise this goal. In 2013, Caterpillar was
named Employer of the Year at the Tasmanian Training Awards.
Part Three
216Ibid.
217 ForestWorks Industry Skills Council, 2013, submission to AWPA’s Manufacturing workforce study.
218 TasTAFE, Case study: Caterpillar Underground Mining, https://www.tastafe.tas.edu.au/documentcentre/
Documents/SW_TasTAFE_casestudy_CAT_Oct2013_WEB.pdf, accessed 26 February 2014.
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Part Four:
Skills pipeline—securing
manufacturers of the future
Part Four: Skills pipeline—securing manufacturers of
the future
The diversity of the Australian Manufacturing sector creates a diverse range of rewarding roles
for its workforce. For example, food technologists play an important role for the food and
beverage manufacturing subsector by developing new products and new techniques for storage
and packaging. Engineers help to design new equipment, materials and production processes.
As discussed earlier, to compete in a global marketplace and carve out a niche, manufacturers
will increasingly rely on a highly skilled workforce. Employment levels in the sector are expected
to continue to decline; however, the sector will still need to attract new workers to address
replacement demand and to meet employment demand in sectors with projected growth.
As Australian manufacturing seeks to move up the value chain, and adopt new technologies and
business models, the make‑up of the workforce will change. Businesses will generate demand
for a wider range of skilled trades workers, technicians and professionals, particularly in STEM
disciplines. The insourcing of many manufacturing business activities, such as marketing, design
and logistics, also means that the sector is reliant on service‑related occupations. Most jobs
growth in the sector is also expected to come from the need to replace workers who transition
into retirement, so attracting younger workers into key manufacturing‑related occupations will be
important.
To secure this pipeline of future manufacturers, the sector faces some long‑term challenges.
Public perceptions of manufacturing jobs and career opportunities are impacting the sector’s
ability to attract skilled workers. In a recent survey, 65 per cent of respondents disagreed that
manufacturing jobs are stable and secure and only 29 per cent of respondents agreed that they
would ‘encourage their child to pursue a career in manufacturing’.219
Industry has a key role to play to cut through these perceptions and communicate the exciting
careers in both manufacturing and related services. A collaborative effort between industry,
secondary schools and tertiary education providers will be important to encourage young people
and students to consider a career in manufacturing, and to enrol in relevant tertiary or vocational
courses.
While the sector’s workforce has traditionally been male-dominated, the changing nature of jobs
in the sector provides industry with an opportunity to tap into previously underrepresented
groups in the labour force to fill these roles. Manufacturing is no longer a synonym for
production; it represents ‘the full cycle of activities from research and development, through
production, logistics and services, to end of life management’. Manufacturers must operate in
globally competitive markets, inventing and innovating, managing global supply chains and
providing aligned services.220 Highlighting these industry characteristics is an important way the
sector can overcome an existing image problem and build a more positive understanding of the
wide scope of manufacturing careers.
219 Wallis Consulting Group, 2013, Public perceptions of manufacturing: final report, report prepared for the
Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, pp. 2, 27,
resources.news.com.au/files/2013/10/09/1226736/461973‑131010‑manufacturing.pdf, accessed 10 December
2013.
220 Australian Business Foundation, 2011, Manufacturing futures, p. 15.
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Part Four
The industry will also need to ensure the ongoing supply of new entrants into the workforce to
replace those approaching retirement. Due to the diversity of the manufacturing workforce, the
future outlook for employees is not uniform. Although the overall trend shows a decrease in the
total number employed, this decrease will not be felt evenly across the industry. While
employment levels in manufacturing will decline overall in the next five to 10 years, a significant
proportion of the current workforce is approaching retirement. The ongoing issue of replacement
demand will see job openings appearing across many of the subsectors, even as some subsectors
contract.
Recommendation 4
That peak industry groups, relevant Industry Skills Councils and trade unions work
together with career development advisory groups such as the Career Industry Council
of Australia to promote the range of jobs and career opportunities available in the
industry in order to attract skilled workers and raise public perceptions of manufacturing.
Strategies should include customised print and online resources for students, parents
and teachers.
It is therefore important to ensure a supply of skilled workers into the industry. The drive towards
advanced manufacturing, however, will present a need for the industry to have a different skills
profile. With the trend towards producing more sophisticated products and services and the
imperative for firms to innovate, the balancing of technical and theoretical skills is a key issue to be
addressed. For both VET and the higher education sector, there should be an increased emphasis
on employability skills, and the need for agility and adaptability to be fostered through training.
Strategies will be needed to improve completions in apprenticeships, overcome barriers to
work‑integrated learning and address nationwide STEM issues. All these challenges are discussed
below, along with the opportunity to increase diversity in the workforce profile. A diverse
workforce increases the potential recruitment pool, and brings with it a number of benefits; for
example, research has shown that for firms seeking a competitive advantage, focusing on
diversity is an effective way to become a product or service innovator.221 Furthermore, increased
workforce participation as a result of sourcing workers from a greater range of cohorts will
improve productivity, and help to support the demands of an ageing population.222
The role of secondary schools in skills supply
Engagement between industry and schools is a key strategy to attract young people to the
Manufacturing sector. Partnerships with schools can be achieved in a number of ways, including
the use of programs such as the Queensland Government’s Manufacturing and Engineering
Gateway to Industry Schools Program. The program involves Queensland secondary schools
engaging collaboratively with local manufacturing and engineering enterprises, registered training
organisations and universities to improve the profile of manufacturing careers; provide professional
development for teachers in the context of manufacturing and engineering; develop a range of
manufacturing‑ and engineering‑related activities across a number of learning curriculum areas;
and create opportunities for work experience and structured work placements, pathways to
university, school‑based apprenticeships and traineeships and full‑time apprenticeships.223
221 Australian Chamber of Commerce and Industry, 2012, Employ Outside the Box: the rewards of a diverse workforce,
p. 10, acci.asn.au/getattachment/1d9163c5‑f634‑4126‑9e90‑ae73d810f1bc/Employ‑Outside‑the‑Box.aspx,
accessed 11 February 2014.
222 Ibid., p. 2.
223 Queensland Government, 2013, Manufacturing and engineering, gatewayschools.qld.gov.au/manufacturing_and_
engineering/index.html, accessed 12 December 2013.
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Individual companies, industry bodies and professional groups establishing internship and
mentoring programs can also seek to collaborate with the schools sector within their own
structures.
There are a number of good examples of regional areas providing opportunities for high school
students to experience and explore career opportunities in manufacturing. For example, the
Hunter region’s ME (Manufacturing Success Through Education) Program delivers tailored
programs to students from Year 9 to Year 12 and includes core subjects like STEM to provide the
foundations for a manufacturing career. Classroom learning is combined with on‑the‑job
experience and additional education delivered by industry. This collaboration creates
opportunities for young people to shape their education and work experience towards a
sustainable career pathway in manufacturing and gives local industry a mechanism to invest in
their long‑term future while also adding to existing recruitment initiatives.224 It is likely that the
adoption of this type of initiative across a number of regions, supplemented by a broader
promotion of manufacturing careers, may help to ensure that manufacturers have the skills
needed for the future of the industry.
Like the ME Program, many school‑based manufacturing initiatives offer industry programs that
provide schools with up‑to‑date, industry‑relevant and cost‑effective academic programs
supported by teaching material, equipment, online resources and licences. In some cases, these
programs can lead to industry certification and be delivered through VET in Schools programs.
Try Trades
Try Trades225 programs have been identified as a highly effective pre‑vocational strategy,
giving Year 10 students an opportunity to make more informed career choices on local
trades. Engaging school students has been particularly effective in regional areas, where
local high schools often feed directly into industry.
Try Trades programs generally involve school visits from industry personnel, outlining the
requirements of their occupations. In addition, factory visits help students see firsthand
what manufacturing roles entail.
Exposing students to workplace environments in Year 10 has proven to be effective in
increasing apprenticeship completion rates. The Queensland Government’s Manufacturing
and Engineering Try Trades program has resulted in very high apprenticeship completion
rates for those who had taken part in the program. This aligns with the findings from a
study into pre‑apprenticeship delivery models that ‘pre‑apprenticeships have strong
support from training providers; course graduates are generally well regarded by external
employers and there are good outcomes for participants in terms of course completion
rates and articulation rates into apprenticeships’.226
Part Four
Also key to the success of Try Trades programs is the ability for participants to work in a
number of different trades, so at the commencement of an apprenticeship, participants
truly have an understanding of what will be required of them. Despite the high levels of
success, Try Trades programs have mainly been small scale.
224 ME Program, 2013, About ME, meprogram.com.au/about‑me/, accessed 10 December 2013.
225 AWPA consultation with Leanne Hixon, QMI Solutions.
226 Toner, P and Lloyd, C, 2012, A study into pre‑apprenticeship delivery models and their labour market outcomes,
Group Training Australia, Sydney.
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101
Supply of skills from vocational education and training
Traditionally, skills for many manufacturing occupations have been gained through trade and
technical qualifications delivered by the VET sector.
Australian Bureau of Statistics data indicates that the majority (38.6 per cent) of manufacturing
workers, with the exception of professional occupations, hold a qualification from the VET
sector. In the trade and technicians occupational group, which equates to more than a quarter
of the manufacturing workforce, 59 per cent of workers hold a VET qualification.227 This
highlights the vital role VET plays in supplying skilled workers to the Manufacturing industry.
As discussed throughout this paper, the Manufacturing industry is changing rapidly, and there
has already been an expansion of job opportunities in occupations traditionally classified as
support or service occupations rather than manufacturing jobs.
Key occupations [in the future] will be in technical areas within engineering,
in marketing and customer relations, in design and product development, in
environmental monitoring and sustainability as well as scientific testing. Many of these
occupations currently don’t exist or are called something else, for example ‘fitters’ in
advanced manufacturing enterprises are known as ‘fitter technicians’.228
ANZSCO has already identified new manufacturing occupations such as Fibre Composite
Technician, Plastics Technician, Corrosion Technician and Environmental Auditor. In its
submission, Manufacturing Skills Australia notes that there are many occupations within the
industry that are not currently recognised as part of the manufacturing workforce because they
are traditionally classified as support or service occupations. However, these occupations are
vital to the effective operation of manufacturing firms and make up a notable cohort of the total
manufacturing workforce. Manufacturing Skills Australia suggests that this group could provide
a potential supply of workers to move into more technical occupations in areas such as
traditional trades and engineering.229
There will still be, of course, a demand for skilled trades workers in manufacturing; however,
the mix of knowledge and skills they will need to operate effectively will change. Submissions
highlighted the need for VET to ensure students are equipped with desirable skill sets for
future manufacturing operations.230 The earlier discussion on advanced manufacturing identified
the future skills demand for selected advanced manufacturing subsectors and technologies.
It highlighted the wide scope of knowledge and capabilities the workforce will require to
effectively utilise these advanced techniques.
Some commentators have argued that the most important feature of vocational education is
equipping workers with the ability to adapt quickly to the constant structural change that
manufacturing is undergoing. The use of generic skills should be at the core of training to
ensure that the future workforce has the capacity to capitalise on sectoral opportunities as
they emerge, and that workers are equipped to cope with redeployment in times of structural
change.231
227 ABS, 2013, 2011 Census of population and housing. Data drawn from using the ABS TableBuilder Basic census
databases.
228 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
229Ibid.
230 Bureau Veritas, 2013, submission to AWPA’s Manufacturing workforce study.
231 Personal correspondence with John Buchanan, 2014.
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Manufacturing Skills Australia noted concerns from its stakeholders in regard to the quality of
both VET and university graduates. In particular, graduate trades workers were cited as lacking
the skills required to solve problems on the job and work across disciplines.232 Similarly,
Business SA reported anecdotal evidence of a lack of focus on employability and
problem‑solving skills embedded as part of educational qualifications.233
Figure 17 shows student commencements in publicly funded training packages related to the
Manufacturing industry in 2007 and 2012. Commencements at the Certificate III level were
fairly stable over the five‑year period, accounting for 45.6 per cent of commencements in 2012.
This appears to support industry feedback that this is the minimum entry standard across most
trades. Over the five‑year period, the proportion of students commencing low‑level
qualifications (Certificate I) shifted towards higher level qualifications (Certificate III and above).
Figure 17 Publicly funded VET student commencements in manufacturing‑related training
packages, by Australian Qualifications Framework level, 2007 and 2012
Certificate I
Certificate II
Certificate III
Certificate IV
Diploma or
higher
0
5
10
15
20
25
30
35
40
45
50
Per cent
2012
2007
Note: Based on selected training packages managed by Manufacturing Skills Australia, ForestWorks Industry
Skills Council, Automotive Skills Australia and AgriFood Skills Australia. A full list is in Appendix H.
Source: NCVER, VOCSTATS database, accessed 10 January 2014.
Part Four
232 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
233 Business SA, 2013, submission to AWPA’s Manufacturing workforce study.
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103
As highlighted in Table 6, the most popular training package over the five‑year period was metal
and engineering, which accounted for 42.5 per cent of commencements in 2012.
Commencements in Certificate I and II–level qualifications tended to be undertaken by
students aged 19 years and under, accounting for 56.6 per cent of commencements in these
qualifications in 2012. Higher level qualifications were more evenly spread among young
students and older age groups.
Table 6
VET student commencements in manufacturing‑related training packages,
2007–2012
2007
2008
2009
2010
2011
2012
Average
annual
growth
(%)
435
400
252
306
192
310
–6.6
10,422
7,436
6,794
6,398
7,617
8,684
–3.6
210
183
135
163
48
140
–7.8
Furnishing
5,454
5,802
5,295
6,140
6,272
8,030
8.0
Textiles, clothing and
footwear
4,250
3,880
4,624
4,423
4,135
4,523
1.3
Aeroskills
1,108
994
1,272
1,358
742
1,058
–0.9
33,179
33,695
28,855
29,140
28,969
33,044
–0.1
Manufacturing
(includes MCM (a)
and MSS (b) )
2,179
1,797
4,164
7,261
11,576
13,242
43.5
Laboratory operations
(includes PML training
package)
2,568
2,827
2,901
3,579
3,683
4,036
9.5
Chemical,
hydrocarbons and oil
refining
1,167
1,666
1,136
2,248
3,195
3,391
23.8
Plastics, rubber and
cablemaking
2,228
2,051
999
1,007
1,188
1,161
–12.2
Manufactured mineral
products
220
81
89
31
95
90
–16.4
Total manufacturing
63,420
60,812
56,516
62,054
67,712
77,709
4.1
Total AQF
commencements
890,422
932,859
945,413
Automotive
manufacturing
Food processing
Pulp and paper
manufacturing
Metal and engineering
1,029,520 1,068,890 1,192,371
AQF = Australian Qualifications Framework
(a) Competitive manufacturing training package.
(b) Sustainability training package.
Source: NCVER, VOCSTATS database, accessed 9 January 2014.
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6.0
Figure 18 shows the number of VET completions of Manufacturing Skills Australia courses in
2006 and 2011. The number of overall completions in manufacturing‑related training packages
grew at an average annual rate of 12.4 per cent. Overall, the data shows qualification
achievement is trending towards higher qualification levels, with the greatest numerical
increases in Certificate III and IV qualifications.
Figure 18 Publicly funded VET student completions in manufacturing‑related training packages,
by Australian Qualifications Framework level, 2006 and 2011
Certificate I
Certificate II
Certificate III
Certificate IV
Diploma or
higher
0
10
20
30
40
50
60
Per cent
2011
2006
Source: NCVER, VOCSTATS database, accessed 10 January 2014.
The National Centre for Vocational Education Research (NCVER) has developed a sophisticated
methodology to estimate completion rates in VET engineering and related technologies, which
covers part of the Manufacturing industry. Though these rates have increased in recent years,
the estimated completion rate for whole qualifications in 2011 was a disappointing 36.1 per
cent.234 In contrast, the module load pass rate (modules completed) was a healthy 87 per
cent.235 Other NCVER research has indicated that students gain more from completing the
whole course.236
235Ibid.
236 Fieger, P and Karmel, T, 2013, The value of completing a VET qualification, NCVER, ncver.edu.au/wps/wcm/
connect/a5d89dc0‑1336‑46a7‑b6cd‑edf9bab5696f/Value‑of‑completing‑VET‑2526. pdf?MOD=AJPERES
&CACHEID=a5d89dc0‑1336‑46a7‑b6cd‑edf9bab5696f, accessed 11 February 2014.
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Part Four
234 NCVER, 2013, The likelihood of completing a VET qualification, 2008–11, p. 9, ncver.edu.au/wps/wcm/connect/
a5ab58e8‑2240‑4827‑ab7a‑9eb261ef50b6/2008‑11‑Likelihood‑completing‑2647. pdf?MOD=AJPERES
&CACHEID=a5ab58e8‑2240‑4827‑ab7a‑9eb261ef50b6, accessed 11 February 2014.
Apprenticeships and traineeships
Apprenticeships and traineeships are an entry pathway into industry that combines study with
an employment contract. As a high proportion of the manufacturing workforce is employed as
Technicians and Trades Workers, Australian Apprenticeships are an important entry pathway
into the industry.
Apprenticeships are effective in decreasing youth unemployment rates. A report by McKinsey
& Company found that countries characterised by strong apprenticeship participation rates also
had low levels of youth unemployment.237 The unemployment rate for people holding a
Certificate III or IV qualification, the level associated with apprenticeships, is 4.1 per cent.238
Apprenticeships provide many benefits—integrating workplace learning with paid work—and
are the recognised pathway to many skilled occupations. In the modern job market, experience
is prized above qualifications in many cases.239 Supporting the use of apprenticeships as a key
transition from school to the workplace will help to ensure that graduates are work-ready and
have clearly articulated career pathways.
Around half of the student commencements in manufacturing‑related training packages are
through apprenticeships or traineeships. The annual completion rate for apprenticeships in
manufacturing‑related training packages was 59.7 per cent in 2012. This proportion has
fluctuated in a band of five percentage points over the past five years.240
The NCVER also calculates contract completion rates based on the outcomes of contracts of
training. For apprentices and trainees commencing in 2008, contract completion rates were
45.4 per cent for trade occupations and 55.4 per cent for non‑trade occupations.
Completion rates differ for apprentices and trainees in particular occupations, as highlighted in
Table 7. The highest completion rates for contracts commencing in 2008 were in Engineering,
ICT and Science Technicians (58.6 per cent) and Printing Trades Workers (57 per cent), while
rates were relatively low for Food Trades Workers (30.4 per cent) and Wood Trades Workers
(38.9 per cent).
237 Steedman, H, Apprenticeship: remaking an old idea for a new era, McKinsey & Company, voices.
mckinseyonsociety.com/modern‑apprenticeships/, accessed 22 January 2014.
238 Ai Group, 2013, Apprenticeships: achieving excellence, p. 5.
239 De Freytas‑Tamura, K, 2014, ‘Britain scrambles to fill skills gap’, New York Times, 17 January, nytimes.
com/2014/01/18/business/international/britain‑scrambles‑to‑fill‑skills‑gap.html?_r=0, accessed 22 January
2014.
240 NCVER, 2013, Completion and attrition rates for apprentices and trainees—2012.
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Table 7
Contract completion rates, Technicians and Trades Workers, for contracts
commencing in 2008
Occupation (ANZSCO) group
Completion rate (%)
Engineering, ICT and Science Technicians
58.6
Automotive and Engineering Trades Workers
50.1
Construction Trades Workers
42.5
Electrotechnology and Telecommunications Trades Workers
54.1
Food Trades Workers
30.4
Other Technicians and Trades Workers
44.6
Printing Trades Workers
57.0
Textile, Clothing and Footwear Trades Workers
47.8
Wood Trades Workers
38.9
Miscellaneous Technicians and Trades Workers
61.4
Source: NCVER, 2013, Completion and attrition rates for apprentices and trainees—2012,
Table 1, p. 7, http://www.ncver.edu.au/wps/wcm/connect/b9cce99f‑4c94‑4bbd‑8121‑97ea02d024d5/
2012‑completion‑and‑attrition‑rates‑2632.pdf?MOD=AJPERES&CACHEID=b9cce99f‑4c94‑4bbd‑
8121‑97ea02d024d5, accessed 30 December 2013.
The Manufacturing Skills Australia, Regional Development Australia and the Australian Industry
Group submissions raised concerns about the completion rates for trade apprenticeships. In
2012, 32,555 contracts of training were commenced from Manufacturing Skills Australia’s suite
of training packages and 19,854 were completed. However, 13,164 contracts of training were
cancelled or withdrawn.241 The lack of foundation and STEM skills among secondary school
graduates is a contributing factor to the low levels of completions.
Improving completions in engineering trade apprenticeships
Engineering Technicians and Trades Workers perform a variety of skilled tasks and represent an
important part of the skills mix in many industries, including manufacturing. AWPA
commissioned ACIL Allen Consulting, in partnership with the NCVER, to investigate
qualification commencements and completions in engineering trade apprenticeships, including
strategies to improve outcomes.
The study found that there is no single factor that affects completion rates.242 Instead, a variety
of factors influence a student’s choice to continue or withdraw from their engineering trade
apprenticeship. These factors include size and type of employer; workplace factors such as
relationship with the employer; the level of apprentices’ school attainment and skills level; the
quality of pre‑apprenticeship recruitment; and the level of apprentice and employer support.
Wages were found to be a factor, but not a deciding one.
241 MSA, 2013, to AWPA’s Manufacturing workforce study.
242 ACIL Allen Consulting, Review of qualification completions in engineering trade apprenticeships,
www.awpa.gov.au.
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Part Four
Based on these findings, the study provides a variety of strategies that can be used to improve
completion rates and which can be implemented at different stages of the apprenticeship.
These strategies include improving the quality and distribution of engineering‑related
information to secondary students; strengthening employer and apprentice matching through
Australian Apprenticeships Centres; streamlined employer advisory services; improved
apprentice mentoring; and better coordination of apprentice and employer support at the
various levels of government.
While the ACIL Allen Consulting study focused on engineering trade apprenticeships, it is likely
that many of these strategies can also be extended to other areas to improve Australian
Apprenticeship completions, including in manufacturing occupations.
Stakeholders also reported employer dissatisfaction with the Australian Apprenticeship model,
in particular the implementation of competency‑based progression.243 A common theme raised
was the need to ensure that the model was consistent, flexible and adaptable. A recent report
by McKinsey & Company found that successful apprenticeship models should be a collective
arrangement, but also stressed that employers, not governments, must take the lead in
determining the relevance of training content, and controlling the training process and costs
associated with the apprenticeship process.244
The Manufacturing sector has a particularly high level of innovation, so it is imperative that
training content maintains current skills and knowledge about the latest technology, and builds
capacity to support innovation in the sector.245 Concerns have been raised by stakeholders
about the ability of the current Australian Apprenticeship model to introduce training for the
latest technological advances as speedily as the industry requires. However, financial
constraints adversely affect the ability of training providers to maintain the currency of
equipment. A role exists for industry associations, firms and training providers to work together
to ensure that a maximum number of apprentices and trainees have exposure to new
technology and an opportunity to develop the associated skills.
The Australian Apprenticeship system has been the subject of many reviews in recent years. In
2011, an expert panel on apprenticeship reform looked at reducing costs for industry, improving
completion rates and promoting the benefits of acquiring formal skills qualifications. The major
recommendations from this review identified the need for a ‘national custodian’ body ‘that can
provide advice, maintain a national framework and overcome difficulties in system mobility’.246
AWPA broadly supported the expert panel’s recommendations and advocated a strong focus
on their implementation.247
The Australian Industry Group is currently piloting the three‑year Engineering Excellence
project, funded by the Australian Government under the Accelerated Australian Apprenticeships
Program. The project is developing systems in 10 registered training organisations across the
country (affecting approximately 3,500 apprentices) to more closely link apprentices’ training
and assessment to what they do in the workplace. Apprentices will still receive training and
undergo assessment off the job, and they will need to satisfy their employer that they can
competently perform at work before they progress. Employers consider and assess
apprentices’ technical skills and employability skills in this way using tools such as an
observation and technical checklist. A key element of the project is to create strong links
between the apprentice’s training provider and their workplace and to align the competency
243 Ai Group, AMWU and Regional Development Australia, 2013, submissions to AWPA’s Manufacturing workforce
study.
244 Steedman, H, Apprenticeship: remaking an old idea for a new era.
245 Toner, P, 2005, Keeping up with technology: a pilot study of TAFE and the manufacturing sector, NCVER,
Adelaide.
246 Australian Government, 2011, A shared responsibility: apprenticeships for the 21st century, final report of the
expert panel, p. 12, australianapprenticeships.gov.au/sites/default/files/publication‑documents/
Apprenticeshipsforthe21stCenturyExpertPanel_0.pdf, accessed 3 March 2014.
247 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy, p. 118.
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progression system with the apprentice’s progression through their VET qualification.248
The project will run until 30 June 2015.249 The Australian Industry Group received an award from
the WorldSkills Foundation in 2013 in recognition of the project’s innovative ways of delivering
VET skills and developing partnerships between organisations.250
Recommendation 5
That peak industry groups, state training authorities, relevant Industry Skills Councils and
the Australian Government Department of Industry work to improve completion rates for
trade apprentices. Strategies should be targeted at pre‑recruitment, induction and during
training. Areas of improvement should include strengthening employer and apprentice
matching through Australian Apprenticeship Centres, streamlined employer advisory
services, improved apprentice mentoring, and better coordination of apprentice and
employer support at the various levels of government.
Supply of skills from higher education providers
With the exception of workers in professional occupations, the higher education sector has not
traditionally been a source of employees in the manufacturing workforce. Only 14.5 per cent of
the manufacturing workforce has a bachelor degree or higher qualification.251 This inadequacy
could affect the overall performance of the industry.
As the industry seeks to move up the value chain, the demand for professional, technical and
managerial workers is expected to increase over the next decade. This will include demand for
workers with professional skills that support more complex business models. Required skills
may include ‘softer skills’, such as analytical capacity, and language and cultural skills, in
addition to more technically oriented capability. According to AWPA’s scenario modelling,
manufacturing managers are expected to upskill in the years to 2025, with the proportion
holding bachelor degrees or higher increasing to 47 per cent under the Long Boom scenario,
compared to 33 per cent in 2011.252
Limited collaboration between the two sectors has implications for the employability of
graduates. A number of submissions indicate dissatisfaction with the quality of both VET and
university graduates.253 Employers have consistently reported that many graduates are not
sufficiently work-ready and do not possess the combination of technical, business and
communication skills required.
248 Ai Group, 2013, Engineering excellence, aigroup.com.au/portal/site/aig/education/engineeringexcellence/,
accessed 12 December 2013.
249 Information provided to AWPA by Ai Group on 4 December 2013.
250 Ai Group, 2013, Ai Group gets international recognition for apprenticeship system reform, media release,
13 November, tda.edu.au/cb_pages/files/AIG%20media%20release.pdf, accessed 12 December 2013.
252 AWPA, 2013, Manufacturing snapshot, p. 9, awpa.gov.au/our‑work/
national‑workforce‑development‑strategy/2013‑workforce‑development‑strategy/Documents/2013%20
Industry%20Snapshots/C‑Manufacturing.pdf, accessed 12 December 2013.
253 Ai Group, Business SA and R.E. Daison Pty Ltd, 2013, submissions to AWPA’s Manufacturing workforce study;
issues raised by Victorian Employers’ Chamber of Commerce and Industry and NSW Business Chamber on 5
December 2013.
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251 Department of Education, Employment and Workplace Relations, 2012, Australian jobs 2012 (ABS 2011 Census
data). Excludes ‘Level of education not stated’ from total.
During the consultations conducted for this report, a range of stakeholders emphasised the lack
or weakness of links between universities and the industry. This was partially due to the fact
that only a small proportion of the workforce had undertaken university qualifications, so
university bureaucracies and systems were unfamiliar and considered hard to navigate. Similar
countervailing concerns may be felt by some higher education providers. It is notable, however,
that there are numerous examples of highly developed and mutually beneficial partnerships
between manufacturers and universities that suggest significant scope for further
development.
Medical Device Partnering Program
The South Australian Medical Device Partnering Program254 facilitates the development
of medical devices and assistive technologies by bringing together researchers, industry,
clinicians and end‑users to provide a streamlined process for collaboration and innovation.
Established in 2008, the program works with medical device projects at any stage in the
product development process, ranging from early stage concepts, through to market
testing and clinical evaluation, and supports the development of products with an
identified clinical need, sound technical solution and viable market opportunity.
With funding available via the Medical Technologies Program (a South Australian
Government grant assistance scheme), inventors, clinicians and researchers can apply to
receive up to 250 hours of research and development assistance towards their medical
device or assistive technology product or concept.
The program utilises a diverse set of expertise from South Australia’s three universities,
allowing for stronger ties to be forged between industry and the higher education sector.
Program founder Professor Karen Reynolds of Flinders University recognised the need
for programs targeting industry–university collaboration, stating, ‘There are well-known
barriers to working together and different motivations. The program is designed to
circumvent these barriers.’
The program also acts to address the high proportion of small businesses in the sector,
noting that lack of scale means that often firms will not have the personnel to facilitate
the commercialisation of projects.
With access to research and clinical expertise, the program can offer access to
multidisciplinary research expertise and state‑of‑the‑art facilities for product development
and testing, resulting in new opportunities for Australian companies and inventors to turn
clever concepts into worldwide market prospects which ultimately improve lives.
For many manufacturing occupations, there is no clear concordance with a particular university
degree. Nevertheless, universities deliver a range of manufacturing‑related courses, such as
chemistry courses to study the physical and chemical properties of substances and develop
and monitor chemical processes and production, and engineering courses to focus on the
254 Flinders University, Medical Device Partnering Program, flinders.edu.au/mdpp, accessed 11 February 2014;
Evans, R, 2014, ‘Ex‑Crows star Matthew Liptak to turn inventor’, The Advertiser, 11 February, adelaidenow.com.
au/business/excrows‑star‑matthew‑liptak‑to‑turn‑inventor/story‑fni6uma6‑1226823485490, accessed
11 February 2014.
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technical skill sets required to gain experience in technical analysis and the operation and
maintenance of equipment and systems.
A broad range of universities deliver courses such as these, including dual‑sector institutions that
offer pathways and articulation arrangements to allow students to progress from VET
qualifications to higher degrees. However, the University of Tasmania and Manufacturing Skills
Australia submissions noted that articulation between VET and higher education remains a key
challenge. In particular, they highlighted that engineer skills shortages would benefit from
improvements to existing models. Pathways between VET and universities are particularly poor
for engineering; more than 50 per cent of commencements in this area occur within institutions
where only 3 per cent of students have been admitted on the basis of a VET award.255 The
University of Tasmania has developed an engineering pathway with a diploma and associate
degree as exit points and Manufacturing Skills Australia is working with Engineers Australia to
create a national framework for an Associate Degree in Mechanical Engineering.256 Growth in
dual‑sector institutions may also help improve articulation pathways.
Work‑integrated learning
Employers and students alike identify the integration of meaningful professional experience into
tertiary programs as the best way to address the work-readiness of graduates. Submissions
argued that work‑ready graduates cannot be produced unless employers work closely with
tertiary providers on course content and participate readily in work‑integrated learning (WIL)
programs.257
Employability skills can be raised by WIL … A purposefully designed curriculum that
integrates theory with workplace practice should become a primary feature across all
education and training sectors and fields of study.258
WIL is considered to be underdeveloped in Australia, particularly outside of a few select areas
such as health and education. The 2009 Australasian Survey of Student Engagement reported
that only 19 per cent of respondents had participated in a ‘practicum, internship, fieldwork or
clinical placement’.259 Furthermore, according to the Graduate Outlook Survey 2012, which
surveyed 584 graduate employers, while a significant number of Australian employers surveyed
used WIL programs to recruit graduates, only 36 per cent of the manufacturing respondents used
it—the lowest of any sector surveyed.260
Some stakeholders have suggested that approaches to WIL could be based around a
‘communities of trust’ model, where sectoral or occupational groups of stakeholders would
oversee WIL arrangements—in much the same way that colleges in medicine oversee
accreditation of teaching hospitals.261 Not all firms will necessarily be appropriate locations to
undertake WIL, just as not all hospitals are teaching hospitals.
255 Watson, L, Hagel, P and Chesters, J, 2013, A half‑open door: pathways for VET award holders into Australian
universities, p. 9, NCVER, http://www.ncver.edu.au/wps/wcm/connect/6fa9f104‑b13b‑4f70‑8bd5‑34ad7
aa69989/A‑half‑open‑door‑2659.pdf?MOD=AJPERES&CACHEID=6fa9f104‑b13b‑4f70‑8bd5‑34ad7aa69989,
accessed 4 March 2014.
257 Business SA, MSA and R.E. Daison Pty Ltd, 2013, submissions to AWPA’s Manufacturing workforce study.
258 Business SA, 2013, submission to AWPA’s Manufacturing workforce study.
259 Australian Council for Educational Research, 2010, Doing more for learning: enhancing engagement and outcomes,
Australasian Survey of Student Engagement report.
260Ibid.
261 Correspondence with John Buchanan, 2014.
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256 University of Tasmania and MSA, 2013, to AWPA’s Manufacturing workforce study.
WIL approaches have been established in other countries for a significant period of time. For
example, in the United States and Canada, cooperative education programs have been around
for nearly 100 years.262 As a result, WIL approaches have become an integral part of university
degrees in the United States and Canada. However, it should be noted that the prevalence of
SMEs in Australia, particularly in manufacturing, means that the industrial landscape is markedly
different to the United States and Canada, and that effective expansion of WIL, on a substantial
scale, is likely to require the tailoring of approaches specifically to Australian circumstances.
The Canadian cooperative education model
Canada’s cooperative education program263, which was initiated 20 years ago by the
University of Waterloo, is now widespread throughout Canadian universities and is well
accepted by employers. Across Canada, approximately 73,000 students participating in
the scheme undertake a work placement for between 10 weeks and four months with
an employer. More than 4,000 employers participate in the program. Students are paid at
wages equivalent to the rate paid to a graduate. The work placement is relevant to the
course of study that the student is undertaking.
At least four provinces in Canada provide tax credits or wage subsidies to employers to
take students on placement under the program. For example, the Ontario government
gives employers a $3,000 tax credit for each student placed. Students and industry both
gain from the scheme. Students gain income and relevant experience across a range of
workplaces to improve their job-readiness, and industry receives skilled workers with
fresh ideas to undertake work or special projects.
Education programs offering industry placements are also operating in universities in the
United States. Data from the United States National Commission for Cooperative
Education indicates that more than 60 per cent of cooperative education students who
undertake 18 months of placement during the course of their studies are offered
permanent jobs from their employers. Around 95 per cent of cooperative education
students in the United States find jobs immediately upon graduation.
Despite general support for increased WIL participation, AWPA acknowledges that there are a
number of barriers to industry engaging in WIL. During the consultations for this report,
stakeholders noted barriers relating to its high costs and resource-intensiveness.264 These
barriers include costs to directly fund the student during their placement and costs incurred as
a result of the higher administrative burden and dedication of work time by staff members at
both universities and the place of employment. This is likely to be a deterrent for SME
manufacturers, who are often resource- and time-poor, and lack the flexibility to accommodate
WIL students.265
262 Haddara, M and Skanes, H, 2007, ‘A reflection on cooperative education: from experience to experiential
learning’, Asia–Pacific Journal of Cooperative Education, vol. 8, no. 1, pp. 67–76.
263 University of Waterloo, About co‑operative education, uwaterloo.ca/co‑operative‑education/
about‑co‑operative‑education, accessed 30 December 2013; Cooperative Education and Internship Association,
ceiainc.org, accessed 30 December 2013.
264 Issues raised by Victorian Employers’ Chamber of Commerce and Industry on 18 November 2013 and
NSW Business Chamber on 5 December 2013.
265 Patrick, C et al., 2009, The WIL report: a national scoping study, eprints.qut.edu.au/44065/1/
WIL‑Report‑grants‑project‑jan09.pdf, accessed 4 March 2014.
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Other barriers for emploters include a lack of time to engage in WIL and concerns relating to
the employment status of participants and, subsequently, the employer’s obligations under the
Fair Work Act 2009. In its Future focus: 2013 National Workforce Development Strategy, AWPA
recommended that the Australian Government work with VET and higher education
stakeholders and peak industry bodies to support transitions from higher level VET and
education to employment by expanding WIL and establishing a co‑funded professional
cadetships program for identified specialised higher education occupations and higher level
VET qualifications.266
A range of innovative and well‑supported approaches to WIL in the Manufacturing industry are
available to students across Australian universities, including final‑year work placements,
short‑term internships and industry‑based projects. The Australian Mathematical Science
Institute Intern is a unique example of an internship program, as it is directed solely at
postgraduate and honours students. Under the program, students across all disciplines and
their university supervisors are connected with industry partners through four‑ to five‑month
research internships.267 While substantive evidence on the merits of particular projects is thin
on the ground, feedback indicates that the experience gained through WIL enables students to
join theoretical knowledge to the practical application of skills, and significantly enhances the
communication and business skills, or soft skills, of students.
In February 2014, Universities Australia released a statement of intent to work with industry to
improve the quality and capacity of education and the innovation, breadth and competitiveness
of Australia’s economy through improved WIL opportunities. The statement of intent involves a
number of industry bodies committing to:
➢ improve the work-readiness of university graduates
➢ enable employers to better utilise the skills and productive capability of their workforce
➢ foster an environment in which entrepreneurship and innovation can thrive
➢ strengthen the critical partnerships to drive national competitiveness.268
Signatories to this statement of intent include the Australian Industry Group, the Australian
Chamber of Commerce and Industry, the Business Council of Australia and the Australian
Collaborative Education Network Limited.
Key features of successful programs highlighted by stakeholders were that they had a model
that simplified engagement with universities for industry partners, and a learning objective that
had clear return on investment benefits for business. A range of practical tools have been
prepared by the Innovative Research Universities network to assist industry to engage with
universities, including a WIL toolkit, a checklist, information on the role and responsibilities of
the workplace supervisor, and detailed case studies on disciplines that are relatively new to the
WIL concept, such as business and creative arts.269
The feedback received indicates that while there is considerable support for WIL and a broad
understanding of its potential benefits, there is a need to provide some additional guidance on
266 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy, pp. 107–110.
268 Universities Australia, University/business partnership to boost graduate employment, https://www.
universitiesaustralia.edu.au/news/media‑releases/‑business‑partnership‑to‑boost‑graduate‑employment,
accessed 26 February 2014.
269 Innovative Research Universities, 2013, Work integrated learning 2012—toolkit for employers and industry,
iru.edu.au/our‑activities/projects/work‑integrated‑learning‑2012‑toolkit‑for‑industry.aspx, accessed
16 December 2013.
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267 Australian Mathematical Science Institute, 2013, About the AMSI Intern, amsiintern.org.au/about‑amsi‑intern/,
accessed 16 December 2013.
how employers can be effectively involved in WIL, especially as many of the programs rely on
firms nominating potential projects to universities. Programs such as the National WIL Portal—
established by the Australian Collaborative Education Network and the Australian Chamber of
Commerce and Industry—assist businesses to engage in WIL opportunities with universities
by providing a streamlined communication channel to promote all types of WIL opportunities
(including placements, internships, projects and cooperative education) in universities
across Australia. Building awareness and understanding of these types of programs widely
throughout industry is important for their success. So too is ensuring that the program data
is kept up to date.
Recommendation 6
a) That a multisectoral working group be established, comprising peak industry groups,
Universities Australia and the Australian Collaborative Education Network, to deepen
engagement with, and increase connections between, manufacturing and universities.
The focus of the working group should cover research, innovation, the supply of
appropriately trained graduates and work-integrated learning. The working group should
build on the work of the Office of the Chief Scientist’s Industry Working Group.
b) That work-integrated learning be promoted, expanded and strengthened to meet
industry demand for work-ready graduates and to enhance linkages with the higher
education sector. Strategies should include engaging more small to medium‑sized
enterprises in work-integrated learning, developing manufacturing-specific case studies
to highlight successful models, and better linking work-integrated learning into course
objectives.
Science, technology, engineering and mathematics skills
There is broad recognition by industry and governments of the need to increase STEM skills at
all levels, starting early in school. It is important to acknowledge that the proportion of
STEM‑literate secondary school students could affect the potential number of future entrants
into highly skilled manufacturing occupations, including some specialised occupations. Many
submissions identified STEM skills as a critical factor to manufacturing’s success over the next
decade.270
Furthering development of advanced manufacturing technologies relies on high‑level
application of STEM skills, as well as ability to integrate advances into manufacturing
practice.271
A recent survey by the Australian Industry Group indicates that Manufacturing sector employers
are already experiencing difficulty recruiting employees with STEM skills. Across many
industries, recruiting Technicians and Trades Workers with sufficient STEM skills was reported
as difficult by 41 per cent of employers, while recruiting Professionals and Managers with
sufficient STEM skills was reported as difficult by 27 per cent and 26 per cent of employers,
respectively. The highest response recorded for difficulty recruiting individuals with STEM skills
270 Ai Group, Plastics Industry Manufacturers of Australia and Australian Design Integration Network, 2013,
submissions to AWPA’s Manufacturing workforce study.
271 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
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was for Technicians and Trades Workers in the Manufacturing industry (44 per cent of survey
respondents).272
The 2012 Programme for International Student Assessment, a survey which assesses the
mathematics, reading and science skills of 15‑year‑old school students from 65 countries,
found that Australian students had slipped in mathematics performance by about half a year of
schooling compared to 10 years ago, though scores in science have remained steady.273
During AWPA’s consultations, a range of stakeholders suggested that STEM education in
schools does not prepare students adequately for tertiary study in engineering and other
manufacturing‑related courses.
Many new entrants into the industry lack these essential underpinning [STEM] skills
because they have not chosen these subjects at school. There is also a concern that at
the school education level, teachers and careers advisers are not aware that STEM
skills are really important for careers in the manufacturing industry or are unaware of
the educational level of STEM skills required in the industry.274
It may take many years to improve the quality of teaching STEM in schools. In the interim, it
may be necessary to introduce alternative approaches to educational delivery that embrace the
online learning environment as well as collaborations between the school sector, universities
and industry to create resources that use industry‑based examples to make learning STEM
skills more interesting and relevant.
The 2013 report by the Office of the Chief Scientist, Science, technology, engineering and
mathematics in the national interest: a strategic approach, outlines a number of strategies to
improve Australia’s STEM skills, with actions for schools, post–compulsory education providers,
the workforce and the broader community.275 The report also advocates industry‑based STEM
training, as well as partnerships between employers and education providers. Many of these
strategies centre on the need to improve perceptions of STEM disciplines within the wider
society, the improvement of STEM‑related training providers, and the incorporation of STEM
into training to meet the needs of the future workforce.
The Australian Industry Group called for ‘the establishment of an industry‑led working group, in
conjunction with the Office of the Chief Scientist, to develop a national framework and
strategies to implement “school–industry” STEM skills initiatives and to support increased
university and industry participation’. The initiatives would include career advice highlighting the
importance of STEM skills for a wide range of occupations.276 Since then, the Office of the
Chief Scientist has established an Industry Working Group to canvass these types of issues.
273 OECD, 2013, 2012 PISA results in focus: what 15‑year‑olds know and what they can do with what they know,
p. 8, oecd.org/pisa/keyfindings/pisa‑2012‑results‑overview.pdf, accessed 12 December 2013.
274 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
275 Office of the Chief Scientist, 2013, Science, technology, engineering and mathematics in the national interest: a
strategic approach, p. 13.
276 Ai Group, 2013, Lifting our science, technology, engineering and mathematics (STEM) skills, p. 13.
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272 Ai Group, 2013, Lifting our science, technology, engineering and mathematics (STEM) skills, p. 5, aigroup.com.
au/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/LIVE_CONTENT/
Publications/Reports/2013/Ai_Group_Skills_Survey_2012‑STEM_FINAL_PRINTED.pdf, accessed 12 December
2013.
F1 in Schools Technology Challenge
The F1 in Schools Technology Challenge277 is the world’s largest secondary schools
technology program, involving more than 20 million students from 40 nations. Each year,
around 35,000 students take part from 300 schools across Australia.
The program gives students (aged between 9 and 19) the opportunity to use CAD and
CAM software to design, make, test, market and race their own miniature,
compressed‑air‑powered, balsawood F1 cars. Students collaborate with many
organisations, industry and higher education facilities to source knowledge and resources
during their project. Both metropolitan and rural schools are linked to encourage ongoing
collaboration between regional and metropolitan students. Teams must also raise
sponsorship and manage budgets to fund research, travel and accommodation.
The program aims to offer a way to learn STEM‑related skills and apply them in a
practical, creative and competitive way. It is hoped that this will ultimately encourage
more students to start future careers in engineering. It also provides a platform for
mentoring students and focuses on developing long‑term employability skills such as
teamwork, leadership, project management, public speaking, writing and presentation
skills. Many students who have participated in the program have been offered
employment by industry before completing their studies—one was even headhunted
into Formula 1 racing as an aerodynamics engineer.
Recommendation 7
That the work of the Office of the Chief Scientist be strongly supported to ensure that
manufacturing has access to workers with sufficient science, technology, engineering
and mathematics capabilities to meet future industry needs.
The role of temporary and skilled migration
Skilled migration, including both permanent skilled migration and temporary skilled migration
(subclass 457 visas), can help fill gaps in local labour supply for the manufacturing industry,
particularly in regional areas.
A number of manufacturing‑related occupations are on the 2013 Specialised Occupations List
developed by AWPA, including Sheetmetal Trades Workers, Metal Fitters and Machinists, and
Electrical Engineers.278 The list identifies occupational areas where the risk of shortages, or
indeed oversupply, needs to be better identified and addressed. A wide range of data and
information is examined each year to generate a new Specialised Occupations List, and
includes occupations that satisfy the criterion of their being high‑quality information available,
277 F1 in Schools, f1inschools.com/about‑the‑challenge, accessed 4 March 2014; Re‑engineering Australia
Foundation, rea.org.au/f1‑in‑schools, accessed 4 March 2014.
278 AWPA, 2013, Specialised Occupations List, awpa.gov.au/our‑work/labour‑market‑information/
specialised‑occupations‑list/Pages/default.aspx, accessed 11 December 2013.
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as well as two of the following three criteria: long lead‑time, high use and high risk. It is
published at the ANZSCO unit group (four‑digit) level.279
Department of Employment data indicates that skills shortages exist in a number of trades
occupations relevant to the Manufacturing sector, including Metal Machinists (First Class),
Fitters (regional shortage) and Sheetmetal Trades Workers.280 Perhaps most significant of these
occupations is Sheetmetal Trades Workers, which has experienced skills shortages for five
consecutive years. No shortages were recorded in Professional occupations relevant to the
Manufacturing sector.
A small amount of mixed feedback was received on the skills shortages through the
Manufacturing workforce study submission and consultation process. In its submission, the
NCVER stated that while 13 per cent of manufacturing firms report a skills shortage (one of the
highest percentages in the economy), the data is inconsistent and may reflect a lack of
specialised knowledge rather than a skills shortage.281
In its consultation with AWPA, the Victorian Employers’ Chamber of Commerce and Industry
indicated that there were sporadic skills shortages in Victoria of fabrication trades workers and
engineers. The NSW Business Chamber’s 2012 business skills conditions survey shows that
29.8 per cent of manufacturers reported skills shortages.282 However, it also notes that there
was a downward trend in skills shortages since 2010, which is consistent with national
figures.283 Similarly, Manufacturing Skills Australia’s 2013 environmental scan notes that the
skills shortage of engineers has slowed due to some resource projects being stalled, but
this skills shortage is likely to intensify again in the future.284
ForestWorks Industry Skills Council’s submission notes a trend whereby temporary migration is
used to fly in overseas technicians to train Australian workers in how to operate new
technologies.285 Manufacturing Skills Australia’s submission raises concerns that migration is
often used to fly in technicians from overseas to carry out services or maintenance and then
leave again, resulting in no diffusion of skills to the Australian workforce.286
Increasing the diversity of the manufacturing workforce
Increasing the diversity of the manufacturing workforce is a key strategy for increasing the
supply of skilled workers to the sector. Attracting and retaining skilled workers from currently
underrepresented groups, such as young people and women, will help to broaden the talent
pool from which firms can recruit. Due to the high proportion of mature‑age workers in
manufacturing, there is also a need to manage the transition to retirement for this cohort.
Providing alternative roles for mature‑age workers nearing retirement will help to increase the
working lives of those within the sector, while minimising the effects of knowledge loss.
Importantly, increasing diversity is not just about increasing numbers in the workforce. A highly
279Ibid.
280 Department of Employment, 2013, Skills shortages Australia, 2012–13.
281 NCVER, 2103, submission to AWPA’s Manufacturing workforce study.
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282 NSW Business Chamber, 2013, submission to the inquiry into skills shortages in New South Wales, p. 6,
nswbusinesschamber.com.au/NSWBC/media/Misc/Policy%20Documents/Workforce%20Skills/
NSW‑Business‑Chamber‑submission‑Inquiry‑into‑skill‑shortages‑in‑NSW‑July‑2013.pdf, accessed
10 December 2013.
283 Ibid., p. 5.
284 MSA, 2013, 2013 environmental scan: a new era for manufacturing, p. 22.
285 ForestWorks Industry Skills Council, 2013, submission to AWPA’s Manufacturing workforce study.
286 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
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diverse workforce brings with it a number of benefits. Increased workforce participation as a
result of sourcing workers from a greater range of cohorts will improve productivity, and help to
support the demands of an ageing population.287 The combination of knowledge, opinions and
life experience that a diverse workforce brings creates opportunities to discover new ways of
thinking, and new approaches to workplace processes.
Young people
While the ageing population is reducing the proportion of young people throughout the wider
Australian economy, its effects are greater for the Manufacturing sector. In 2012–13, workers
aged 35 years and under made up 34.1 per cent of the manufacturing workforce, which is
substantially lower than all industries (38.8 per cent). These figures suggest that there is an
opportunity to develop more strategies to attract and retain young workers within Australian
manufacturing.
The large proportion of SMEs in Australian manufacturing also plays a part in the low levels of
youth employment within the sector. Young people are more likely to be less experienced and
SMEs may be less able to absorb the higher risk that recruiting inexperienced people can bring.
However, it should be noted that recruiting those new to the industry does bring benefits as
well; for example, employing young people can open up opportunities for existing workers to
upskill into higher level positions or act as trainers or mentors for new workers.288
Women
As noted previously, the manufacturing workforce is characterised by low levels of female
participation (26.7 per cent, as compared to 45.8 per cent for all industries). Of this group, the
majority are employed in clerical and administrative roles (26 per cent).289 Female employment
is also skewed towards lower paying subsectors, such as Textile, Leather, Clothing and
Footwear Manufacturing, and Printing (including the Reproduction of Recorded Media).290
Therefore, increasing female participation in manufacturing will need to address both
non‑traditional roles, and those roles in higher paying, high‑skilled occupations. Submissions to
the Manufacturing workforce study were unanimous on the need for the Manufacturing sector
to increase female participation.
One of the barriers to increasing female participation stems from the commonly held
perception that manufacturing is not a female‑friendly sector. The perception that
manufacturing jobs are masculine, dirty and lacking valuable career pathways acts as a
deterrent to attracting female participation. A recent study conducted by the Department of
Industry found that manufacturing was ranked last out of eight industries in terms of
attractiveness for women, compared to fifth for men.291 While there are overall perception
issues for manufacturing, this concern is heightened in the case of women. Negative
perceptions may be perpetuated through employers, who often hold an unconscious bias
regarding what women are capable of achieving in the workplace.
287 Australian Chamber of Commerce and Industry, 2012, Employ Outside the Box, p. 2.
288 Ibid., p. 10.
289 MSA, 2013, submission to AWPA’s Manufacturing workforce study, p. 14.
290 ABS, 2012, Employee earnings, benefits and trade union membership, cat. no. 6310.0.
291 Wallis Consulting Group, 2013, Public perceptions of manufacturing, p. 30.
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Many manufacturing workplaces are not gender inclusive. MSA has heard of worksites
where there are no female toilets or wash areas and other[s] where female staff
facilities are outside the factory. One employer, when approached about taking
on a female apprentice said she wouldn’t ‘as they would be too distracting to the
male employees.’ Others have expressed concern about having to replace female
employees when they take ‘career breaks’ (i.e. maternity leave).292
The high level of full‑time roles within the sector may also inhibit the attraction and retention of
women within manufacturing. The sector’s full‑time employment rate (85.3 per cent) is third
after Mining (97.0 per cent) and Construction (85.4 per cent), and is far higher than the national
average of 70.4 per cent.293 Unsurprisingly, subsectors with the highest levels of part‑time
employment (Textile, Leather, Clothing and Footwear Manufacturing and Food Product
Manufacturing) are characterised by higher levels of female participation.294 The introduction of
flexible working arrangements, such as childcare‑friendly shifts and job‑share arrangements,
have been noted as effective strategies to attract and retain female workers, particularly for
those with family commitments.295 In order for these strategies to be effective, however, any
perception of their negative effect on an employee’s career prospects needs to be overcome.296
The ability of manufacturing firms to attract women into non‑traditional roles is also hindered by
the small number of women entering the VET pipeline. The need for skilled Technicians and
Trades Workers has been identified as highly important to meet future demands on the sector,
yet enrolments at this level are dominated by males.297 Figures show that there has been little
change in the proportion of women in traditionally male roles over the past 15 years. In
construction and automotive and engineering trades, two of the most male‑dominated
occupational groups, the proportion of women decreased between 1996–97 and 2011–12.298
Increasing female participation in VET qualifications at the trade and technician level will help
broaden the talent pool that manufacturers can draw from to fill the skills requirements of
future roles.
292 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
293 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, (four‑quarter average).
294Ibid.
296 Engineers Australia, 2012, The Engineers Australia survey of working environment and engineering careers, p. 2.
297 NCVER, 2013, VET students by industry, Technicians and Trade Workers, 2008–12, ncver.edu.au/resources/vsi/
vsi_table.html?table_list_class_type_id=3&table_list_table_nr=1&table_list_filter_id=3&filter_
name=3+‑+Technicians+and+Trades+Workers&classification_name=Occupation+%28ANZSCO%29,
accessed 10 December 2013.
298 Women NSW, 2013, Women in trades: the missing 48 percent, p. 8.
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295 Women NSW, 2013, Women in trades: the missing 48 percent, NSW Department of Family and Community
Services, p. 29, women.nsw.gov.au/__data/assets/pdf_file/0017/268010/3000_WNSW‑OccasionalPaper_
document_ART.pdf, accessed 5 December 2013.
Women who Weld initiative
The Queensland Government’s Manufacturing and Engineering Gateway to Industry
Schools Program299 runs a number of initiatives providing young people with an
opportunity to access industry relevant activities, curriculum and experiences while at
school, assisting students to make informed career choices. Under this program, the
Women who Weld initiative300 was devised, providing pre‑vocational exposure to women
interested in a career in welding. The program provides a safe and supportive
environment for women to gain an understanding of what a career in welding might
involve. Participants for the program were chosen from a diverse range of ages and
backgrounds, including high school students, Indigenous women, and out of work
women.
The initiative involves a 10-week program, resulting in the certification of five metal and
engineering competencies. Participants also have the opportunity to transition into an
apprenticeship, which a number of women have achieved since the program’s
commencement.
Industry response to the program has been overwhelmingly positive. While initially
hesitant in recruiting apprentices from the program, many firms have identified a number
of advantages that female welders have demonstrated, including greater attention to
detail and superior fine motor skills. Concerns about employee reactions to the
introduction of women on the factory floor were also quelled, as it was found that a
female presence had a positive effect on workforce culture.
Due to the success of the program, a TAFE-funded follow-up was held for an additional
15 students, which again resulted in a number of participants moving into
apprenticeships. Several one-day sessions have also been carried out across high
schools in Queensland for Year 10 girls, to expose students to career pathways that may
not have otherwise been considered.
As well as increasing the participation of women in trade and technician roles, there is a need
to increase participation of women in managerial and professional roles. Participation at these
levels is hindered by the skills pipeline in schools and higher education, where low numbers of
female students in STEM‑related disciplines persist. In both the VET and university sectors,
female enrolments in engineering‑related qualifications, a crucial pathway to managerial and
professional manufacturing roles, remain consistently low.301
Women make up the majority of enrolments at both the Manager and Professional level for all
industries, and also comprise more than 55 per cent of all working‑age persons (15–64 years of
age) with a bachelor or above qualification, a proportion that is continuing to grow.302 Despite
this, women represent 31 per cent of Professionals within manufacturing, and only 20 per cent
of Managers within the sector. Even for women who are undertaking STEM‑related training,
299 Skills Tech Australia, 2013, Pioneering initiative for women to enter welding trade, http://skillstech.tafe.qld.
gov.au/about_us/media_centre/media_releases/2012/august/women‑enter‑welding‑trade.html, accessed
4 March 2014.
300 AWPA consultation with Leanne Hixon, QMI Solutions, on 9 December 2013.
301 NCVER, 2013, Students by industry, Engineering Professionals, 2008–2012, www.ncver.edu.au/resources/vsi/
vsi_table.html?table_list_class_type_id=3&table_list_table_nr=1&table_list_filter_id=233&filter_
name=233+‑+Engineering+Professionals&classification_name=Occupation+%28ANZSCO%29, accessed
11 December 2013.
302 ABS, 2012, Education and work, Australia, cat. no. 6227.0.
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Manufacturing workforce study | Australian Workforce and Productivity Agency
preferences lean towards occupations such as veterinary science and medicine.303 The 2013
report of the Office of the Chief Scientist, Science, technology, engineering and mathematics in
the national interest: a strategic approach, recommends that approaches should be developed
and implemented to raise the participation of females in STEM disciplines at all levels of
education.304
Power of Engineering Inc.
Power of Engineering Inc.305 is a not‑for‑profit organisation that emerged from a
collaboration initiative between industry, government and universities. Engineers
Australia Women in Engineering Committee (Queensland), Queensland University of
Technology, the National Association of Women in Construction, Women in Mining and
Resources Queensland, AECOM and the Queensland Government came together to
create the first event, which has since expanded to become an Australia‑wide program
that has inspired 1,600 high school students over two years.
It is a program that addresses the engineering pipeline, seeking ‘to inspire young people,
particularly females, regional students and non‑traditional entrants to consider a diverse
and creative career in engineering’.306
The initiative has now become a series of one-day events that follow the same format of
hands-on workshops, presentations from recent female engineering graduates, positive
role models as volunteers (current university students and professional engineers) and
site tours. The events are aimed at females or non‑traditional entrants (such as students
who might not otherwise select engineering and who might usually enjoy arts or
humanitarian subjects) and regional students in Years 9 and 10. Students are targeted
before senior subject selection as many girls who enjoyed science during primary and
middle school often opt out by Year 11, demonstrating the need to encourage the pursuit
of STEM-related study at an early age.307 This is confirmed through the findings from the
2012 Programme for International Student Assessment study, where one-third of female
students did not think mathematics was important for later study, compared to only
one-fifth of males.
The Power of Engineering initiative also seeks to inform teachers of the resources and
programs available to educate high school students about engineering. To evaluate the
effectiveness of the program, a survey was completed by participants, which garnered
highly positive results. Fifty-seven per cent of girls who had not considered engineering
pathways before the day said they would now consider the field.308 The program
suggests that hands-on activities may garner a positive response by young people.
These results have continued at consecutive events, with an average of 55 per cent of
students changing their mind from a ‘no’ to a ‘yes’ when asked if they would consider a
304 Office of the Chief Scientist, 2013, Science, technology, engineering and mathematics in the national interest:
a strategic approach, p. 13.
305 AWPA consultation with AECOM.
306 Briody, F, Goh, S and Dawes, L, 2012, ‘Power of engineering: changing the perceptions of year 9 and 10 female
students towards an engineering career’, AAEE 2012 Conference.
307 Lyons, T & Quinn, F, 2011, Looking back: students’ perceptions of the relative enjoyment of primary and
secondary school science, Hudson & Chandra (Eds) STEM in Education Conference.
308 Briody, F, Goh, S and Dawes, L, 2012, ‘Power of engineering: changing the perceptions of Year 9 and 10 female
students towards an engineering career.
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Part Four
303 Australian Learning and Teaching Council, 2011, Women in engineering education: recommendations for
curriculum change and support to aid recruitment and retention, p. 1.
career in engineering. The best results arose from Chinchilla in western Queensland,
where 70 per cent of students changed their perceptions of engineering careers. The
format of this program is easily scalable and in the two years since the first event in
March 2012, there have been 21 events reaching 1,600 students and their teachers.
Events have been held in Brisbane, Cairns, Mt Isa, Townsville, Bundaberg, Caboolture,
Springfield Lakes, Toowoomba, Dalby, Miles, Chinchilla, Roma, Kingaroy and Melbourne.
In 2014, 10 events are confirmed for Brisbane (March, June and August), Perth (April)
and regional Queensland, and new events are planned for Rockhampton, Sydney and
Melbourne.
Cross‑sectoral recruitment is a potential strategy for improving participation of women within
the sector, though it has been widely documented that this is dependent on interest from
women if it is to be achieved.309 This strategy is also limited due to the need for women with
manufacturing‑specific skills and qualifications. However, a potential source of recruitment
could be to transition women already working in the industry in occupations traditionally
classified as support roles (for example, administration and sales) to other manufacturing
occupations.
The Australian Human Rights Commission’s tool kit, Women in male‑dominated industries: a
toolkit of strategies, outlines strategies that businesses can adopt to improve participation of
women that are highly relevant to the Manufacturing sector.310 The guide largely addresses
workplace strategies, and does not cover in great detail the skills pipeline issue.
Mature‑age workers
Due to the high proportion of mature‑age workers within the Manufacturing sector, succession
planning will be a key strategy to address the impending retirement of these workers. In each
of AWPA’s four scenarios, the majority of job openings are projected to occur through
replacement in existing roles in the years to 2025 (Appendix F). Ensuring a smooth transition for
retirees out of the sector will be a key focus for manufacturers to avoid skills and knowledge
loss.
As the nature of manufacturing occupations becomes less labour-intensive, there may be
opportunities to extend the working lives of skilled personnel.311 Current mature‑age workers
are also more highly qualified than preceding generations, and will therefore be able to perform
more diverse and complex tasks than in previous times. Additional training for mature‑age
workers, such as upskilling in digital literacy, will also help increase the working lives of those
who are less tech savvy.312 Using recognition of prior learning may also assist the retention of
older workers, who have often developed the required skills for their occupation through
experience, rather than through the attainment of formal qualifications.
The use of flexible working arrangements has been highlighted through AWPA’s consultations
as an effective method for retaining mature‑age workers. Offering incentives such as reduced
hours, or a shift in job design to a mentoring‑based role, may assist the retention of those
approaching retirement. It has been noted through AWPA’s submission process that these
309 Business SA, 2013, submission to AWPA’s Manufacturing workforce study, p. 3.
310 Australian Human Rights Commission, 2013, Women in male‑dominated industries: a toolkit of strategies.
311 MSA, 2013, submission to AWPA’s Manufacturing workforce study.
312Ibid.
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arrangements can be of mutual benefit, with employees receiving greater flexibility to suit
lifestyle preferences, while businesses receive transfer of skills and knowledge to younger
workers.313
Mature aged workers should be actively encouraged to provide mentorship, passing on
acquired knowledge and competencies to other employees. This will increase the
engagement of mature workers seeking recognition for the value of their skills, while at
the same time ensuring organisational succession planning and minimising loss of
‘corporate knowledge’.314
The ability for smaller firms to provide flexible job design for mature‑age workers is somewhat
limited, due to staff responsibilities in SMEs. Stakeholders have also proposed the prospect of
mature‑age workers transitioning into roles as VET teachers, as there are fewer physical
demands in these roles. It has been noted, however, that not all workers with strong technical
skills will possess the ability to act as a mentor or trainer.
Employ Outside the Box initiative
The Australian Chamber of Commerce and Industry has developed a series of employers
guides,—Employ Outside the Box315 —to encourage employers to develop innovative
strategies to attract and retain valued employees to bolster Australia’s dwindling
workforce participation. Target groups include mature‑age workers and women with
caring responsibilities.
These initiatives emphasise the business case for a diverse workforce, as well as the
need for Australia to increase labour force participation to address the demands that an
ageing population presents.
The program calls for a number of support mechanisms to increase participation of those
‘outside the box’ including an overall promotion of workplace diversity, and a Corporate
Champions initiative to provide role models for best practice.
Indigenous Australians
For Indigenous Australians, manufacturing is a major employer. In the 2011 Census, a total of
6,018 people identified themselves as Indigenous in the manufacturing subsectors under
Manufacturing Skills Australia’s coverage.
According to the 2011 Census, 6 per cent of Indigenous Australians were employed in
manufacturing, making manufacturing the seventh‑largest employer of Indigenous people.
The top three subsectors for Indigenous employment in manufacturing were Primary Metal and
Metal Product Manufacturing (1,048 employees), Machinery and Equipment Manufacturing
(755 employees) and Fabricated Metal Product Manufacturing (729 employees).316
314 Business SA, 2013, submission to AWPA’s Manufacturing workforce study.
315 Australian Chamber of Commerce and Industry, 2012, Employ Outside the Box: the rewards of a diverse
workforce.
316 MSA, 2013, MSA background research: Indigenous workers in the manufacturing industry, p. 9, mskills.com.au/
DownloadManager/downloads/MSA%20Background%20Research%20Indigenous%20workers%20in%20
the%20manufacturing%20industry.pdf, accessed 11 February 2014.
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123
Part Four
313 Bureau Veritas, 2013, submission to AWPA’s Manufacturing workforce study.
However, concerns have arisen regarding the participation of Indigenous Australians in
manufacturing. Over the five years from 2006 to 2011, there was a two percentage point
decrease in the proportion of Indigenous Australians employed in the sector. In 2006, the
industry was the fifth‑highest employer for Indigenous Australians, providing employment for
8 per cent of this demographic group. It was even more significant for Indigenous men, for
whom manufacturing was the third‑highest employer at 12 per cent.317
People with a disability
Manufacturing is a major employer of people with a disability, with the second‑highest
proportion of disabled workers employed within the sector, behind only Health Care and Social
Assistance and Retail Trade.318 The increasing use of automation and technology, coupled with
the shift towards professional, managerial and sales positions within Australian manufacturing,
may improve employment opportunities for people with a disability.
Recommendation 8
That peak industry groups and trade unions build employer commitment to improving the
attraction and retention of underrepresented groups within manufacturing. Strategies
should include:
➢ providing advice on how to develop inclusive workplace practices including flexible
working arrangements and safe (mental and physical) working environments for
employees
➢ supporting development and educational opportunities (through job shadowing,
mentoring and formal training) to assist workers to transition to revised or different
roles where required.
317Ibid.
318 ABS, 2013, 2011 Census of population and housing.
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Manufacturing workforce study | Australian Workforce and Productivity Agency
Australian manufacturing will continue to transition as it responds to global and domestic drivers
of change. Its future will increasingly lie in shifting to a sustainable manufacturing base that
incorporates advanced and niche manufacturing, with firms participating in global supply chains
and offering lifetime services for their products.
Securing a competitive future for manufacturing will require a strategic focus on innovation.
Innovation is crucial to the development of new materials, processes and technologies, and will
be at the foundation of the sector’s future. Non‑technical innovations such as design‑led
innovation, new business models and lean manufacturing will also drive the competitiveness
and productivity of manufacturing firms.
As the industry continues to transform, its workforce will also adapt. A strong Manufacturing
sector will continue to be founded on a core base of skilled Technicians and Trades Workers,
but will also see the creation of new occupations and career paths in creative, high‑skill and
interdisciplinary manufacturing jobs. The industry will also offer an expanding range of
opportunities in non‑traditional manufacturing careers as more firms look to add value to their
products by bundling services with their goods.
A move to advanced manufacturing will increase the demand for higher skill jobs, but will not
necessarily bring jobs growth. This will put pressure on parts of the existing workforce,
particularly those in lower skilled or manual roles. Upskilling and reskilling of the existing
workforce will be critical. This will involve the provision of strategies to address the sector’s
ageing workforce, to extend workers’ working lives and prevent knowledge loss. To secure the
skills needed for the future of manufacturing, the sector must secure a strong stream of new
apprentices and graduates.
The industry’s current skills profile suggests that it is facing a challenging transition phase.
Currently, just under half of the manufacturing workforce does not have any post‑school
qualifications. If this is not addressed, it is likely that firm productivity and competitiveness will
be severely compromised.
Building the industry’s resilience through promoting and supporting a culture of structured
training and lifelong learning will require long‑term leadership from industry partners.
This study has identified a range of strategies designed to address the workforce challenges
and opportunities facing Australian manufacturing. Concerted, collaborative effort is now
required from industry, education and training providers, and governments to foster, attract and
retain the skilled workforce required for a competitive Manufacturing sector into the future.
Manufacturing workforce study | Australian Workforce and Productivity Agency
127
Conclusion
Conclusion
Appendices
Appendix A
AWPA modelling of future employment and output
➢ The Long Boom—The economy recovers from the financial uncertainty of 2012 and India
and China drive the demand for Australian resources. Mining and construction continue
to thrive in Australia. Industries like manufacturing, challenged by the high terms of trade,
undertake structural adjustment. Average annual growth for manufacturing output and
employment are 0.6 per cent and –1.5 per cent respectively.
➢ Smart Recovery—A protracted European downturn and slowing growth in China and
India create a drop in demand for Australian resources. As global growth resumes from
2014–15, the Australian economy looks to knowledge‑based industries to drive growth,
which leads to increased demand in technology‑related skills. Average annual growth for
manufacturing output and employment are 1.4 per cent and –1.3 per cent respectively.
➢ Terms of Trade Shock—An oversupply of commodities creates a drop in commodity
prices. Australia moves to a broad‑based economy with internationally competitive
businesses. The material content in many products is reduced through advanced
engineering design, which in turn decreases worldwide demand for commodities. Small
technologies and micro‑fabrication help drive the re‑establishment of a viable Australian
Manufacturing sector based on technology and innovation. Giant 3D printers and robotics
replace assembly lines. Average annual growth for manufacturing output and
employment are 1.9 per cent and –1.0 per cent respectively.
➢ Ring of Fire—In a context of natural disasters, global crises, political unrest and increased
protectionism, the lower Australian dollar enables the strengthening of trade‑exposed
industry sectors. As global trade wanes, manufacturing employment and output grow at
an average annual rate of 0.6 per cent and 2.4 per cent respectively.
Economic modelling against each of these four scenarios was undertaken by Deloitte Access
Economics to determine the skills demand for the economy into the future.320
AWPA has taken the view that the Ring of Fire scenario is a relative outlier in terms of
workforce and qualifications outcomes for Australia in the future and should not be considered
as a focus of analysis and planning. Figures for this scenario have still been provided in the
report for completeness.
319 AWPA, 2013, Future focus: 2013 National Workforce Development Strategy.
320 A description of the scenarios and the modelling of employment in each, with state and territory breakdowns,
are available in AWPA, 2012, Scenarios for Australia to 2025, awpa.gov.au/our‑work/Workforce%20
development/national‑workforce‑development‑strategy/2013‑workforce‑development‑strategy/documents/
scenarios‑for‑australia‑to‑2025.pdf, accessed 1 March 2014; and Deloitte Access Economics, 2012,
Economic modelling of skills demand and supply, awpa.gov.au/publications/Documents/
DAE‑Economicmodellingofskillsdemandandsupply.pdf, accessed 1 March 2014.
Manufacturing workforce study | Australian Workforce and Productivity Agency
129
Appendices
With a view to avoiding skills shortages, improving productivity and enhancing participation,
AWPA has developed a suite of scenarios for Australia to 2025 as a basis for modelling
Australia’s workforce needs and developing policy to help meet those needs. The scenarios are
not projections, nor are they based on past trends, but represent a range of possible futures for
Australia that help us to plan for an uncertain world.319 The four scenarios are:
Appendix B
Manufacturing ANZSIC codes, 2006
Subdivision 11: Food Product Manufacturing
111 Meat and Meat Product Manufacturing
1111
Meat Processing
1112
Poultry Processing
1113
Cured Meat and Smallgood Manufacturing
112 Seafood Processing
1120
Seafood Processing
113 Dairy Product Manufacturing
1131
Milk and Cream Processing
1132
Ice Cream Manufacturing
1133
Cheese and Other Dairy Product Manufacturing
114 Fruit and Vegetable Processing
1140
Fruit and Vegetable Processing
115 Oil and Fat Manufacturing
1150
Oil and Fat Manufacturing
116 Grain and Cereal Product Manufacturing
1161
Grain Mill Product Manufacturing
1162
Cereal, Pasta and Baking Mix Manufacturing
117 Bakery Product Manufacturing
1171
Bread Manufacturing (Factory based)
1172
Cake and Pastry Manufacturing (Factory based)
1173
Biscuit Manufacturing (Factory based)
1174
Bakery Product Manufacturing (Non‑factory based)
118 Sugar and Confectionery Manufacturing
1181
Sugar Manufacturing
1182
Confectionery Manufacturing
119 Other Food Product Manufacturing
1191
Potato, Corn and Other Crisp Manufacturing
1192
Prepared Animal and Bird Feed Manufacturing
1199
Food Manufacturing n.e.c.
130
Manufacturing workforce study | Australian Workforce and Productivity Agency
Subdivision 12: Beverage and Tobacco Manufacturing
121 Beverage Manufacturing
Soft Drink, Cordial and Syrup Manufacturing
1212
Beer Manufacturing
1213
Spirit Manufacturing
1214
Wine and Other Alcoholic Beverage Manufacturing
122 Cigarette and Tobacco Product Manufacturing
1220
Cigarette and Tobacco Product Manufacturing
Subdivision 13: Textile, Leather, Clothing and Footwear Manufacturing
131 Textile Manufacturing
1311
Wool Scouring
1312
Natural Textile Manufacturing
1313
Synthetic Textile Manufacturing
132 Leather Tanning, Fur Dressing and Leather Product Manufacturing
1320
Leather Tanning, Fur Dressing and Leather Product Manufacturing
133 Textile Product Manufacturing
1331
Textile Floor Covering Manufacturing
1332
Rope, Cordage and Twine Manufacturing
1333
Cut and Sewn Textile Product Manufacturing
1334
Textile Finishing and Other Textile Product Manufacturing n.e.c.
134 Knitted Product Manufacturing
1340
Knitted Product Manufacturing
135 Clothing and Footwear Manufacturing
1351
Clothing Manufacturing
1352
Footwear Manufacturing
Manufacturing workforce study | Australian Workforce and Productivity Agency
131
Appendices
1211
Subdivision 14: Wood Product Manufacturing
141 Log Sawmilling and Timber Dressing
1411
Log Sawmilling
1412
Wood Chipping
1413
Timber Resawing and Dressing
149 Other Wood Product Manufacturing
1491
Prefabricated Wooden Building Manufacturing
1492
Wooden Structural Component Manufacturing
1493
Veneer and Plywood Manufacturing
1494
Reconstituted Wood Product Manufacturing
1499
Other Wood Product Manufacturing n.e.c.
Subdivision 15: Pulp, Paper and Converted Paper Product
Manufacturing
151 Pulp, Paper and Converted Paper Product Manufacturing
1510
Pulp, Paper and Paperboard Manufacturing
152 Converted Paper Product Manufacturing
1521
Corrugated Paperboard Container Manufacturing
1522
Paper Bag Manufacturing
1523
Paper Stationary Manufacturing
1524
Sanitary Paper Product Manufacturing
1529
Other Converted Paper Product Manufacturing n.e.c.
Subdivision 16: Printing (including the Reproduction of
Recorded Media)
161 Printing and Printing Support Services
1611
Printing
1612
Printing Support Services
162 Reproduction of Recorded Media
1620
132
Reproduction of Recorded Media
Manufacturing workforce study | Australian Workforce and Productivity Agency
Subdivision 17: Petroleum and Coal Product Manufacturing
170 Petroleum Refining and Coal Product
1701
Petroleum Refining and Petroleum Fuel Manufacturing
1709
Other Petroleum and Coal Product Manufacturing
Appendices
Subdivision 18: Basic Chemical Product Manufacturing
181 Basic Chemical and Chemical Product Manufacturing
1811
Industrial Gas Manufacturing
1812
Basic Organic Gas Manufacturing
1813
Basic Inorganic Chemical Manufacturing
182 Basic Polymer Manufacturing
1821
Synthetic Resin and Synthetic Rubber Manufacturing
1829
Other Basic Polymer Manufacturing
183 Fertiliser and Pesticide Manufacturing
1831
Fertiliser Manufacturing
1832
Pesticide Manufacturing
184 Pharmaceutical and Medicinal Product Manufacturing
1841
Human Pharmaceutical and Medicinal Product Manufacturing
1842
Veterinary Pharmaceutical and Medicinal Product Manufacturing
185 Cleaning Compound and Toiletry Preparation Manufacturing
1851
Cleaning Compound Manufacturing
1852
Cosmetic and Toiletry Preparation Manufacturing
189 Other Basic Chemical Product Cleaning
1891
Photographic Chemical Product Manufacturing
1892
Explosive Manufacturing
1899
Other Basic Chemical Product Manufacturing n.e.c.
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133
Subdivision 19: Polymer Product and Rubber Product Manufacturing
191 Polymer Product Manufacturing
1911
Polymer Film and Sheet Packaging Material Manufacturing
1912
Rigid and Semi‑Rigid Polymer Product Manufacturing
1913
Polymer Foam Product Manufacturing
1914
Tyre Manufacturing
1915
Adhesive Manufacturing
1916
Paint and Coatings Manufacturing
1919
Other Polymer Product Manufacturing
192 Natural Rubber Product Manufacturing
1920
Natural Rubber Product Manufacturing
Subdivision 20: Non‑Metallic Mineral Product Manufacturing
201 Glass and Glass Product Manufacturing
2010
Glass and Glass Product Manufacturing
202 Ceramic Product Manufacturing
2021
Clay Brick Manufacturing
2029
Other Ceramic Product Manufacturing
203 Cement, Lime, Plaster and Concrete Product Manufacturing
2031
Cement and Lime Manufacturing
2032
Plaster Product Manufacturing
2033
Ready‑Mixed Concrete Manufacturing
2034
Concrete Product Manufacturing
209 Other Non‑Metallic Mineral Product Manufacturing n.e.c.
2090
134
Other Non‑Metallic Mineral Product Manufacturing n.e.c.
Manufacturing workforce study | Australian Workforce and Productivity Agency
Subdivision 21: Primary Metal and Metal Product Manufacturing
211 Basic Ferrous Metal Manufacturing
2110
Iron Smelting and Steel Manufacturing
212 Basic Ferrous Metal Product Manufacturing
Iron and Steel Casting
2122
Steel Pipe and Tube Manufacturing
Appendices
2121
213 Basic Non‑Ferrous Metal Manufacturing
2131
Alumina Production
2132
Aluminium Smelting
2133
Copper, Silver, Lead and Zinc Smelting and Refining
2729
Basic Non‑Ferrous Metal Manufacturing n.e.c.
214 Basic Non‑Ferrous Metal Product Manufacturing
2141
Non‑Ferrous Metal Casting
2142
Aluminium Rolling, Drawing, Extruding
2149
Other Basic Non‑Ferrous Metal Product Manufacturing
Subdivision 22: Fabricated Metal Product Manufacturing
221 Iron and Steel Forging
2210
Iron and Steel Forging
222 Structural Metal Product Manufacturing
2221
Structural Steel Fabrication
2222
Prefabricated Metal Building Manufacturing
2223
Architectural Aluminium Product Manufacturing
2224
Metal Roof and Guttering Manufacturing (except Aluminium)
2229
Other Structural Metal Product Manufacturing
223 Metal Container Manufacturing
2231
Boiler, Tank and Other Heavy Gauge Container Manufacturing
2239
Other Container Manufacturing
224 Sheet Metal Product Manufacturing (except Metal Structural and Container Products)
2240
Sheet Metal Product Manufacturing (except Metal Structural and Container Products)
229 Other Fabricated Metal Product Manufacturing
2291
Spring and Wire Product Manufacturing
2292
Nut, Bolt, Screw and Rivet Manufacturing
2293
Metal Coating and Finishing
2299
Other Fabricated Metal Product Manufacturing n.e.c.
Manufacturing workforce study | Australian Workforce and Productivity Agency
135
Subdivision 23: Transport Equipment Manufacturing
231 Motor Vehicle and Motor Vehicle Part Manufacturing
2311
Motor Vehicle Manufacturing
2312
Motor Vehicle Body Manufacturing and Trailer Manufacturing
2313
Automotive Electrical Component Manufacturing
2319
Other Motor Vehicle Parts Manufacturing
239 Other Transport Equipment Manufacturing
2391
Shipbuilding and Repair Services
2392
Boatbuilding and Repair Services
2393
Railway Rolling Stock Manufacturing and Repair Services
2394
Aircraft Manufacturing and Repair Services
2399
Other Transport Equipment Manufacturing n.e.c.
Subdivision 24: Machinery and Equipment Manufacturing
241 Photographic and Scientific Equipment Manufacturing
2411
Photographic, Optical and Ophthalmic Equipment Manufacturing
2412
Medical and Surgical Equipment Manufacturing
2419
Other Professional and Scientific Equipment Manufacturing
242 Computer and Electronic Equipment Manufacturing
2421
Computer and Electronic Office Equipment Manufacturing
2422
Communication Equipment Manufacturing
2429
Other Electronic Equipment Manufacturing
243 Electrical Equipment Manufacturing
2431
Electric Cable and Wire Manufacturing
2432
Electrical Lighting Equipment Manufacturing
2439
Other Electrical Equipment Manufacturing
244 Domestic Appliance Manufacturing
2441
Whiteware Appliance Manufacturing
2449
Other Domestic Appliance Manufacturing
245 Pump, Compressor, Heating and Ventilation Equipment Manufacturing
2451
Pump and Compressor Manufacturing
2452
Fixed Space Heating, Cooling and Ventilation Equipment Manufacturing
136
Manufacturing workforce study | Australian Workforce and Productivity Agency
246 Specialised Machinery and Equipment Manufacturing
2461
Agricultural Machinery and Equipment Manufacturing
2462
Mining and Construction Machinery Manufacturing
2463
Machine Tool and Parts Manufacturing
2469
Other Specialised Machinery and Equipment Manufacturing
249 Other Machinery and Equipment Manufacturing
Lifting and Material Handling Equipment Manufacturing
2499
Other Machinery and Equipment Manufacturing n.e.c.
Appendices
2491
Subdivision 25: Furniture and Other Manufacturing
251 Furniture Manufacturing
2511
Wooden Furniture and Upholstered Seat Manufacturing
2512
Metal Furniture Manufacturing
2513
Mattress Manufacturing
2519
Other Furniture Manufacturing
259 Other Manufacturing
2591
Jewellery and Silverware Manufacturing
2592
Toy, Sporting and Recreational Product Manufacturing
2599
Other Manufacturing n.e.c.
Manufacturing workforce study | Australian Workforce and Productivity Agency
137
Appendix C
Performance of Australian manufacturing
The Australian Manufacturing sector is diverse. This section expands on the information on the
Australian Manufacturing industry presented in the main body of this report.
Subsector performance
Figure 3 in Part One highlighted the composition of manufacturing in Australia.
Machinery and Equipment Manufacturing experienced the strongest average annual growth in
gross value added over the 20 years to 2013 at 2.6 per cent, moving it from the fourth-largest
subsector to the second largest over the period. Food, Beverage and Tobacco Product
Manufacturing was the largest subsector in terms of gross value added (23.5 per cent in 2013),
and has performed reasonably well over the past 20 years to 2013 with average annual growth
of 1.3 per cent. However, this has plateaued over the past five years (0.4 per cent per year,
2008 to 2013).321
Textiles, Clothing and Other Manufacturing (–2.8 per cent) and Wood and Paper Products
(–0.6 per cent) experienced declines in average annual growth over the past 20 years to 2013,
while Printing and Recorded Media grew by just 0.7 per cent per year (1993 to 2013). Over the
past five years (2008 to 2013), Textiles, Clothing and Other Manufacturing declined by
5.7 per cent per year and accounted for 5.4 per cent of total gross value added for
manufacturing in 2013, which is less than half of what it was in 1993 (11.9 per cent).322
Exports
Manufacturing currently accounts for 33.5 per cent (as at 2013) of total merchandise exports.323
In general, manufacturing’s percentage of total merchandise exports has been declining since a
high of 51.7 per cent in 2007 (note the data series begins in July 2005).
In 2013, the three largest manufacturing subsectors that contributed to manufacturing
merchandise exports were Primary Metal and Metal Products (36.7 per cent), Food Products
(20.5 per cent), and Machinery and Equipment (13.0 per cent). Since 2006, the three
subsectors have experienced annual average growth of 0.9 per cent, 3.6 per cent, and
1.8 per cent respectively.
The Australian Bureau of Statistics also produces merchandise export data under the standard
international trade classifications, which provides further granularity on the type of
manufactured goods that Australia exports.
321 ABS, 2013, Australian system of national accounts, 2012–13, cat. no. 5206.0, Table 5, chain volume measures,
original.
322 ABS, 2014, Australian national accounts: national income, expenditure and product, cat. no 5206.0, Table 6,
chain volume measures, original terms, December quarter 2013. Annual estimates have been derived from
summing up quarterly data.
323 ABS, 2013, International trade in goods and services, Australia, cat. no. 5368.0, Table 32a. Figures are for
2012–13. Data is in monthly terms and has been summed to create annual figures.
138
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Appendices
Figure 19 shows selected manufactured goods exports, which reflect the main industries in
the sector (Food and Beverages, Processed Metals and a broad range of Equipment and
Machinery). Figure 19 shows the average annual growth rates of these goods over the
10 years to the December quarter 2013. Goods which recorded the highest average annual
growth were prefabricated buildings and sanitary, plumbing, heating and lighting fixtures and
fittings, n.e.s. (10.7 per cent); professional, scientific and controlling instruments and
apparatus (8.0 per cent); essential oils and resinoids and perfume materials; toilet, polishing
and cleansing preparations (7.6 per cent); and transport equipment excluding road vehicles
(7.4 per cent). Goods which recorded negative average annual growth were iron and steel
(–8.2 per cent); photographic apparatus, equipment and supplies and optical goods, n.e.s.;
watches and clocks (–8.0 per cent); and non-metallic mineral manufactures, n.e.s.
(–7.7 per cent).324
Figure 19 Selected manufactured goods exports, 2012–13, chain volume measures
10.7
Prefabricated buildings and sanitary, plumbing, heating and lighting fixtures and fittings, n.e.s.
8.0
7.6
7.4
6.8
6.7
5.8
4.7
4.4
4.3
3.9
3.7
3.4
2.9
2.4
2.0
1.6
0.9
0.4
Professional, scientific and controlling instruments and apparatus
Essential oils and resinoids and perfume materials; toilet, polishing and cleansing preparations
Transport equipment (excl. road vehicles)
Office machines and automatic data processing machines
Telecommunications and sound recording and reproducing apparatus and equipment
General industrial machinery and equipment, n.e.s., and machine parts, n.e.s.
Chemical materials and products, n.e.s.
Miscellaneous manufactured articles
Miscellaneous manufactured articles, n.e.s.
Rubber manufactures, n.e.s.
Machinery specialised for particular industries
Paper, paperboard and articles of paper pulp, of paper or of paperboard
Medicinal and pharmaceutical products
Dyeing, tanning and colouring materials
Non-ferrous metals
Power generating machinery and equipment
Plastics in non-primary forms
Beverages and tobacco
–0.3
–0.6
Plastics in primary forms
Inorganic chemicals
0.0
Road vehicles (incl. air-cushion vehicles)
–1.7
–2.2
–2.6
–3.7
–4.1
–4.1
Manufactures of metals, n.e.s.
Electrical machinery, apparatus and appliances, n.e.s., and electrical parts thereof
Articles of apparel and clothing accessories
Fertilisers
Organic chemicals
Leather, leather manufactures, n.e.s., and dressed furskins
–6.8
–7.7
Photographic apparatus, equipment and supplies and optical goods, n.e.s.; watches and clocks –8.0
Iron and steel –8.2
Textile yarn, fabrics, made-up articles, n.e.s.
Non-metallic mineral manufactures, n.e.s.
–10
–5
0
5
10
15
Per cent
Source: ABS, 2013, Balance of payments and international investment position, Australia, cat. no. 5302.0,
Table 103.
324 ABS 2014, Balance of payments and international investment position, Australia, cat. no. 5302.0, Table 103,
December quarter 2013.
Manufacturing workforce study | Australian Workforce and Productivity Agency
139
Productivity
There are two commonly used measures of productivity—labour productivity and multifactor
productivity. Labour productivity is a measure of the quantity of output produced per unit of
labour, while multifactor productivity is a measure of the quantity of output per unit of
combined inputs of capital and labour.325 A common method of examining changes in
productivity over an extended period involves identifying and dividing the data into productivity
‘growth cycles’ to minimise the effects of temporary influences.326
Labour productivity (gross value added per hour worked) in the Manufacturing sector trended
upward between 1992–94 and 2012–13, growing at an average annual rate of 1.7 per cent
compared to 2.4 per cent for the 12‑industry market sector. As illustrated in Figure 20, this
growth has varied across the productivity cycles, with a high of 2.6 per cent per year between
1998–99 and 2003–04, followed by a low of 0.1 per cent per year in the following cycle
(2003–04 to 2007–08). The Productivity Commission considers that the variation in the rate of
labour productivity growth across the different cycles is mainly being driven by changes in
multifactor productivity growth.327
325 Productivity Commission, 2013, Aggregate manufacturing productivity, p. 27.
326 ABS, 2012, Australian system of national accounts: concepts, sources and methods, cat. no. 5216.0, p. 672.
327 Productivity Commission, 2013, Aggregate manufacturing productivity, p. 32.
140
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Figure 20 Labour productivity index (hours worked basis) for the Manufacturing industry and
the 12‑industry market sector, 1993–94 to 2012–13
110
Appendices
Index (2011–12 = 100)
100
90
80
70
60
1993–94 to
1998–99 cycle
1998–99 to
2003–04 cycle
2003–04 to
2007–08 cycle
Current, incomplete
cycle
50
3
7
4
5
6
7
1
9
0
3
4
5
6
1
9
0
–9 –9 –9 –9 7–98 8–9 9–0 0–0 1–02 2–0 3–0 4–0 5–0 6–0 7–08 8–0 9–1 10–1 1–12 12–1
0
0 20 201 20
0
0
0
0
0
0
0
93 94 95 96
9
9
19 19 19 19 199 19 19 20 20 20 20 20 20 20 200 20 20
Manufacturing
12 selected industries(a)
(a) ANZSIC industry divisions A to K and R (Agriculture, Forestry and Fishing; Mining; Manufacturing;
Electricity, Gas, Water and Waste Services; Construction; Wholesale Trade; Retail Trade; Accommodation and
Food Services; Transport, Postal and Warehousing; Information, Media and Telecommunications; Financial and
Insurance Services; Arts and Recreation Services).
Source: ABS, 2013, Estimates of industry multifactor productivity, 2012–13, cat. no. 5260.0.55.002, Table 6.
As shown in Figure 21, multifactor productivity growth for the Manufacturing industry has been
variable. In the last complete cycle (2003–04 to 2007–08), growth declined by 1.2 per cent per
year compared to growth of 1.0 per cent per year experienced in the previous cycle (1998–99
to 2003–04).328 The Productivity Commission’s report Aggregate manufacturing productivity
analyses the possible drivers behind this performance.329
The study notes that this large decline was atypical for manufacturing, and since then,
multifactor productivity has continued to decline (although more slowly). Overall, the
Productivity Commission concluded that there was no overarching systemic reason for the
large decline. Rather, various subsector‑specific factors, such as lags between investment and
output, unmeasured increases in quality and lower capacity utilisation, all contributed.330
328 ABS, 2013, Estimates of industry multifactor productivity, 2012–13, cat. no. 5260.0.55.002, Table 1.
329 The analysis conducted in Productivity Commission, 2013, Aggregate manufacturing productivity examines
manufacturing multifactor productivity up to 2010–11, based on the 2010–11 ABS national accounts, the latest
available at the time of publication. Data used for this report may differ as charts and analysis are derived from
ABS, 2013, Estimates of industry multifactor productivity, 2012–13, cat. no. 5260.0.55.002 (released December
2013), which provides estimates for 2012–13.
330 Productivity Commission, 2013, Aggregate manufacturing productivity, p. 2.
Manufacturing workforce study | Australian Workforce and Productivity Agency
141
Figure 21 Multifactor productivity index (hours worked basis) for the Manufacturing industry
and the 12‑industry market sector, 1993–94 to 2012–13
110
Index (2001–12 = 100)
105
100
95
90
85
1993–94 to
1998–99 cycle
80
1998–99 to
2003–04 cycle
2003–04 to
2007–08 cycle
Current, incomplete
cycle
94 –95 –96 –97 –98 –99 –00 0–01 1–02 –03 –04 –05 –06 –07 –08 –09 –10 0–11 1–12 –13
12
02 003 004 005 006 007 008 009 201 201
94 995 996 997 998 999 00 200
20
1
2
2
2
1
1
19
1
2
2
2
2
20
1
2
3–
9
19
Manufacturing
12 selected sectors(a)
(a) ANZSIC industry divisions A to K and R (Agriculture, Forestry and Fishing; Mining; Manufacturing; Electricity, Gas,
Water and Waste Services; Construction; Wholesale Trade; Retail Trade; Accommodation and Food Services;
Transport, Postal and Warehousing; Information, Media and Telecommunications; Financial and Insurance Services;
Arts and Recreation Services).
Source: ABS, 2013, Estimates of industry multifactor productivity, 2012–13, cat. no. 5260.0.55.002, Table 1.
As part of the study, the Productivity Commission produced multifactor productivity estimates
for manufacturing subsectors as this data is not produced by the ABS. The study found that
almost two‑thirds of the decline in manufacturing’s multifactor productivity growth across the
2003–04 to 2007–08 cycle and in the current incomplete cycle (2008–09 to 2011–12331) is
accounted for by three of the eight subsectors: petroleum and chemicals, food and beverages,
and metal products.
Multifactor productivity growth in the latest incomplete cycle (2007–08 to 2012–13) continued
to decline, but at a slower rate. Multifactor productivity for manufacturing over this period
declined at 0.1 per cent per year compared to a decline of 1.1 per cent per year for the
12‑industry sector. The Productivity Commission’s report noted that the sectors driving the
declines in this period (noting the study reviews up to 2011–12) are textiles, clothing and other
manufacturing, printing and recorded media, and petroleum and chemicals. Multifactor
productivity rates in the food and beverages and metal products subsectors in the current cycle
have returned to growth rates closer to, but still below, their longer‑term averages. This could
reflect the fact that the significant declines in the 2003–04 to 2007–08 cycle were atypical.332
331 Analysis in Productivity Commission, 2013, Aggregate manufacturing productivity used data up to 2011–12.
332 Ibid., p. 16.
142
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Appendix D
Profile of the Australian manufacturing workforce
Employment by subsector
Employment in the sector as a whole has declined by 10.2 per cent over the past 10 years, or
around 106,600 jobs. Declines in employment levels have been experienced across most
subsectors to varying degrees.
Large job losses have been experienced in 10 of the manufacturing subsectors over the past
decade to 2013. These were Pulp, Paper and Converted Paper Product Manufacturing
(–45.4 per cent), Textile, Leather, Clothing and Footwear Manufacturing (–41.4 per cent),
Fabricated Metal Product Manufacturing (–40.0 per cent), Wood Product Manufacturing
(–33.3 per cent), Polymer Product and Rubber Product Manufacturing (–29.9 per cent),
Transport Equipment Manufacturing (–28.8 per cent), Furniture and Other Manufacturing
(–26.0), Printing (including the Reproduction of Recorded Media) (–22.6 per cent), Non‑Metallic
Mineral Product Manufacturing (–22.0 per cent), and Basic Chemical and Chemical Product
Manufacturing (–5.6 per cent).333
These losses have arisen in the context of the appreciation of the Australian dollar, the tail end
of progressive tariff reductions, significant increases in the move to offshore production (to
low‑wage economies) and ongoing technological change and industry restructuring.334
Employment by state and territory
The majority of manufacturing employment (in 2013, four-quarter average) is in Victoria
(30.5 per cent) and New South Wales (30.3 per cent). Both states have experienced declines
in manufacturing employment over the 10 years to 2013 at around the same rate as the national
average, which is 1.2 per cent per year (1.3 per cent per year for New South Wales
and 1.4 per cent per year for Victoria).335
Manufacturing employment levels have declined across all states and territories in the past
decade barring Queensland (up 0.1 per cent per year) and Western Australia (up 0.1 per cent
per year).
333 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003 (2013, four-quarter average)
334 Prime Minister’s Manufacturing Taskforce, 2012, Smarter manufacturing for a smarter Australia: report of the
non‑government members, p. 16.
335 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003 (2013, four-quarter average).
Manufacturing workforce study | Australian Workforce and Productivity Agency
143
Appendices
Manufacturing is the fourth‑largest employing sector in the country. In 2013 (four‑quarter
average), 936,400 people worked in the industry, accounting for 8.1 per cent of total
employment. Figure 12 in Part Three shows employment in manufacturing by subsector in
2003 and 2013.
Table 8
Manufacturing employment by state and territory, 2013 (four‑quarter average)
Employment (’000)
State/territory share
of total manufacturing
employment (%)
Manufacturing share
of total state/territory
employment (%)
New South Wales
283.9
30.3
7.8
Victoria
285.3
30.5
9.8
Queensland
174.9
18.7
7.4
South Australia
74.5
8.0
9.2
Western Australia
92.0
9.8
7.0
Tasmania
18.2
1.9
7.9
Northern Territory
4.0
0.4
3.1
3.7
0.4
1.8
Australian Capital
Territory
Source: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003 (2013, four‑quarter
average).
Key occupations
Table 9 highlights the top 30 occupations that account for more than 60 per cent of
manufacturing employment, grouped under the main occupation type (ANZSCO one‑digit
level). The largest five employing occupations (at the four‑digit occupation level) are an example
of the range of jobs and associated skill levels in the sector, given that they span managerial
roles, traditional trades and labourer roles. The top five occupations are Structural Steel and
Welding Trades Workers (45,200), Metal Fitters and Machinists (37,000), Production Managers
(37,000), Packers (23,700) and Product Assemblers (23,300).
144
Manufacturing workforce study | Australian Workforce and Productivity Agency
Top 30 occupations in the Manufacturing industry, 2013 (four‑quarter average)
Employment
(‘000)
Occupation
Employment
(‘000)
Occupation
Occupation
Machinery operators,
drivers and labourers
Clerical and other
Production
Managers
37.0
Structural Steel
and Welding
Trades Workers
45.2
Sales Assistants
(General)
25.1
Food and Drink
Factory Workers
28.4
Advertising and
Sales Managers
22.4
Metal Fitters and
Machinists
37
Sales
Representatives
16.6
Packers
23.7
Manufacturers
18.1
Cabinetmakers
20.7
Purchasing and
Supply Logistics
Clerks
16.5
Product
Assemblers
23.3
Industrial,
Mechanical and
Production
Engineers
12
Bakers and
Pastrycooks
15
Accounting
Clerks
15.6
Storepersons
19.4
Accountants
9.5
Carpenters and
Joiners
13.7
Office
Managers
12.2
Engineering
Production
Systems
Workers
19.2
Printers
13.5
General Clerks
11.5
Forklift Drivers
17.4
Electricians
11.4
Meat, Poultry
and Seafood
Process
Workers
13
Metal
Engineering
Process
Workers
10.7
Truck Drivers
9.9
Meat Boners
and Slicers, and
Slaughterers
9.6
Plastics and
Rubber
Production
Machine
Operators
8.6
Source: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003.
Manufacturing workforce study | Australian Workforce and Productivity Agency
145
Appendices
Employment
(‘000)
Technicians and trades
workers
Employment
(‘000)
Managers and
professionals
Occupation
Table 9
Many of the top 30 occupations are highly concentrated within the Manufacturing sector.
Six of the top 10 have concentrations of 50 per cent or more (Structural Steel and Welding
Trades Workers, 55.9 per cent; Production Managers, 64.8 per cent; Product Assemblers,
79.3 per cent; Food and Drink Factory Workers, 89.9 per cent; Cabinetmakers, 81.8 per cent;
and Bakers and Pastrycooks, 65.5 per cent).336
Labour movements
Given the declining employment levels in the Manufacturing sector, an obvious question is
where workers are going.
Australian Bureau of Statistics labour mobility data can help to paint part of this picture. The
statistics indicate that job tenure in manufacturing is broadly in line with the all industries
average. Of the workers employed in manufacturing in February 2013, 16.8 per cent had been
working for their current employer for less than 12 months, 34.3 per cent for one to two years,
and 29 per cent for 10 years or more. These figures are not far from the industry averages of
18.2 per cent, 37.4 per cent and 25.3 per cent respectively.337
Data from the ABS, however, only provides limited, snapshot information on the aggregate
manufacturing workforce, an aggregate which masks a great deal of movement into, out of, and
within the Manufacturing industry. AWPA therefore engaged the Workplace Research Centre to
analyse longitudinal data to examine the movements of manufacturing workers.
The Workplace Research Centre analysis was based on data from the Household, Income and
Labour Dynamics in Australia longitudinal survey (waves 1 to 11, 2001 to 2011). Initial analysis
was restricted to a sample of 1,205 respondents who had reported being employed in the
Manufacturing industry in any year of the survey. The sample was split into six key groups,
each with distinct members and patterns of movement through the labour market: low‑skilled
manual workers; professionals and managers (split between those in traditional blue‑collar
industries and not); trades workers (split between those in traditional blue‑collar industries and
not); clerical and sales workers; and those with marginal attachment to the labour force.
The Workplace Research Centre analysis shows that behind the slow, long‑term decline of
manufacturing employment, a significant amount of churn takes place in the workforce.338
While manufacturing workers tend to move within the broad occupational scope (that is, trades
workers tend to remain in trade occupations), there is significant cross‑industry mobility,
particularly within the blue‑collar industries. This was true for high‑, medium‑ and low‑skilled
workers. A significant number are at risk of exiting the labour force, or drifting in and out of
low‑paid work or unemployment.
Manual workers (276 people) —There was considerable churn in this group, with most moving
between manual work across industries (both within and outside the blue‑collar industries) and
experiencing episodes of unemployment. Few people in this group made a transition into
higher skilled technical roles.
Professionals and managers—These highly skilled workers were split into two groups—those
who generally spent their time working in traditional blue‑collar industries, including
manufacturing (169 people in the sample); and those who generally worked briefly in
336 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003 (2013, four‑quarter average).
337 ABS, 2013, Labour mobility, Australia, February 2013, cat. no. 6209.0, Table 3 (data cube).
338 Yu, S, 2013, Behind the trends in manufacturing employment: transitions through and attrition from its workforce,
2001–2011, analysis conducted for AWPA, unpublished.
146
Manufacturing workforce study | Australian Workforce and Productivity Agency
manufacturing (147 people). The latter group likely had more generic skills such as accounting,
financial analysis and human resources management. Both groups of professionals and
managers had a distinctly higher incidence of participation in tertiary study than the other
groupings.
Trades workers in blue‑collar industries (209 people) —Trades workers were also very mobile
across the blue‑collar industries.
Clerical and sales workers (257 people) —There was general stability within this group.
Further analysis was undertaken on a sample of 482 people who were working in
manufacturing at the beginning of the survey (2001). Initially in 2001, 81.7 per cent of people in
the sample were employed in manufacturing as trades workers and technicians, professionals
and managers, and manual workers. This proportion dropped to 58.9 per cent after just one
year, and fell to just over a third by 2011. Professionals and managers likely moved into other
industries, with 11 per cent outside the blue‑collar industries by 2011. A significant percentage
of low‑skilled manual workers also moved outside the manufacturing and blue‑collar industries
(7.7 per cent).
A large proportion left the labour force, with 17.6 per cent of the original sample outside the
workforce by 2011. Initial analysis on the sample of 1,205 workers showed that many lower
skilled manual workers left the labour force altogether. They did not appear to move into
unemployment, as the percentage of the sample who were unemployed remained relatively
stable between 2001 and 2011. These workers were likely to be less educated and older
workers.
Age profile
The median age of the manufacturing workforce in 2013 was 41 years, just above the median
for all industries of 39 years. Over the past decade, the proportion of the workforce aged
45 years and over also increased, from 34.4 per cent in 2003 to 42.5 per cent in 2013.339
The age of the workforce varies across the manufacturing subsectors. In 2013 (four‑quarter
average), six subsectors had relatively older workforces given that half of their workers were
aged 45 years and over: Polymer Product and Rubber Product Manufacturing (53.5 per cent),
Petroleum and Coal Product Manufacturing (54.9 per cent), Textile, Leather, Clothing and
Footwear Manufacturing (54.3 per cent), Pulp, Paper and Converted Paper Product
Manufacturing (53.0 per cent), Non‑Metallic Mineral Product Manufacturing (50.6 per cent) and
Printing (including the Reproduction of Recorded Media) (53.9 per cent).
Subsectors with the smallest percentage of workers aged 45 years and over included Food
and Product Manufacturing (34.3 per cent), Beverage and Tobacco Product Manufacturing
(37.2 per cent) and Furniture and Other Manufacturing (38.9 per cent).
339 ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003.
Manufacturing workforce study | Australian Workforce and Productivity Agency
147
Appendices
Weak attachment to the labour market (257 people) —This group is characterised by long
periods outside the labour force, episodes of unemployment, and spells of low‑skill
employment (manual work or clerical and sales work) that showed little evidence of sustained
direction, or attachment to a particular area of practice.
Gender and full‑time/part‑time status
The manufacturing workforce is predominantly male—73.3 per cent compared to 54.2 per cent
for all industries (2013, four‑quarter average). This proportion has remained steady for the past
15 years, standing at 74.3 per cent in 1998 (four‑quarter average). Female employment varied
considerably between manufacturing subsectors, from a low of 9.8 per cent in Primary Metal
and Metal Product Manufacturing to 61.9 per cent in Textile, Leather, Clothing and Footwear
Manufacturing (2013, four‑quarter average).
In 2013 (four‑quarter average), a significant proportion of employment in the Manufacturing
industry was full-time (85.3 per cent), although this has changed over the past 15 years. In
1998 (four‑quarter average), more than 89.5 per cent of employment was full-time. Full‑time
work also varied across subsectors. In 2013, Primary Metal and Metal Product Manufacturing
had the highest proportion of full‑time work (94.6 per cent), closely followed by Transport
Equipment Manufacturing (94.5 per cent). The lowest proportion of full‑time work was in Food
Product Manufacturing (73.1 per cent) and Textile, Leather, Clothing and Footwear
Manufacturing (77.6 per cent).340
Migration
Of all employer‑sponsored subclass 457 visas granted in 2012–13, 5.5 per cent were for the
Manufacturing industry.341 This is down from 10 per cent in 2005–06. Base salaries for subclass
457 visa holders in the industry start at around $70,000 to $90,000 across the states and
territories, indicating that applications lean towards skilled occupations.342 Occupations that
were most reliant on subclass 457 primary visas between 2005–06 and 2011–12 in the
Manufacturing industry were Structural Steel and Welding Trades Workers; Metal Fitters and
Machinists; Accountants; Industrial, Mechanical and Production Engineers; and Advertising and
Sales Managers.
Occupations with the highest average annual growth rates between 2005–06 and 2011–12
were Carpenters and Joiners (27.2 per cent), Accountants (15.9 per cent) and Technical Sales
Representatives (11.2 per cent).
Manufacturing‑related occupations that were most reliant on skilled migration in 2011–12 were
Accountants (7,076), Industrial, Mechanical and Production Engineers (1,583), Metal Fitters and
Machinists (1,115), Structural Steel and Welding Trades Workers (951), Bakers and Pastrycooks
(828), Carpenters and Joiners (722) and Electricians (622).
340 Ibid., four‑quarter average.
341 Department of Immigration and Border Protection, 2013, Subclass 457 state/territory summary report, 2012–13
to 30 June 2013, Table 1.10, p. 9. Historical data provided to AWPA separately.
342 Ibid., Table 108, p. 7.
148
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Appendix E
Occupational employment numbers
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
Chief Executives and
Managing Directors
7.7
61.4
12.6
37.1
–1.9
1,787
3.6
1112
General Managers
4.9
55.3
8.8
27.6
4.9
1,800
4.6
1311
Advertising and
Sales Managers
22.4
131.8
17.0
7.5
17.0
1,700
2.5
1322
Finance Managers
4.9
49.5
9.9
1.3
–1.4
2,000
6.0
1323
Human Resource
Managers
2.8
47.0
5.9
2.6
11.9
1,827
4.8
1332
Engineering
Managers
4.3
19.7
21.9
27.2
13.3
2,071
5.0
1334
Manufacturers
18.1
20.6
87.9
–20.9
–3.7
1,100
1.9
1335
Production
Managers
37.0
57.1
64.9
12.2
1.5
1,426
1.7
1336
Supply and
Distribution
Managers
5.7
34.2
16.6
19.9
4.1
1,520
2.6
1399
Other Specialist
Managers
7.9
47.8
16.5
34.3
24.2
1,500
2.1
1421
Retail Managers
5.3
232.5
2.3
0.5
1.3
984
3.5
1492
Call or Contact
Centre and
Customer Service
Managers
3.2
39.8
8.1
–2.1
24.3
1,500
8.0
Other Hospitality,
Retail and Service
Managers
2.6
62.2
4.2
19.2
2.6
1,440
4.9
Occupation
ANZSCO code
1111
Managers
1499
Professionals
2114
Visual Arts and
Crafts Professionals
1.6
7.9
20.1
14.6
–19.0
1,500
n.a.
2211
Accountants
9.5
167.1
5.7
–0.2
12.6
1,400
3.2
Manufacturing workforce study | Australian Workforce and Productivity Agency
149
Appendices
Total employment,
2013 (all industries)
(’000), four-quarter
average
Occupational employment numbers, historical and projected growth to 2017–18,
and earnings by occupation, (‘000)
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10
Total employment,
2013 (all industries)
(’000), four-quarter
average
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
2.9
56.2
5.1
17.3
10.2
1,380
–0.8
Advertising and
Marketing
Professionals
5.6
49.2
11.4
15.9
9.8
1,200
0.9
2254
Technical Sales
Representatives
7.4
32.7
22.5
15.8
7.9
1,283
3.1
2323
Fashion, Industrial
and Jewellery
Designers
3.7
7.8
47.3
–9.0
8.9
1,075
–1.3
Graphic and Web
Designers, and
Illustrators
5.3
53.3
9.9
26.1
13.6
1,100
3.6
2333
Electrical Engineers
3.3
22.8
14.4
49.1
4.1
1,864
4.8
2334
Electronics
Engineers
3.4
8.3
40.6
13.8
8.2
1,841
7.8
2335
Industrial,
Mechanical and
Production
Engineers
12.0
34.5
34.8
14.7
1.5
1,610
1.8
2342
Chemists, and Food
and Wine Scientists
4.7
9.7
48.8
–10.2
–3.0
1,500
6.1
2613
Software and
Applications
Programmers
3.9
88.4
4.4
9.4
4.4
1,500
2.1
2247
2251
2324
Occupation
Management and
Organisation
Analysts
ANZSCO code
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10 continued
Technicians and Trades Workers
3114
Science Technicians
3.2
17.5
18.5
4.9
–2.0
1,057
2.2
3121
Architectural,
Building and
Surveying
Technicians
3.1
56.2
5.5
2.5
2.3
1,500
3.7
Mechanical
Engineering
Draftspersons and
Technicians
2.6
7.1
36.2
17.9
–7.9
1,403
4.1
Other Building and
Engineering
Technicians
4.1
27.2
15.1
20.7
3.5
1,700
7.2
Motor Mechanics
5.2
95.1
5.4
–8.5
9.2
988
6.0
3125
3129
3212
150
Manufacturing workforce study | Australian Workforce and Productivity Agency
Total employment,
2013 (all industries)
(’000), four-quarter
average
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
Sheetmetal Trades
Workers
7.2
8.9
81.0
38.6
–26.7
850
2.8
3223
Structural Steel and
Welding Trades
Workers
45.2
80.8
56.0
–3.0
1.6
1,141
4.5
Occupation
ANZSCO code
3222
3231
Aircraft Maintenance
Engineers
4.6
11.3
40.9
–6.1
2.2
1,100
0.0
3232
Metal Fitters and
Machinists
37.0
118.9
31.1
12.5
–3.1
1,500
5.5
3234
Toolmakers and
Engineering
Patternmakers
5.8
6.6
88.0
8.2
–6.7
1,000
1.0
Vehicle Body
Builders and
Trimmers
3.1
5.6
55.6
2.7
1.5
1,000
2.1
3311
Bricklayers and
Stonemasons
4.8
29.2
16.5
–16.5
13.4
1,000
3.3
3312
Carpenters and
Joiners
13.7
130.9
10.4
5.3
10.7
1,025
2.6
3411
Electricians
11.4
138.9
8.2
10.7
2.2
1,300
5.4
3423
Electronics Trades
Workers
2.7
31.3
8.7
–15.4
12.8
1,000
3.3
3511
Bakers and
Pastrycooks
15.0
22.9
65.7
–13.6
1.5
900
4.2
3921
Binders, Finishers
and Screen Printers
4.0
4.8
83.5
–3.9
–17.6
800
0.0
3923
Printers
13.5
15.7
85.8
–11.0
–2.2
980
1.2
3932
Clothing Trades
Workers
5.9
8.6
68.9
–6.9
1.5
725
–3.8
3933
Upholsterers
3.7
4.4
84.6
6.9
–3.2
800
5.9
3941
Cabinetmakers
20.7
25.3
81.7
–9.1
1.5
900
2.4
3942
Wood Machinists
and Other Wood
Trades Workers
2.8
5.3
53.3
–12.7
–0.6
950
9.6
3991
Boat Builders and
Shipwrights
4.2
4.9
85.4
–23.2
1.5
1,150
5.9
3992
Chemical, Gas,
Petroleum and
Power Generation
Plant Operators
3.6
8.7
41.4
–7.8
–5.9
2,071
8.1
Jewellers
1.9
3.2
58.7
–32.4
1.5
1,200
4.8
3242
3994
Manufacturing workforce study | Australian Workforce and Productivity Agency
151
Appendices
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10 continued
Total employment,
2013 (all industries)
(’000), four-quarter
average
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
2.9
7.5
39.3
48.4
15.6
3,500
34.3
Contract, Program
and Project
Administrators
6.7
123.6
5.4
45.5
16.4
1,480
3.8
5121
Office Managers
12.2
129.3
9.5
–3.8
12.1
1,100
4.1
5211
Personal Assistants
2.5
55.4
4.5
–0.3
–11.4
1,160
5.2
5212
Secretaries
3.0
65.4
4.5
–38.8
–12.2
1,000
5.9
5311
General Clerks
11.5
215.6
5.4
56.2
–0.6
950
3.5
5321
Keyboard Operators
3.5
64.0
5.5
–38.8
–7.7
950
4.8
5412
Inquiry Clerks
1.7
68.2
2.5
2.9
22.4
966
3.8
5421
Receptionists
6.8
175.8
3.9
2.1
9.7
834
3.9
5511
Accounting Clerks
15.6
146.6
10.6
22.2
7.2
988
4.6
5512
Bookkeepers
6.8
113.4
6.0
–15.1
7.2
900
0.8
5513
Payroll Clerks
4.6
39.7
11.7
10.4
2.1
1,075
3.3
5911
Purchasing and
Supply Logistics
Clerks
16.5
88.5
18.6
–2.0
8.5
1,100
4.8
5912
Transport and
Despatch Clerks
4.6
36.0
12.7
9.2
7.1
1,150
2.8
6113
Sales
Representatives
16.6
95.0
17.5
–3.6
8.7
1,200
4.5
6211
Sales Assistants
(General)
25.1
522.1
4.8
11.1
8.9
760
3.5
7111
Clay, Concrete, Glass
and Stone
Processing Machine
Operators
2.7
3.1
87.1
–30.6
–12.1
919
–1.1
7112
Industrial
Spraypainters
3.6
6.1
59.3
–10.0
8.8
1,400
14.0
7113
Paper and Wood
Processing Machine
Operators
6.6
7.9
83.8
–26.5
–2.4
965
6.6
Plastics and Rubber
Production Machine
Operators
8.6
10.2
84.8
–13.4
–19.6
920
1.6
Sewing Machinists
8.6
10.4
82.4
–29.9
–5.0
650
2.3
Occupation
Dental Hygienists,
Technicians and
Therapists
ANZSCO code
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10 continued
All other occupations
4112
5111
7115
7116
152
Manufacturing workforce study | Australian Workforce and Productivity Agency
Total employment,
2013 (all industries)
(’000), four-quarter
average
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
Other Machine
Operators
4.6
12.6
36.5
–7.3
17.9
1,050
7.6
7121
Crane, Hoist and Lift
Operators
3.0
14.6
20.5
1.6
–2.4
1,575
7.4
7123
Engineering
Production Systems
Workers
19.2
23.6
81.6
–23.5
–2.0
1,200
5.0
7129
Other Stationary
Plant Operators
3.8
22.7
16.7
21.9
–4.8
1,367
5.4
7212
Earthmoving Plant
Operators
0.9
52.8
1.7
–1.1
9.9
1,550
9.2
7213
Forklift Drivers
17.4
57.3
30.5
–5.5
4.7
1,000
4.6
7321
Delivery Drivers
4.0
45.7
8.7
23.5
7.1
836
3.6
7331
Truck Drivers
9.9
180.3
5.5
3.8
7.5
1,200
3.7
7411
Storepersons
19.4
121.8
16.0
5.1
9.5
900
4.6
8112
Commercial
Cleaners
6.4
158.3
4.0
10.8
6.4
800
3.3
8211
Building and
Plumbing Labourers
2.2
50.0
4.3
–14.1
12.7
1,000
2.1
8212
Concreters
2.1
36.1
5.7
–3.3
9.2
1,050
–1.9
8217
Structural Steel
Construction
Workers
1.4
23.8
5.9
12.8
9.2
1,700
7.2
8311
Food and Drink
Factory Workers
28.4
31.6
89.8
9.9
2.2
1,058
5.7
8312
Meat Boners and
Slicers, and
Slaughterers
9.6
10.1
95.2
–26.5
–23.2
800
0.3
Meat, Poultry and
Seafood Process
Workers
13.0
16.1
81.0
–10.7
–6.4
801
4.3
8321
Packers
23.7
55.0
43.1
–24.4
1.5
800
3.6
8322
Product Assemblers
23.3
29.4
79.3
–35.3
1.5
837
3.6
8391
Metal Engineering
Process Workers
10.7
14.6
73.3
–3.0
–21.4
900
–0.7
8392
Plastics and Rubber
Factory Workers
3.0
3.2
92.8
–19.6
–5.3
840
2.7
8313
Occupation
ANZSCO code
7119
Manufacturing workforce study | Australian Workforce and Productivity Agency
153
Appendices
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10 continued
Total employment,
2013 (all industries)
(’000), four-quarter
average
Manufacturing
employment, 2013 (%),
four-quarter average
Five-year growth to
2013 (all industries)
(%), four-quarter
average
Projected five-year
growth to 2017–18
(all industries) (%)
Median full-time
earnings per week
(all industries), 2012
($)
Average annual
earnings growth
(all industries),
2007 to 2012 (%)
Product Quality
Controllers
5.6
13.1
42.9
–19.3
1.0
1,000
4.4
8394
Timber and Wood
Process Workers
4.4
6.0
73.5
–37.7
–51.9
816
4.8
8399
Other Factory
Process Workers
4.2
9.9
42.4
–12.7
1.5
910
3.1
8512
Food Trades
Assistants
2.3
5.8
39.2
–0.4
–6.6
755
5.4
8911
Freight and Furniture
Handlers
2.1
15.7
13.7
–2.1
11.6
930
0.9
8995
Printing Assistants
and Table Workers
4.8
5.5
86.5
–31.6
0.5
920
0.4
8999
Other Miscellaneous
Labourers
3.5
62.1
5.7
6.2
–7.5
1,000
3.3
Occupation
8393
ANZSCO code
Manufacturing
employment, 2013
(’000), four-quarter
average
Table 10 continued
Sources: ABS, 2013, Labour force, Australia, detailed, quarterly, cat. no. 6291.0.55.003, custom request
(for manufacturing and total employment figures); Department of Education, Employment and Workplace
Relations, 2013, Labour Market Information Portal, lmip.gov.au (for employment projections to
2017–18); ABS, 2012, Employee earnings, benefits and trade union membership, cat. no. 6310.0, custom
request (for earnings figures).
154
Manufacturing workforce study | Australian Workforce and Productivity Agency
Appendix F
Replacement demand and projected total job
openings to 2025
Table 11
ANZSCO
code
Replacement demand and projected total job openings to 2025—
Long Boom scenario
Occupation
Total growth
(persons)
Net replacement
estimates (persons)
Total job openings
(persons)
(’000)
%
(’000)
%
(’000)
%
3223
Structural Steel and
Welding Trades Workers
4.2
16.6
21.1
83.4
25.2
100
3232
Metal Fitters and
Machinists
22
36.2
38.8
63.8
60.8
100
1335
Production Managers
16.7
49.1
17.3
50.9
34
100
8321
Packers
2.7
8
30.5
92
33.1
100
8322
Product Assemblers
0.4
3.7
11
96.3
11.4
100
8311
Food and Drink Factory
Workers
2
12.2
14.1
87.8
16
100
7213
Forklift Drivers
17.1
56.5
13.2
43.5
30.3
100
6211
Sales Assistants
(General)
97.7
18.2
438.5
81.8
536.2
100
3941
Cabinetmakers
2.5
17
12.3
83
14.8
100
3511
Bakers and Pastrycooks
6.5
41.5
9.1
58.5
15.6
100
3,889.70
45
4,755.60
55
8,645.30
100
All occupations
Manufacturing workforce study | Australian Workforce and Productivity Agency
155
Appendices
Tables 11, 12, 13 and 14 show replacement demand and projected total job openings in the
top 10 manufacturing occupations under AWPA’s four scenarios (Long Boom, Smart Recovery,
Terms of Trade Shock and Ring of Fire). A description of each scenario can be found in
Appendix A.
Table 12
Replacement demand and projected total job openings to 2025—
Smart Recovery scenario
ANZSCO
code
Occupation
Total growth
(persons)
Net replacement
estimates (persons)
Total job openings
(persons)
(’000)
%
(’000)
%
(’000)
%
3223
Structural Steel and
Welding Trades Workers
3.8
15.6
20.6
84.4
24.4
100
3232
Metal Fitters and
Machinists
16.6
30.5
37.8
69.5
54.4
100
1335
Production Managers
13.8
44.7
17.1
55.3
30.9
100
8321
Packers
2.5
7.6
29.8
92.4
32.3
100
8322
Product Assemblers
0.5
4.2
11
95.8
11.4
100
8311
Food and Drink Factory
Workers
2.4
14.7
14.1
85.3
16.5
100
7213
Forklift Drivers
14
52.1
12.9
47.9
26.9
100
6211
Sales Assistants
(General)
69.4
13.9
429.9
86.1
499.3
100
3941
Cabinetmakers
2.6
17.4
12.4
82.6
15.1
100
3511
Bakers and Pastrycooks
6.7
42.3
9.1
57.7
15.8
100
2,953.20
39.3
4,559.60
60.7
7,512.90
100
All occupations
Table 13
ANZSCO
Replacement demand and projected total job openings to 2025—
Terms of Trade Shock scenario
Occupation
Total growth
(persons)
Net replacement
estimates (persons)
Total job openings
(persons)
(’000)
%
(’000)
%
(’000)
%
3223
Structural Steel and
Welding Trades Workers
3.2
13.8
20.3
86.2
23.5
100
3232
Metal Fitters and
Machinists
13.4
26.4
37.3
73.6
50.7
100
1335
Production Managers
13.9
44.9
17.1
55.1
31
100
8321
Packers
2.5
7.7
30.1
92.3
32.7
100
8322
Product Assemblers
0.5
4
10.9
96
11.4
100
8311
Food and Drink Factory
Workers
2.7
15.8
14.3
84.2
16.9
100
7213
Forklift Drivers
13
50.4
12.8
49.6
25.7
100
6211
Sales Assistants
(General)
68.2
13.6
434.8
86.4
502.9
100
3941
Cabinetmakers
2.7
17.7
12.4
82.3
15.1
100
3511
Bakers and Pastrycooks
7
43.2
9.2
56.8
16.2
100
3,080.40
40
4,619.30
60
7,699.60
100
All occupations
156
Manufacturing workforce study | Australian Workforce and Productivity Agency
Table 14
ANZSCO
code
Replacement demand and projected total job openings to 2025—
Ring of Fire scenario
Occupation
Total growth
(persons)
Net replacement
estimates (persons)
Total job openings
(persons)
%
(’000)
%
(’000)
%
Structural Steel and
Welding Trades
Workers
3.6
15
20.5
85
24.2
100
3232
Metal Fitters and
Machinists
9.9
21.4
36.4
78.6
46.4
100
1335
Production Managers
14.4
45.6
17.2
54.4
31.6
100
8321
Packers
2.8
8.6
30.3
91.4
33.1
100
8322
Product Assemblers
0.9
7.2
11.7
92.8
12.6
100
8311
Food and Drink
Factory Workers
4.1
21.4
15
78.6
19
100
7213
Forklift Drivers
10.4
45.2
12.6
54.8
23
100
6211
Sales Assistants
(General)
39.2
8.5
419.9
91.5
459.1
100
3941
Cabinetmakers
3.2
19.5
13.3
80.5
16.6
100
3511
Bakers and
Pastrycooks
7.6
44.7
9.4
55.3
17
100
1,532.90
26.1
4,338.50
73.9
5,871.40
100
3223
All occupations
Source: Deloitte Access Economics, 2012, Economic modelling of skills demand and supply, scenario output—
detailed employment results. Net replacement demand by AWPA (2013).
Manufacturing workforce study | Australian Workforce and Productivity Agency
157
Appendices
(’000)
Appendix G
Qualification profile of top 30 employing occupations
in manufacturing
Table 15 shows the qualification profile of the top 30 employing occupations in the
Manufacturing industry. A description of ANZSCO skill levels343 is provided after the table.
Diploma (%)
Certificate III or IV
(%)
Certificate I or II (%)
No post‑school
qualifications (%)
With post‑school
qualifications (%)
Skill level
(1–5)
3223
Bachelor or above
(%)
1
Structural Steel
and Welding
Trades Workers
1
2
66
1
30
70
3
Occupation (unit
group)
ANZSCO code
Qualification profile of top 30 employing occupations in Manufacturing industry
Rank
Table 15
2
3232
Metal Fitters and
Machinists
2
5
78
0
15
85
3
3
1335
Production
Managers
20
12
32
1
35
65
1
4
8321
Packers
8
5
10
2
75
25
5
5
8311
Food and Drink
Factory Workers
8
5
19
2
67
33
5
6
6113
Sales
Representatives
16
12
23
1
48
52
4
7
7411
Storepersons
5
5
18
2
71
29
4
8
8322
Product
Assemblers
7
5
17
2
68
32
5
9
6211
Sales Assistants
(General)
6
6
10
2
76
24
5
10
1334
Manufacturers
13
9
33
1
45
55
1
11
7123
Engineering
Production
Workers
4
5
32
1
58
42
4
12
3941
Cabinetmakers
2
2
67
0
29
71
3
13
7213
Forklift Drivers
2
3
15
2
78
22
4
14
1311
Advertising,
Public Relations
and Sales
Managers
38
14
17
1
30
70
1
343 ABS, 2005, ANZSCO —Australian and New Zealand Standard Classification of Occupations, information paper,
cat. no. 1221.0, Appendix 2.
158
Manufacturing workforce study | Australian Workforce and Productivity Agency
Bachelor or above
(%)
Diploma (%)
Certificate III or IV
(%)
Certificate I or II (%)
No post‑school
qualifications (%)
With post‑school
qualifications (%)
Skill level
(1–5)
5311
General Clerks
10
10
15
3
63
37
4
16
5911
Purchasing and
Supply Logistics
Clerks
16
12
19
2
52
48
4
Occupation (unit
group)
ANZSCO code
15
17
5511
Accounting
Clerks
15
13
19
2
50
50
4
18
8313
Meat, Poultry
and Seafood
Process Workers
6
3
13
3
75
25
5
19
3511
Bakers and
Pastrycooks
6
7
41
1
45
55
3
20
3411
Electricians
2
7
75
0
16
84
3
21
3312
Carpenters and
Joiners
2
2
67
0
29
71
3
22
7331
Truck Drivers
1
2
25
1
70
30
4
23
5121
Office Managers
12
13
17
3
55
45
2
24
7110
Machine
Operators nfd
6
5
19
1
68
32
4
25
3923
Printers
5
5
60
1
29
71
3
26
2211
Accountants
78
10
3
0
8
92
1
27
2335
Industrial,
Mechanical and
Production
Engineers
66
13
15
0
6
94
1
Metal
Engineering
Process Workers
3
3
22
1
71
29
5
28
8391
29
8300
Factory Process
Workers nfd
6
4
13
1
76
24
4/5
30
7116
Sewing
Machinists
4
5
10
1
80
20
4
15
8
30
1
46
54
All manufacturing occupations
nfd = not further defined
Source: ABS, 2013, 2011 Census of population and housing; ABS, 2013, Labour force, Australia, detailed, quarterly,
cat. no. 6291.0.55.003, custom request. Data covers entire Australian workforce, not just manufacturing.
Manufacturing workforce study | Australian Workforce and Productivity Agency
159
Appendices
Rank
Table 15 continued
ANZSCO skill levels
Skill Level 1
Occupations at Skill Level 1 have a level of skill commensurate with a bachelor degree or higher
qualification. At least five years of relevant experience may substitute for the formal
qualification. In some instances, relevant experience and/or on‑the‑job training may be required
in addition to the formal qualification.
Skill Level 2
Occupations at Skill Level 2 have a level of skill commensurate with either a NZ Register
diploma or Australian Qualifications Framework (AQF) associate degree, advanced diploma or
diploma. At least three years of relevant experience may substitute for the formal qualifications
listed above. In some instances, relevant experience and/or on‑the‑job training may be required
in addition to the formal qualification.
Skill Level 3
Occupations at Skill Level 3 have a level of skill commensurate with one of the following:
➢ NZ Register Level 4 qualification
➢ AQF Certificate IV
➢ AQF Certificate III including at least two years of on‑the‑job training.
At least three years of relevant experience may substitute for the formal qualifications listed
above. In some instances, relevant experience and/or on‑the‑job training may be required in
addition to the formal qualification.
Skill Level 4
Occupations at Skill Level 4 have a level of skill commensurate with either a NZ Register
Level 2 or 3 qualification or AQF Certificate II or III. At least one year of relevant experience
may substitute for the formal qualifications listed above. In some instances, relevant experience
may be required in addition to the formal qualification.
Skill Level 5
Occupations at Skill Level 5 have a level of skill commensurate with one of the following:
➢ NZ Register Level 1 qualification
➢ AQF Certificate I
➢ compulsory secondary education.
For some occupations, a short period of on‑the‑job training may be required in addition to, or
instead of, the formal qualification. In some instances, no formal qualification or on‑the‑job
training may be required.
160
Manufacturing workforce study | Australian Workforce and Productivity Agency
Appendix H
Manufacturing-related training packages managed by
Manufacturing Skills Australia, ForestWorks,
Automotive Skills Australia and Agrifood Skills Australia
Type of accreditation
Diploma or higher
Appendices
Level
AUM—Automotive Industry Manufacturing
FDF— Food Processing Industry
FPP— Pulp and Paper Manufacturing Industries
LMF— Furnishing
LMT—Textiles, Clothing and Footwear
MEA— Aeroskills
MEM— Metal and Engineering
MSA— Manufacturing (includes MCM)
MSL— Laboratory Operations (includes PML)
MSS— Sustainability
PMA— Chemical, Hydrocarbons and Oil Refining
PMB— Plastics, Rubber and Cablemaking
PMC— Manufactured Mineral Products
Certificate IV
AUM— Automotive Industry Manufacturing
FDF— Food Processing Industry
FPP— Pulp and Paper Manufacturing Industries
LMF— Furnishing
LMT—Textiles, Clothing and Footwear
MEA— Aeroskills
MEM— Metal and Engineering
MSA— Manufacturing (includes MCM)
MSL— Laboratory Operations (includes PML)
MSS— Sustainability
PMA— Chemical, Hydrocarbons and Oil Refining
PMB— Plastics, Rubber and Cablemaking
PMC— Manufactured Mineral Products
Certificate III
AUM— Automotive Industry Manufacturing
FDF— Food Processing Industry
FPP— Pulp and Paper Manufacturing Industries
LMF— Furnishing
Manufacturing workforce study | Australian Workforce and Productivity Agency
161
Level
Type of accreditation
LMT—Textiles, Clothing and Footwear
MEA— Aeroskills
MEM— Metal and Engineering
MSA— Manufacturing (includes MCM)
MSL— Laboratory Operations (includes PML)
MSS— Sustainability
PMA— Chemical, Hydrocarbons and Oil Refining
PMB— Plastics, Rubber and Cablemaking
PMC— Manufactured Mineral Products
Certificate II
AUM— Automotive Industry Manufacturing
FDF— Food Processing Industry
FPP— Pulp and Paper Manufacturing Industries
LMF— Furnishing
LMT—Textiles, Clothing and Footwear
MEA— Aeroskills
MEM— Metal and Engineering
MSA— Manufacturing (includes MCM)
MSL— Laboratory Operations (includes PML)
MSS— Sustainability
PMA— Chemical, Hydrocarbons and Oil Refining
PMB— Plastics, Rubber and Cablemaking
PMC— Manufactured Mineral Products
Certificate I
AUM— Automotive Industry Manufacturing
FDF— Food Processing Industry
FPP— Pulp and Paper Manufacturing Industries
LMF— Furnishing
LMT—Textiles, Clothing and Footwear
MEA— Aeroskills
MEM— Metal and Engineering
MSA— Manufacturing (includes MCM)
MSL— Laboratory Operations (includes PML)
MSS— Sustainability
PMA— Chemical, Hydrocarbons and Oil Refining
PMB— Plastics, Rubber and Cablemaking
PMC— Manufactured Mineral Products
162
Manufacturing workforce study | Australian Workforce and Productivity Agency
Appendix I
Manufacturing workforce study reference group
Mr Robin Shreeve (reference group chair)
Chief Executive Officer, Australian Workforce and Productivity Agency
Appendices
Ms Megan Lilly (reference group deputy chair)
Director, Education and Training, Australian Industry Group
Mr Wayne Achurch
Human Resources Manager, BAE Systems
Mr Stephen Bolton
Senior Adviser, Employment, Education and Training, Australian Chamber of Commerce
and Industry
Prof Matthew Cuthbertson
Deputy Pro Vice‑Chancellor, Research and Innovation, College of Science, Engineering
and Health, RMIT University
Mr Andrew Dettmer
National President, Australian Manufacturing Workers’ Union
Dr Michael Green
General Manager, Manufacturing Policy, Department of Industry
Mr Rod Nelson
State Director, Victoria, Enterprise Connect
Mr Bob Paton
Chief Executive Officer, Manufacturing Skills Australia
Manufacturing workforce study | Australian Workforce and Productivity Agency
163
Appendix J
Submissions to AWPA’s Manufacturing workforce
study
Table 16
Submissions to AWPA’s Manufacturing workforce study
Organisation
164
1
Bureau Veritas
2
NSW Furniture Design and Manufacturing Industry Training Advisory Body
3
Food, Fibre and Timber Industries Training Council (WA)
4
R.E. Daison Pty Ltd
5
Plastic Industry Manufacturers of Australia
6
University of Tasmania
7
Australian Manufacturing Workers’ Union
8
Regional Development Australia
9
Australian Design Integration Network
10
Duromer Products Pty Ltd
11
Business SA
12
ForestWorks Industry Skills Council
13
National Centre for Vocational Education Research
14
Australian Industry Group
15
Australian Window Association
16
Rebuildit Pty Ltd
17
Manufacturing Skills Australia
Manufacturing workforce study | Australian Workforce and Productivity Agency
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