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Five opportunities and challenges facing Australian manufacturers

03:30pm March 25 2024

A welder at work on the factory floor. (Getty)

Australian manufacturers are emerging from a challenging few years in relatively good shape to take advantage of opportunities emerging in 2024 and beyond. 

Having weathered pandemic lockdowns, geo-political disruptions and tough economic conditions, many manufacturers entered 2024 with strong cashflow and are now preparing to make significant investments in machinery and property, or seek growth through business acquisitions, according to a St.George Bank report on the sector.

The report highlights five themes that are likely to impact on manufacturing businesses in the period ahead, presenting both opportunities and challenges. 


The AUKUS strategic defence alliance between Australia, the U.S. and the U.K. announced in 2021 is expected to open a wide range of opportunities for Australian manufacturers. 

The pact will require Australia to expand its industrial capacity in order to build and sustain 8 submarines, creating 8,500 direct jobs. It will also encourage increased trilateral cooperation across new technologies including artificial intelligence and quantum computing. 

Smart companies in other sectors will be able to adapt their technologies to create new revenue streams in the defence industry. 

“We’re seeing the emergence of dual-use technologies, with several of our members who are involved in fabricating for the mining sector now having an opportunity to enter the defence sector,” says Michael Sharpe, Director of AUKUS Forum, a member-based organisation aimed at helping companies realise AUKUS-related growth opportunities. 

Sectors including construction and agriculture also stand to benefit and St.George is partnering with AUKUS Forum to help connect clients with opportunities for contracts.

“We’ve already had clients setting up defence areas within their existing businesses and getting themselves ready as a result of connections through the AUKUS Forum,” says Matthew Kelly, Head of Manufacturing and Wholesale at St.George.

2. Recruitment challenges persist

Many manufacturing firms continue to have trouble recruiting staff, even as record migration levels help to ease labour market tightness. 

The September 2023 Recruitment Experiences and Outlook Survey from Jobs and Skills Australia showed that almost 70 per cent of recruiting manufacturing firms had trouble hiring staff. 

In particular, the industry’s digital transformation has highlighted a skills gap in technology roles, with access to workers with relevant experience in areas such as data analytics and robotic engineering expected to remain a challenge in 2024. 

Wage pressures are another strain for many operators in the sector. They are expected to ease in 2024 as the labour market continues to cool but are likely to remain above pre-pandemic averages.


Western Sydney-based Sloanebuilt has been making heavy vehicle trailers for more than three decades. CEO Fred Marano says the success and longevity of the business is based on two core values: building a high-quality product and providing first class customer service.

"Our trailers are unique, and the difference is our people and how we put them together. We have a passion to be the best in the industry and deliver trailers that exceed the customer's expectations," Marano says.

In business, Marano makes a point of aligning with customers and suppliers that share the same commercial values, whether that be a tyre or aluminium supplier or the company's long-time banker Westpac. 

It's a relationship that goes both ways. 

"It's a real privilege for Westpac to be supporting a business like Sloanebuilt," said Anthony Miller, Chief Executive, Business and Wealth. "They're a very large local employer here in Western Sydney, they bring on a lot of apprenticeships and they train and develop their staff. They're also doing something which is really important for Australia which is to help build out our manufacturing capacity."

Sloanebuilt was named business of the year in 2023 by Australian Owned, the body that certifies businesses as fully Australian owned. But it's not the awards that motivate Marano.

"We don't benchmark ourselves on awards. We benchmark ourselves on recurring customers, on having a good customer base, and being known in the industry for good quality."  

3. Embracing technology

Manufacturing is one of the biggest spenders on research and development of any Australian industry and investment in technology looks set to increase with initiatives such as the Federal Government’s National Reconstruction Fund, which is directing $1 billion toward advanced manufacturing.

Emerging technologies including AI, robotics, 3-D printing, materials engineering and the Internet of Things have potential to deliver cost savings and drive innovation. 

There’s a growing trend towards companies collaborating with universities to help improve their processes.

Modelling by Cadence Economics for Universities Australia shows formal collaborations between Australian businesses and universities generate more than $10 billion a year in revenue directly for the businesses that forge partnerships.

St.George has partnered with universities such as UNSW to give manufacturing clients greater access to advanced facilities, technologies and researchers. For example, UNSW’s Centre for Sustainable Materials Research and Technology (SMaRT) has developed a process to make green alloys using end‐of‐life rubber tyres and waste plastic as an alternative to coking coal.

4. Growing cyber threats

The average cost of cybercrime to Australian businesses rose by 14 per cent in the 2023 financial year, according to the Australian Signals Directorate’s annual Cyber Threat Report, and cyber criminals are targeting manufacturers with increasingly sophisticated methods.

Ransomware – where harmful software is inserted into a company’s operating system by a bad actor who then demands a ransom to remove it -- remains the biggest threat. The ASD recorded 118 ransomware incidents in FY23 with manufacturing among the top three industries to report ransomware-related cyber security incidents during this period.

More than 40 per cent of manufacturing respondents in a 2023 survey by cybersecurity company Sophos reported malicious emails or phishing as the root cause of attacks. This compares to the cross-sector average of 30 per cent, which suggests that manufacturing is particularly vulnerable to email-based attacks.

The onus is on companies to better train their employees to become more aware of cyber threats. 

St.George is also working to help educate its customers. For example, the bank has partnered with cyber security firm Eftsure to assist business customers in identifying where bank account details have been changed to help them detect invoice fraud. 

5. Clean energy opportunity

The clean energy transition is creating opportunities for manufacturers, with the Federal Government’s target of 82 per cent renewables in the electricity grid by 2030 requiring significant investment in the local manufacture of infrastructure such as wind turbines and solar panels. 

The critical minerals required for renewable energy production also present potential for Australian manufacturers, according to Sharpe from AUKUS Forum.

For example, Australia is among the world’s biggest miners of rate earth elements, which are an important input for many hi-tech industries including defence, but mostly ships them overseas to supply manufacturers in other countries. Sharpe would like to see more collaboration between mining companies and local industry to get more value from the critical minerals supply chain. 

Meanwhile, volatility in energy prices in recent times has exposed a vulnerability among manufacturers, with the sector accounting for around 18 per cent of Australia’s energy consumption. Sharpe says diversifying their energy sources can help firms to alleviate energy price pressures, for example by installing solar panels and batteries on their premises. 

James Thornhill was appointed as editor of Westpac Wire in May 2022. Prior to joining the bank, he was a business and financial journalist with more than two decades of experience with international newswires. Most recently, he was a resources correspondent for Bloomberg, covering the mining and energy sectors, and previously reported on a broad range of topics from economics and politics to currency and bond markets. Originally from the UK, he’s had stints working in London, New York and Singapore, but is now happily settled in Sydney.

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