Time to revive manufacturing

Australia, Energy, GREENSTEEL, Sanjeev Gupta > 24th April, 2020
Sanjeev Gupta at the Cultana Solar Plant

At a glance

0 min read

  • COVID-19 has brought into focus critical gaps in domestic manufacturing capability and self-sufficiency.
  • We have an opportunity to re-imagine and revive advanced manufacturing in Australia.
  • Coupled with process innovation, advanced manufacturing and industry 4.0, gives us the ingredients needed to develop a wholesome ecosystem of manufacturing supply chains and secure the future for our generations to come.

Australia has an opportunity to revitalise its manufacturing sector to ensure self-sufficiency and secure the future for generations to come, writes our Executive Chairman Sanjeev Gupta.

There is no doubt COVID-19 will leave a lasting mark both socially and economically. The consensus is we are facing the most severe global economic downturn since the Great Depression.

World leaders and captains of industry are right to question the pre-COVID-19 globalisation model. This experience has exposed how fragile international supply chains are in the face of contagion outbreaks, wars, border closures, or other disruptions to the world order. It has also brought into sharp focus critical gaps in domestic manufacturing capability and self-sufficiency.

It’s why Prime Minister Scott Morrison told parliament that while open trading principles have and will continue to be part of Australia’s enduring prosperity, we “equally … need to look carefully at our domestic economic sovereignty as well”.

I’ve long expressed my view on Australia’s untapped potential in manufacturing, both in foundation industries such as steel and aluminium as well as new opportunities in advanced manufacturing such as electric vehicles, renewable energy and hydrogen.

We have the clear opportunity to develop new and robust avenues of economic growth rather than relying only on traditional revenue drivers of commodity exports, education and tourism that are now sadly suffering as a result of the global impact of COVID-19.

Successful and modern economies are built on a vibrant and healthy domestic manufacturing sector. Its revival, as we steer our way out of the COVID-19 downturn, is essential to the long-term sustainability of the Australian economy.

In good times, manufacturing brings jobs, wealth and stability to individuals, families and, indeed, entire communities across our society. It ensures skills and capabilities are not only retained, but with the support of government, industries can grow and flourish through intergenerational skills development and knowledge transfer happening in stride with new and emerging technologies.

An early, positive consequence I can see emerging from this pandemic is a groundswell of support from business, industry and political leaders alike to work together to see what we can achieve in Australian domestic manufacturing once again.

Nev Power, head of the National COVID-19 Co-ordination Commission, clearly signalled the opportunity Australia has to develop a modern, efficient and hi-tech manufacturing sector that is competitive in the long term and underpinned by large-scale public and private investment strategies.

Andrew Liveris, appointed by the commission to focus on the revitalisation of Australian manufacturing, has voiced the urgent need for Australia to get behind the manufacturing sector. Upon his selection to the commission, Liveris told media the model of Australia being “willing to export commodities and import finished goods is old and broken”.

Like World War II before it, which led Australians and government alike to want greater domestic capability, the COVID-19 flashpoint now presents a once-in-a-generation opportunity to re-imagine a different working world and arrest the negative trajectory of manufacturing in Australia.

From its heights in the 1950s and 60s when one in three Australians worked in the manufacturing sector, that figure is now just one in 13. From a 30 per cent contribution to Australian GDP in the 1970s, manufacturing has now dwindled to a mere 7 per cent.

The gains we can make in rebuilding and strengthening the sector are abundantly clear. Australia is well positioned to take advantage of its inherent natural resources, well-educated workforce and world-class educational institutions. Coupled with process innovation, advanced manufacturing and industry 4.0, this gives us the ingredients needed to develop a wholesome ecosystem of manufacturing supply chains.

As a prime example, Australia exports enough iron ore to produce 500 million tonnes of steel, over a quarter of the world’s demand. Yet we process less than 1 per cent of this into steel domestically. With global steel consumption set to double in the next 30 years it’s not too late for Australia to claim its place as a modern, efficient, low-carbon, global steel power. This conviction is central to my group’s endeavours on improving and developing mining and steel production at Whyalla in South Australia.

Our abundance of renewable energy sources can power domestic manufacturing up and down the supply chain, at an decreasing cost. This, again, is at the very heart of GFG’s Cultana Solar Farm being built in Whyalla, one of the largest solar farms in the country, which we are committed to progressing and delivering despite these challenging times.

Electric vehicle production could provide us the opportunity to repurpose Australia’s vehicle manufacturing facilities, retool and upskill workers. This is another ambition of GFG, and I believe this could be a key initiative for building a smarter domestic manufacturing base in the future. It’s a challenging and bold vision for sure, but the plan is right for Australia.

COVID-19 is a wake-up call. The time to act is now, boldly and collectively, to secure the future of our generations to come.

This opinion piece appeared in The Weekend Australian.

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