Manufacturing in Australia - A Statistical Overview
Stephen Barber
Statistics Group
The manufacturing industry in Australia has come under much scrutiny
in recent times, especially in relation to tariff protection for the industry
as a whole and certain sections of the industry in particular. This note
presents some of the statistics that are available for the manufacturing
industry as a whole and gives an historical perspective over the last
30 to 35 years.
Size
Currently, the manufacturing sector has a gross product (GP) of nearly
$70 billion. [Where gross product is the value of goods and services produced
in Australia less the cost of goods and services used up in the production
process and before allowance has been made for the consumption of fixed
capital (depreciation)].
Manufacturing is Australia's largest industry, with wholesale trade ($50
billion), property and business services ($40 billion), retail trade ($35
billion) and finance and insurance ($35 billion) completing the top five.
However, Chart 1 shows the decline in the dominance of the manufacturing
industry since the early 1960s. In 1962-63, it was over a quarter (26.2%)
of Australia's gross domestic product (GDP) but by 1995-96 its contribution
has declined to little more than a seventh (14.3%).
Employment
Thirty years ago, manufacturing provided over 1.2 million jobs and was
a major source of employment. Its position as a significant employer was
only rivalled by the combined wholesale and retail trade industries.
Today, however, manufacturing employment is still around the same level
(1.1 million people) although total employment in Australia has increased
from 4.8 million to 8.3 million over that time. The retail trade industry
on its own has employed more people than manufacturing since the early
1990s.
Chart 2 shows the trend in manufacturing employment when expressed as
a percentage of total employment. The picture is almost identical to that
shown by Chart 1. In 1966, nearly 26% of jobs were in manufacturing. In
1996, this has reduced to just over 13%.
Exports
Exports of manufactured goods as a proportion of total merchandise exports
have more than doubled over the last 30 years from less than 14% in 1963-64
to 33% in 1996-97. The evolving trend, shown in Chart 3, has two distinct
periods of increasing share-the 1960s through to the early 1970s and from
the mid 1980s-sandwiching a period of gradual decline.
Over the last four years exports of manufactures have become greater
than either mining or agricultural exports. In 1996-97, exports of manufactures
are valued at almost $26 billion while mining and agricultural exports
are valued at just over $23 billion each.
The decreasing proportion of the manufacturing industry overall, measured
in relation to GDP, combined with the above information on the increasing
share of exports of manufactures means that the production of the manufacturing
industry is now being directed away from sales and consumption within
Australia and directed to foreign markets.
This can be seen from Chart 4, where exports of manufactures have been
expressed as a percentage of manufacturing gross product. From the early
1960s the share of manufacturing production that was exported was around
8%. The share then increased gradually to 15% by the early 1970s and then
plateaued until the mid 1980s. In the 9 years from 1986-87, the proportion
has increased steeply so that in 1996-97 over a third of manufacturing
production was exported.
STMs and ETMs
Australia's exports of manufactures can be split into two types, simply
transformed (STM) and elaborately transformed (ETM).
These terms refer to the amount of processing that are made to the inputs
to the manufacturing process. STMs are mainly basic metal manufactures,
e.g., aluminium ingots. ETMs, which form the major portion of world trade
in manufactures, are defined as finished goods or goods that have unique
qualities that allow them to be differentiated from other manufactured
goods. ETMs have a high degree of manufacturing value added.
Chart 5 shows the proportion of Australia's exports of manufactures that
are STMs or ETMs since 1971-72. Over this period, it can be seen that
ETMs hovered between 50% and 60% of exports of manufactures for nearly
20 years. However, over the last eight years exports of ETMs have trended
upwards to around 70% of exports of manufactures. It seems that Australia
has changed its focus to provide more finished goods and rely to a lesser
extent on 'traditional' (STM) products of unworked iron, steel and non-ferrous
products.
Sources:
ABS, National Income, Expenditure and Product (Cat nos 5204.0, 5206.0)
ABS, International Merchandise Trade, Australia (Cat no 5422.0)
ABS, Labour Force, Australia (Cat no 6203.0)
DFAT, Exports of Primary and Manufactured Products.
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