Analysis of Costs of Production in Australian Manufacturing

This report examines the costs of production in the Australian manufacturing industry, analyzing its decline over the past three decades despite overall economic growth. The report explores factors contributing to this decline, including increased competition from low-cost economies and the need for significant investments. It analyzes various sub-industries within manufacturing, highlighting their impact on overall growth. The report also presents recommendations for key players and policymakers to stimulate growth in the sector, including promoting research and development, supporting small producers, and providing financial resources. The conclusion emphasizes the importance of addressing the challenges facing the manufacturing sector to ensure its future viability and contribution to the Australian economy.

Newspaper Analysis: - Economics for Business
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Table of Contents
The Essence of Story (Introduction)..........................................................................................3
Economic Analysis.....................................................................................................................4
Recommendations to the Key Player or Policy Holders............................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10
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Topic – “Costs of Production in any one or two industries in Australia”
The Essence of Story (Introduction)
The report study is aimed to examine the costs of production in the manufacturing industry
of Australia. It has been observed from the market research and scenario that the
manufacturing sector in Australia has been steadily declining since last three decades.
Moreover, the manufacturing sector leads to contributing maximum in the overall growth and
development of the economy. As recorded from the past years, it has been researched that the
manufacturing industry has been facing with stiff competition due to the increase in supply
from the low-cost economies. However, considering the overall growth of Australian
economy it has been analysed that the country is continuously growing in terms of economic
development.
The issue of the research study is that the manufacturing sector in Australia has been steadily
decreasing over the past few years instead of overall economic growth of Australia. This is a
major issue for the manufacturing companies and the government also because this industry
is the one which has major share in the development of the country. It is due to the increase in
competition and need for investments in the manufacturing sector. The graph has been
presented below which is derived from the survey.
Figure 1: Manufacturing Indicators
Source: (Langcake, 2016)
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Economic Analysis
The Australia’s manufacturing sector is highly diverse and comprises of various sub-
industries. Among those sub-industries some of the major recognised industries are such as
food, beverage, coal & petroleum, tobacco, plant & machinery and various others. When
considering the total of the sub-industries it is observed that all of such sub-industries lead to
accounting at 80% of the manufacturing output and employment (Beer, 2018).
Figure 2: Manufacturing Output
Source: (Langcake, 2016)
From the above statistical figure it has been reflected that the manufacturing industry has
been segregated in various sub-industries that is majorly engaged in contributing towards the
growth in manufacturing sector of Australia. The variations in these sub-industries can lead to
creating impact on the overall growth and development of manufacturing that be increased or
decreased (The Guardian, 2017).
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Figure 3: Industry changes from a five per cent reduction in rent/facility costs
Source: (Australian Industry Report, 2016)
On the basis of the above tabular representation of the figures related to the industry change it
has been observed that the manufacturing sector is placed at third position where the cost
reduction is amounted to (-212), value added (-298) and employment (-2052) respectively.
The figures are in negative term that shows that from the past year to the current year there
have been decline in the manufacturing growth. The main reason behind such declining is the
increasing competitiveness and performance in other industries. The manufacturing industry
comprises of the various sub-industry that can vary according to time as per the demand and
supply of resources. From the statistical perspective also, it is studied that there are a lot of
increasing and decreasing trends in the manufacturing sector of Australia (The Guardian,
2017).
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Figure 4: Manufacturing Output and Employment
Source: (Langcake, 2016)
The respective figure shows the trend in the manufacturing output as well as employment
level over the past 25 years. Other most developed economies have shown their development
in the manufacturing output and employment however, in context of the Australia there is a
record of lower share of manufacturing industry in the output and employment generation
(Australian Government Department of Industry, Innovation and Science, 2018). In terms of
total share in the output generation within manufacturing sector it is observed that from the
year 1991 it has been declining since 2016 and is expected to continue the same for the
coming years also. Same as with the employment share the Australian manufacturing is still
declining from the past 25 years.
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Figure 5: Characteristics of Australian Manufacturing
Source: (Langcake, 2016)
The tabular presentation shows the list of figures and ratio of value added to the total
production within the Australian manufacturing sector. As compared to the other economies
the manufacturing sector of Australia is placed at 5th position in terms of manufacturing
value-added share of production. Relative to the other economies it is examined that the
Australian manufacturing is growing on a slow pace and nearly adds to approximately 29%
of value addition in the economy (Australian Government Department of Industry,
Innovation and Science, 2018).
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Recommendations to the Key Player or Policy Holders
There are some key points have been suggested to the players and policyholders in order to
increase the manufacturing output and employment in the Australian economy. The
recommendations are as follows:
 Research and Development – R&D is the key to produce innovative products and
services which is as per the economies of scale. The sub-manufacturing industries in
Australia must go for intensive research and development so that uniqueness can be
bringing into the manufactured products and services.
 Promoting small producers – The economy should promote and boost small
producers so that they have the opportunity to grow and expand in the foreign market
as well.
 Providing funds and resources – The government should provide adequate funds,
resources and investment proposal in the manufacturing plant to the companies. The
availability of sufficient capital helps in the economic growth and development.
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Conclusion
On the basis of the above report study, it has been concluded that the manufacturing industry
of Australia has been decreasing tremendously and is expected to continue the same in
coming years. This argument has been supported by the facts, figures, and stats which prove
that from the past 25 years there has been steady decrease in the manufacturing output and
employment level of the country.
However, the last two to three years it has been observed that the manufacturing industry is
expected to grow and develop accordingly. It is evidence by the index of Australia
Manufacturing PMI which evident that the manufacturing industry is currently booming and
is proceeding towards gaining the competitive position in the market.
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References
 Australian Government Department of Industry, Innovation and Science, 2018.
Manufacturing Data Card - September Quarter 2015. [Online] industry. Available at:
https://industry.gov.au/industry/ManufacturingPerformance/Pages/ManufacturingData
Card.aspx [Accessed: 09 May 2018].
 Australian Industry Report, 2016. Reducing business costs. Retrieved From:
https://industry.gov.au/Office-of-the-Chief-Economist/Publications/
AustralianIndustryReport/assets/Australian-Industry-Report-2016-Chapter-3.pdf
 Beer, A., 2018. The closure of the Australian car manufacturing industry:
redundancy, policy and community impacts. Australian Geographer, pp.1-20.
 Langcake, S., 2016. Conditions in the Manufacturing Sector. Retrieved From:
https://www.rba.gov.au/publications/bulletin/2016/jun/pdf/bu-0616-4.pdf
 The Guardian, 2017. Australia's manufacturing industry on rebound, report says.
[Online] theguardian. Available at:
https://www.theguardian.com/business/2017/jun/21/australias-manufacturing-
industry-on-rebound-report-says [Accessed: 09 May 2018].
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