Lead Story
Issue No. 49 - October/November 2009
Making SA Better
by Professor Richard Blandy
Slow growth, strong competition and declining exports have brought SA’s manufacturing sector into eclipse. Prof Richard Blandy takes a close look at the sector, one of the State’s biggest employers, to explain what’s happening and why the trend to small-scale specialisation must continue.
Manufacturing is Australia’s second largest industry (after property and business services) producing about $107 billion of valued added in 2007-08 (latest figures). This was 10.7% of total Australian value added.
As shown in Chart 1, Australian manufacturing value added has been growing moderately, averaging 1.9%pa growth in real terms over the past 15 years - about half the rate of total industry value added, which grew at the rate of 3.8%pa over the same period. While it is far from true that Australia “does not make things any more”, manufacturing has been subject to major pressures with the rise of super cheap, quality mass production in Asia.
Manufacturing is South Australia’s largest industry but, contrary to the Australian trend, has been in steady decline over the past five years. In 2007-08, manufacturing value added in SA was about $8.6 billion, having fallen, in constant value dollar terms, from about $9.6 billion in 2002-03.
Before that, manufacturing value added had increased more or less steadily from about $7.7 billion in 1991-92. Over the past 15 years, manufacturing value added in SA has grown in real terms at an average annual rate of only 0.7%pa compared with 1.9%pa nationally, as stated earlier.
This very slow growth rate - property and business services in SA have grown at 3.8%pa real, by contrast - no doubt reflects the difficulties that Australian mass producers of consumer durables, textiles, clothing and footwear and cars have faced over this period. Metals processing and smaller, specialist and high-tech, manufacturers have fared better.
As already noted, manufacturing remains SA’s largest indu...
