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Australian manufacturing: structural trends 2001-02 to 2006-07



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Parliament of Australia Department of Parliamentary Services

Parliamentary Library Information, analysis and advice for the Parliament RESEARCH PAPER

www.aph.gov.au/library

24 November 2008, no. 16, 2008-09, ISSN 1834-9854

Australian manufacturing—structural trends 2001-02 to 2006-07

Guy Woods Statistics and Mapping Section

Executive summary

• Manufacturing is a key Australian industry equal to 10 per cent of gross domestic product.

• Global and domestic economic trends are producing structural change in the industry.

• There has been a shift away from manufacturing goods exposed to international

competition to manufacturers aligned with Australia’s commodities based industries.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 

Research and experimental development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 

Profit growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 

Postscript — the 2008 financial crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

Annex tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 

Glossary and abbreviations

Gross domestic product — the total market value of goods and services produced in Australia within a given period after deducting the cost of goods and services used up in the process of production but before deducting allowances for the consumption of fixed capital. Thus gross domestic product, as here defined, is 'at market prices'. It is equivalent to gross national expenditure plus exports of goods and services less imports of goods and services.

Gross operating profit — selected items are excluded from company profits before income tax to provide a measure of underlying company profits. These items include interest income and expenses; depreciation and amortisation; and selected items which do not involve the production of goods and services such as net foreign exchange gains/losses, gains/losses arising from the sale of non-current assets and net unrealised gains/losses from the revaluation of current or non-current assets.

Gross value added — the value of output at basic prices minus the value of intermediate consumption at purchasers' prices. The term is used to describe gross product by industry and by sector. Basic prices valuation of output removes the distortion caused by variations in the incidence of commodity taxes and subsidies across the output of individual industries.

Large business—businesses employing 200 or more persons.

Medium business—businesses employing 20 to 199 persons.

mfg— abbreviation for manufacturing

n.e.c—not elsewhere classified.

Net terms—takes into account gains and losses, e.g. in the number of businesses, in a given period

Real growth—growth measured in constant prices removing the inflationary impact on prices so that analysis of trends can be made on the basis of volumes produced.

Small business—businesses employing fewer than 20 persons, including non-employing.

TCF—textiles, clothing and footwear.

Australian manufacturing—structural trends 2001-02 to 2006-07

Introduction

Manufacturing is an important part of Australia’s economy. In 2006-07 it accounted for 10 per cent of Australia’s gross domestic product (GDP) and employment and for about 25 per cent of merchandise exports. However, forces at work in the Australian economy combined with international developments and increased globalisation are having a profound effect on the size and structure of the industry.

In recent years, competition from cheap imports, a strong dollar, the drought and rising costs for raw materials and labour have created a very competitive business environment for many Australian manufacturers. At the same time the mining boom and infrastructure development

have created opportunities for other manufacturers.1

The result is an industry that is more aligned with Australia’s comparative advantage in resource based industries and less focussed on the production of consumer goods such as clothing and furniture.

Using data on output, employment, business numbers, expenditure on research and development (R&D) and profits, this paper analyses the structural changes that have occurred in the Australian manufacturing industry during the period 2001-02 to 2006-07.

The Australian Bureau of Statistics (ABS) has developed a classification for defining industries by the nature of the goods and services produced; this is the Australian New Zealand Standard Industry Classification (ANZSIC). For the purposes of this paper the manufacturing industry is as defined by the 1993 edition of the ANZSIC.2

Any reference to industry in this paper refers to the manufacturing industry unless otherwise specified.

1. Australian PMI, Australian Industry Group, Price Waterhouse Coopers, July 2008.

2. Australian and New Zealand Standard Classification (ANZIC), 1993, ABS, (1292.0)

1

Australian manufacturing—structural trends 2001-02 to 2006-07

Output

Average growth

In real terms, i.e. adjusted for inflation, manufacturing growth has been erratic in recent years. The industry has fluctuated between periods of above average growth and periods of contraction (see Graph 1). At the same time, the wider economy, as measured by GDP, has grown more consistently. As a result, the annual average growth rate for manufacturing over the five years ending 2006-07 was just one per cent. This compares with 3.2 per cent for the wider economy.

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Per cent

Manufacturing compared with the wider economy â€ Real annual percentage change (a)

Manufacturing

Gross domestic product

(a) Chain volume measures. Reference year for chain volume measures is 2005-06 Source: Australian National Accounts: National Income, Expenditure and Product, March 2008, ABS (5206.0)

Graph 1.

However, this aggregate level data presents a misleading impression of the industry. When the data are examined at the state level a much more varied picture emerges (see Graph 2).

Growth rates in the major manufacturing states of New South Wales and Victoria have been very weak. Measured in real terms, absolute levels of output declined in both of these states. In New South Wales manufacturing industry gross value added (GVA) declined by just under one per cent between 2001-02 and 2006-07; in Victoria, it declined by just over three per cent.

This trend was completely the opposite in Queensland and Western Australia. Queensland’s annual average growth rate was 4.5 per cent, increasing manufacturing GVA by nearly 25 per

2

Australian manufacturing—structural trends 2001-02 to 2006-07

cent over the five years. In Western Australia the annual average growth was just over six per cent, increasing manufacturing GVA by 35 per cent.

-2 -1 0 1 2 3 4 5 6 7

Australian Capital Territory

Northern Territory

Tasmania

Western Australia

South Australia

Queensland

Victoria

New South Wales

Per cent

Manufacturing industry  Annual average growth  (a) 2001‐02 to  2006‐07 

(a) Chain volume meeasure s.Base year 2005-06 = 100

Source: Australian Natioanl Accounts: State Accounts, 2006-07, ABS (5220.0)

Graph 2

Relative importance

The economic importance of manufacturing varies significantly between the states (see Graph 3). Manufacturing is most important in South Australia and Tasmania where it accounts for 13 per cent of gross state product (GSP). During the five year period covered by this paper the importance of manufacturing declined in nearly every state and territory. The only two jurisdictions to go against this trend were Tasmania and the Northern Territory.

0 2 4 6 8 1 0 1 2

Australian Capital Territory

Northern Territory

Tasmania

Western Australia

South Australia

Queenslan

1 4

d

Victoria

New South Wales

Per cent

Manufacturing industry  (a)  Share of gross state product Year ending  30 June

2002 2007

(a) Industry gross value added Source: Australian Natioanl Accounts: State Accounts, 2006-07, ABS (5220.0)

Graph 3

3

Australian manufacturing—structural trends 2001-02 to 2006-07

As well as changes in the importance of manufacturing output within states there has also been a shift in manufacturing output between states (see Graph 4). New South Wales and Victoria account for the lion’s share of manufacturing output. However, between 2001-02 and 2006-07 there was a shift away from these states. At the beginning of the period the two largest states accounted for 64 per cent of total manufacturing output. By the end, their share had fallen to 60 per cent. At the same time Queensland, Western Australia and Tasmania all increased their share of the national total. The biggest gain occurred in Queensland which increased its share of manufacturing from 15 to 17 per cent.

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

Australian Capital Territory

Northern Territory

Tasmania

Western Australia

South Australia

Queenslan d

Victoria

New South Wales

Per cent

Manufacturing industry (a) -State share of Australian manufacturing output Year ending 30 June

2002 2007

(a) Industry gross value added

Source: Australian Natioanl Accounts: State Accounts, 2006-07, ABS (5220.0)

Graph 4

Growth by industry sub-division

The ANZSIC divides the manufacturing industry into sub-divisions, groups and classes based on the nature of the goods produced. The sub-divisions for manufacturing are:

• Food, beverages and tobacco;

• Textile, clothing, footwear and leather work;

• Wood and paper products;

• Printing, publishing and recorded media;

• Petroleum, coal and chemical products;

• Non-metallic mineral products;

• Metal products;

• Machinery and equipment; and

4

Australian manufacturing—structural trends 2001-02 to 2006-07

• Other manufacturing. 3

From 2001-02 to 2006-07 growth varied across these industry sub-divisions. Some experienced high rates of growth and others experienced a period of decline (see Graph 5).

• The Textiles, clothing, footwear and leather (TCF) sub-division experienced a significant

decline in output. Over the five years TCF output declined by an annual average rate of nine per cent. As a result, output in 2006-07 was 36 per cent lower than in 2001-02.

• The Wood and paper products; Petroleum, coal and chemical products and the sub-division defined as Other manufacturing also experienced declines; although not on the same scale as the TCF industry.

• At the other end of the scale the Non-metallic mineral products; Metal products and

Machinery and equipment sub-divisions experienced very strong growth rates.

- The Non-metallic minerals products sub-division grew at an annual average rate of six per cent, increasing its output by 34 per cent.

- The Metal products sub-division grew at an annual average rate of two per cent and increased its output by 10 per cent.

- The Machinery and equipment sub-division grew at an annual average rate of three per cent and increased its output by 18 per cent.

-10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0

Other manufactuiring

Machinery and equipment

Metal products

Non-metallic mineral products

Petroleum, coal and chemical products

Printing, publishing and recorded media

Wood and paper products

Textile, clothing and footwear

Food, beverages and tobacco

Per cent

Manufacturing industry   Sub‐divisions  Annual average growth (a)  2001‐02 to 2006‐07

(a) Chain volume meeasures. Base year 2005-06 = 100

Source: Australian National Accounts: National Income, Expenditure and Product, March 2008, ABS (5206.0)

Graph 5

3. Includes prefabricated building, furniture, jewellery, toys and sports goods.

5

Australian manufacturing—structural trends 2001-02 to 2006-07

Relative importance of sub-divisions

The three biggest industry sub-divisions are; Food, beverages and tobacco; Metal products; and Machinery and equipment. These three sub-divisions account for nearly 60 per cent of manufacturing output. The first two are heavily involved in processing Australia’s abundant agricultural and mineral resources. There are also a large number of manufacturers in the Machinery and equipment sub-division involved in the production of equipment for the resources based sector of the economy. For instance, at the end of 2006-07, over a 1000, or five per cent, of businesses in this sub-division were engaged in the manufacture of mining and construction machinery.

The trend in recent years has been for the Non-metallic minerals products, Metal products and Machinery and equipment industry sub-divisions to increase their share of total manufacturing output. At the other end of the spectrum the TCF sub-division lost ground and is now the smallest of the manufacturing industry sub-divisions (see Graph 6).

0 5 10 15 20 25

Other manufactuiring

Machinery and equipment

Metal products

Non-metallic mineral products

Petroleum, coal and chemical products

Printing, publishing and recorded media

Wood and paper products

Textile, clothing and footwear

Food, beverages and tobacco

Per cent

Manufacturing industry sub-divisions(a) Share of total manufacturing output Year ending 30 June

2002 2007

(a) Industry gross value added Source: Australian National Accounts: National Income, Expenditure and Product, March 2008, ABS (5206.0)

Graph 6

6

Australian manufacturing—structural trends 2001-02 to 2006-07

Employment

Aggregate growth

Manufacturing’s share of employment has been declining for a number of years. Annual average employment for manufacturing was 1 081 300 persons in 2001-02 which was equal to about 12 per cent of total employment. In 2006-07 annual average employment in manufacturing was 1 063 900 which was 10 per cent of total employment. The lack of employment growth in manufacturing contrasts with the wider economy. In the wider economy employment grew at an average annual rate of 2.4 per cent over the same period.

However, given that overall output in manufacturing increased over the same period, the lack of growth in manufacturing employment could be indicative of increased productivity in the industry.

Industry sub-division

As with GVA there were significant differences between the individual manufacturing industry sub-divisions. Some sub-divisions recorded positive growth while others dramatically declined (see Graph 7):

• The Food, beverages and tobacco and Metal products sub-divisions both grew at an annual

average rate of just over one per cent in the five years to 2006-07.

• The Wood and paper products and the Printing, publishing and recorded media sub-divisions recorded annual average growth rates just under one per cent.

• The remaining industry sub-divisions recorded falls in employment.

• Again the worst performing industry was the TCF sub-division. Employment in the TCF

sub-division fell at an annual average of 7.6 per cent in the five years to 2006-07. As a result, TCF employment was 32 per cent less than it had been in 2001-02.

• The Other manufacturing sub-division also declined. Employment in this industry fell by

almost a quarter over the five years.

7

Australian manufacturing—structural trends 2001-02 to 2006-07

-9.0 -8.0 -7.0 -6.0 -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0

Other manufacturing

Machinery and equipment

Metal products

Non-metallic mineral products

Petroleum, coal, chemical and associated products

Printing, publishing and recorded media

Wood and paper products

Textile, clothing, footwear and leather

Food, beverages and tobacco

Per cent

Employment in manufacturing industry sub‐divisions  Annual average growth rates 2001‐02 to 2006‐07

Source: Labour Force, Australia, Detailed, Quarterly, May 2008 , ABS (6291.0.55.003)

Graph 7

Contribution to state employment

At the state level manufacturing makes its most significant contribution to total employment in Victoria and South Australia. In Victoria it accounts for almost 13 per cent of total employment, and 12.5 per cent in South Australia. It is least important in the Australian

Capital Territory and the Northern Territory where it accounts for three and four per cent of total employment respectively.

However, in the period 2001-02 to 2006-07 all states and territories experienced a decline in manufacturing’s contribution to total employment. This decline was most notable in the industry’s most important states. For instance, in Victoria it fell by over two percentage points from 15 to 13 per cent (see Graph 8).

0 2 4 6 8 10 12 14

Australian Capital Territory

Northern Territory

Tasmania

Western Australia

South Australia

Queenslan

16

d

Victoria

New South Wales

Per cent

Manufacturing industry  Share of total employment by state  As at 30 June

2002 2007

Source: Labour Force, Australia, Detailed, Quarterly, May 2008 , ABS (6291.0.55.003)

Graph 8

8

Australian manufacturing—structural trends 2001-02 to 2006-07

Despite the decline in the relative importance of manufacturing, the actual number of people employed in the industry did grow in some states (see Graph 9).

In the period 2001-02 to 2006-07 employment in manufacturing grew most strongly in Western Australia, where it grew at an annual average rate of 2.4 per cent. Also, it grew at an annual average rate of 1.3 per cent in Queensland and 0.6 per cent in Tasmania.

All the other states and territories experienced a decline in the total number of people employed in the industry. The most notable decline occurred in the Northern Territory where it fell at an annual average rate of 4.7 per cent.

These differing growth rates have resulted in a change to the relative importance of the states. Victoria and New South are by far the biggest states in terms of manufacturing employment. In 2006-07 they accounted for 61 per cent of employment in the industry. However, this was down from 64 per cent in 2001-02. Whilst New South Wales and Victoria declined in importance, Queensland and Western Australia increased their share of manufacturing employment. Queensland increased its share from 17 to 18 per cent and Western Australia from eight to nine per cent.

-5 -4 -3 -2 -1 0 1 2 3

Australian Capital Territory.

Northern Territory

Tasmania

Western Australia

South Australia

Queensland

Victoria

New South Wales

Per cent

Employment in manufacturing industry   Annual average growth rates 2001‐02 to 2006‐07

Source: Labour Force, Australia, Detailed, Quarterly, May 2008 , ABS (6291.0.55.003

Graph 9

9

Australian manufacturing—structural trends 2001-02 to 2006-07

At the industry sub-division level there were also some major differences in employment growth between the states and territories in the five years to 2006-07.

New South Wales

• Employment declined in every industry sub-division.

• The decline in the TCF sub-division was particularly severe. TCF employment fell by 37

per cent at an annual average rate of nine per cent.

Victoria

• The Food, beverages and tobacco sub-division grew at an annual average rate of three per

cent, increasing employment by over three thousand.

• The Wood and paper products and Printing, publishing and recorded media sub-divisions

both experienced an increase in employment.

• Employment growth was slightly positive in the Machinery and equipment sub-division.

• The rest of the sub-divisions experienced declining employment.

• Again, the TCF industry was notable in the level of its decline; employment fell by 31 per

cent.

• Employment in Other manufacturing sub-division also declined sharply, falling by 36 per

cent.

Queensland

• Printing, publishing and recorded media was the fastest growing sub-division with an

annual average growth rate of eight per cent.

• This was followed by the Metal products sub-division which grew at an annual average

rate of seven per cent.

• The Food, beverages and tobacco sub-division grew at an annual average rate of two per

cent.

• The remaining sub-divisions all experienced a decline in employment.

• Employment in Petroleum, coal and chemical products fell by 21 per cent.

• Employment in the sub-division classified as Other manufacturing fell by 32 per cent.

10

Australian manufacturing—structural trends 2001-02 to 2006-07

South Australia

• Employment grew by six per cent a year in the Wood and paper products sub-division.

• Employment also grew by five per cent a year in the Metal products sub-division

• The Food, beverages and tobacco sub-division experienced a growth rate of three per cent

a year.

• All the other sub-divisions experienced declines in employment.

• Employment in the Non-metallic mineral products sub-division fell by almost 30 per cent.

• The most notable decline occurred in the TCF sub-division, where employment fell by

almost 50 per cent.

Western Australia

• The Metal products sub-division grew at an annual average rate of five per cent.

• Other sub-divisions experiencing growth were the Food beverages and tobacco sub-division which grew at an annual average rate of four per cent; the Printing publishing and recorded media, and Machinery and equipment sub-divisions both grew at an annual average rate of one per cent.

• Notable falls in employment occurred in the Wood and paper products (down 39 per cent)

and the TCF sub-divisions (down 38 per cent).

Tasmania

• The Printing, publishing and recorded media sub-division grew at an annual average rate

of eight per cent.

• The Food, beverage and tobacco and the Petroleum, coal and chemical products sub-divisions both grew at an annual average rate of one per cent.

• All other sub-divisions experienced declines in employment.

• The biggest falls occurred in the TCF (down 15 per cent), Non-metallic mineral products

(down 15 per cent) and Other manufacturing (down 13 per cent) sub-divisions.

11

Australian manufacturing—structural trends 2001-02 to 2006-07

Businesses

Business numbers

Between 2002-03 and 2006-07 the total number of manufacturing businesses declined by four per cent from 111 000 to 106 000.4 This compares with an increase in the total number of businesses, across all industries, of eight per cent; equal to about 143 000 businesses. The only other industry to experience a fall in the number of businesses was the cultural and recreational industry, which declined by two per cent or just over a thousand businesses.

Trends in business size5

Over the period covered by the data, the proportion of non-employing businesses in manufacturing declined by ten percentage points from 55 to 45 per cent. The proportion of small employing businesses increased from 35 to 45 per cent. As a result the overall size of the small business sector in manufacturing remained about the same, but as the data shows there has been a move away from non-employing businesses to employing businesses. Over the same period the proportion of medium sized businesses increased from eight to nine per cent. The proportion of large business remained virtually the same (see graph 10).

-5 5 15 25 35 45 55 65 75 85 9

200+ employees

20-199 employees

Small business

0 to 19 employees

Non employing

Per cent

Manufacturing industry Businesses by employer size  As at 30 June

5

2003 2007

Source: Counts of Australian Businesses, Including Entries and Exits, June 2003 to June 2007, ABS (8165.0)

Graph 10

4. The ABS provides an annual snapshot of its business register. This snapshot can be used to obtain data on businesses by business size, industry and location. The data are only available from 2002-03, the analysis in this part of the paper is restricted to the period 2002-03 to 2006- 07.

5. For the purposes of this paper the following definitions of business size are used:

Small—employing less than 20 persons.

Medium—employing 20 to 199 persons.

Large—employing more than 200

12

Australian manufacturing—structural trends 2001-02 to 2006-07

Trends by industry sub-division

By industry sub-division the biggest fall in the number of businesses occurred in the TCF sub-division, which declined by over 2000 businesses or 18 per cent. The Other manufacturing sub-division also declined by over 2000 businesses, which was a 13 per cent fall.

The Metal products and Machinery and equipment sub-divisions experienced slight rises in the number of businesses of about one per cent each.

-5 -4 -3 -2 -1 0 1

Other manufacturing

Machinery and equipment

Metal products

Non-metallic mineral products

Petroleum, coal, chemical and associated products

Printing, publishing and recorded media

Wood and paper products

Textile, clothing, footwear and leather

Food, beverage and tobacco

Per cent

Business in manufacturing industry  sub‐divisions    Annual average growth rates  2002‐03 to 2006‐07

Source: Counts of Australian Businesses, Including Entries and Exits, June 2003 to June 2007, ABS (8165.0)

Graph 11

State trends

The number of manufacturing business increased in Queensland at an annual average rate of 0.3 per cent. However, in every other state and territory, the number of manufacturing businesses declined. The biggest decline was in the Northern Territory which lost almost a quarter of its manufacturing businesses at an annual average rate of almost seven per cent. In the Australian Capital Territory and New South Wales the number of manufacturing businesses declined by about two per cent a year. The smallest decline was in Western Australia where the number declined by about 0.3 per cent a year (see Graph 12).

13

Australian manufacturing—structural trends 2001-02 to 2006-07

New South Wales

• As noted, the number of businesses declined by almost two per cent a year. Declines

occurred in every sub-division.

• The biggest decline occurred in the TCF sub-division. It experienced an annual average

fall of nearly six per cent, losing over 21 per cent of businesses in the period.

• The smallest decline occurred in the Metal product sub-division. This sub-division

experienced an annual average decline of 0.6 per cent, losing 2.5 per cent of businesses.

Victoria

• The number of businesses declined by almost six per cent at an average annual rate of 1.5

per cent. Declines occurred in most industry sub-divisions.

• The TCF sub-division lost almost a quarter of its businesses at an annual average rate of

just over six per cent.

• The Petroleum, coal and chemical products sub-division grew by 0.6 per cent at an annual

average rate of 0.2 per cent.

• The Machinery and equipment sub-division also experienced some modest growth at an

annual average rate of 0.2 per cent.

Queensland

• The number of businesses increased by one per cent at an annual average rate of 0.3 per

cent.

• The number of businesses in the Metal products and Machinery and equipment industry

sub-divisions increased by over nine per cent with an annual average growth rate of over two per cent.

• The sub-division classified as Other manufacturing lost over 11 per cent of its businesses

declining on average by almost three per cent a year.

• The number of businesses in the TCF and Food, beverages and tobacco sub-divisions

declined by almost seven per cent at an annual average rate of nearly two per cent.

South Australia

• The number of businesses declined by almost four per cent and at an annual average rate

of one per cent.

14

Australian manufacturing—structural trends 2001-02 to 2006-07

• The number of businesses in the sub-division classified as Other manufacturing declined

by over 12 per cent at an annual average rate of 3.2 per cent.

• The TCF sub-division lost 11 per cent of its businesses at an annual average rate of almost

three per cent.

• The Food, beverages and tobacco; Petroleum, coal and chemical products and machinery

and equipment sub-divisions all experienced increases in the number of businesses.

• The fastest growing sub-division in the state was the Food, beverages and tobacco sub-division, which grew by 8.5 per cent at an annual average rate of 2.1 per cent.

Western Australia

• The number of businesses in the state declined by just over one per cent at an average

annual rate of 0.3 per cent.

• The sub-division classified as Other manufacturing lost almost 12 per cent of its

businesses at an annual average rate of 3.1 per cent.

• The TCF and Non-metallic minerals sub-divisions also experienced falls in the number of

businesses.

• The number of businesses grew in the remaining industry sub-divisions.

• The fastest growing was the Petroleum, coal and chemical products sub-division. It grew

by almost 8 per cent at an annual average rate of almost two per cent.

Tasmania

• The number of businesses declined by almost five per cent, at an annual average rate of

just over one per cent.

• The TCF sub-division lost almost a quarter of its businesses at an average annual rate of

over six per cent

• The Printing, publishing and recorded media sub-division lost over 12 per cent of its

businesses and the number of Non-metallic mineral products businesses fell by almost 15 per cent.

• However, the number of businesses in the Metal products and Other manufacturing sub-divisions increased by two per cent and one per cent, respectively.

15

Australian manufacturing—structural trends 2001-02 to 2006-07

-8 -6 -4 -2 0 2

Australian Capital Territory

Northern Territory

Tasmania

Western Australia

South Australia

Queensland

Victoria

New South Wales

Per cent

Number of business in manufacturing industry   Annual average growth rates 2002‐03 to 2006‐07

Source: Counts of Australian Businesses, Including Entries and Exits, June 2003 to June 2007, ABS (8165.0)

Graph 12

By industry class

In addition to data at the sub-division level, data on the count of Australian businesses are also available at the next level of detail; that is, by industry class. At the industry class level a more refined picture of trends within an industry can be observed. In the case of manufacturing, the data can be used to ascertain what sort of goods are produced by those manufacturers who are prospering or struggling. From the data the following observations can be made.

For the period 2002-03 to 2006-07, the industries that gained the most businesses were:

• Fabricated metal products, Queensland, gained 258 businesses.

• Mining and construction machinery, Queensland, gained 144 businesses.

• Wine, South Australia, gained 126 businesses.

• Petroleum refining, Victoria, gained 111 businesses.

• Motor vehicle bodies, Queensland, gained 111 businesses.

• Industrial equipment, Queensland, gained 111 businesses.

• Fabricated metal products, Western Australia, gained 90 businesses.

16

Australian manufacturing—structural trends 2001-02 to 2006-07

• Wooden structural components, Victoria, gained 90 businesses.

• Petroleum refining, New South Wales, gained 81 businesses.

• Non-metallic mineral products, Queensland, gained 78 businesses.

At the other end of the scale, the industries suffering the biggest losses were:

• Clothing manufacturing, n.e.c, Victoria, lost 444 businesses.

• Clothing manufacturing, n.e.c, New South Wales, lost 444 businesses.

• Wooden furniture and upholstered seat, New South Wales, lost 408 businesses.

• Manufacturing, n.e.c, 6 New South Wales, lost 249 businesses.

• Women’s and girls’ wear, New South Wales, lost 192 businesses.

• Manufacturing, n.e.c, Victoria, lost 183 businesses.

• Wooden furniture and upholstered seat, Victoria, lost 171 businesses.

• Furniture manufacturing, n.e.c, Queensland, lost 159 businesses.

• Furniture manufacturing, n.e.c, New South Wales, lost 147 businesses.

6. Includes the manufacture of ball point pens; brooms; brushes; floor mops; hair brushes; musical instruments; paint brushes; pencils; pens; stamp pads; staplers; tooth-brushes; umbrellas; vacuum flasks and wigs.

17

Australian manufacturing—structural trends 2001-02 to 2006-07

Research and experimental development

In 2005-06, manufacturers spent $3.9 billion on research and experimental development (R&D). This was equal to nearly 40 per cent of total R&D by businesses in Australia. As a proportion of GVA manufacturing, R&D is twice as high as the national average making it the most R&D intensive sector of the economy.

As with the rest of the economy, R&D expenditure in manufacturing went through a slump in the late 1990s, but in recent years this trend has reversed. The latest data show that, in real terms,7 manufacturing R&D grew at an annual average rate of seven per cent in the period

2002-02 to 2005-06. However, this was less than the 11 per cent for total business expenditure on R&D.

As with other indicators the aggregate picture for R&D in manufacturing conceals some notable differences between the various industry sub-divisions. In the period 2002-02 to 2005-06, the fastest growing sub-divisions for R&D were Printing, publishing and recorded media with an annual average rate of 45 per cent; Machinery and equipment at 22 per cent and Metal products at 20 per cent.

7. Adjusted by non-farm GDP implicit price deflator.

18

Australian manufacturing—structural trends 2001-02 to 2006-07

Profit growth

In real terms company profits grew at an annual average rate of 4.4 per cent for the period 2001-02 to 2006-07; compared with 6.1 per cent for all industries.8 Again there were significant differences between the industry sub-divisions.

• Profits in the Metal products sub-division grew at an annual average rate of almost 20 per

cent. The Printing publishing and recorded media; Petroleum, coal and chemical products; and the Non-metallic mineral products sub-divisions all grew at an annual average rate of about four per cent.

• In some industry sub-divisions profits contracted. The Food, beverage and tobacco; TCF

and the Machinery and equipment sub-divisions saw profits fall by an average rate of about two per cent a year. Profits in the Wood and paper products sub-division fell by an annual average rate of six per cent.

8. As measured by gross operating profit.

19

Australian manufacturing—structural trends 2001-02 to 2006-07

Conclusion

The data presented in this paper reveal the changing nature, size and location of the manufacturing industry. In aggregate, the industry has not performed as well as the rest of the economy in recent years. However, when the data are examined in more detail a much more complex picture emerges. In the time period covered by this research paper, some parts of the industry have grown at rates well above the average for the rest of the economy and others

have declined.

Manufacturers closely linked to the mining industry have experienced a period of strong growth. For instance, the Metal products sub-division has experienced significant growth in output, profits and expenditure on R&D in recent years.

At the same time, other manufacturers exposed to increased competition from overseas producers have not fared so well. This trend has particularly affected the TCF and Furniture manufacturers, which have experienced significant declines.

There have also been geographic changes to the industry. Historically, New South Wales and Victoria have been the base states for manufacturing. However, in the last few years the industry has experienced a period of decline in these two states and their dominance has waned. At the same time, the industry has grown in Queensland and Western Australia. This growth is probably, in part, due to the general economic conditions in these states. It is also likely to be closely linked to the commodities boom and demand from the mining industry for

manufacturers to process its products and provide it with machinery and equipment.

On the whole, the data present a picture of a key industry undergoing a period of structural change. Some parts of the industry have declined in the face of increased international competition and others have thrived on the back of the commodities boom.

20

Australian manufacturing—structural trends 2001-02 to 2006-07

Postscript—the 2008 financial crisis

The unfolding financial crisis and subsequent credit crunch have had a major impact on economic activity around the world. As 2008 draws to an end, the USA, Japan and most of the major European economies are either in recession or are very close to it. In China, growth has slowed from double digit figures to about eight per cent and may slow further.

The economic slow down has had a major impact on commodity prices which have fallen dramatically from the historic highs reached at the beginning of the year. This has impacted on the value of the Australian dollar which has fallen by over 30 per cent against the US dollar in recent weeks.

Despite all this, the major international and national economic policy institutions are predicting that, although economic growth in Australia will slow, it should avoid a recession. This is largely due to the continuing strength of the Chinese economy and stimulatory policies adopted by the Australian Government and Reserve Bank.

The impact of all this on Australia’s manufacturers is probably quite mixed. Falling interest rates should be beneficial. However, the credit crunch is making it difficult for businesses to obtain new credit. The falling dollar will improve the competitiveness of export orientated manufacturers, although slowing demand in overseas markets may counter this to some extent. The current slow down in Germany, for instance, has been blamed on its reliance on exports of manufactured goods. On the other side of the trade coin, the falling dollar will make imported goods more expensive. This will help to improve the competitiveness of Australian manufactures in the domestic market. Again, though this is not entirely clear cut. Many manufacturers rely on imported components; the falling dollar will make these components more expensive which will raise the cost of producing the finished goods.

In all likelihood, the economic slow down may hasten the trends highlighted by this paper. The commodity boom of the last few years may have ended for now, but demand for raw materials from a modernising China should continue for many years to come. Also, the Australian Government has said it will spend billions of dollars on infrastructure projects. Those manufacturers that are aligned with these two economic drivers will probably weather the economic slow down relatively well. However, those manufacturers that were struggling with competitive forces in the economy before the financial crisis may not fare so well.

21

Australian manufacturing—structural trends 2001-02 to 2006-07

22

Australian manufacturing—structural trends 2001-02 to 2006-07

Annex tables

1. Real growth by state and territory

2. Share of output

3. Real growth by industry sub-division

4. Employment by industry sub-division and state

5. ABS count of businesses by industry sub-division, state and business size

6. Expenditure on research and development

7. Profits

23

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 1.

Manufacturing industry (a) Real growth by state and territory New South

Wales Victoria Queensland South Australia Western

Australia Tasmania Northern Territory

Australian Capital Territory Australia

$ millions (b) Jun-2002 32 251 31 275 13 985 9 073 6 872 2 286 710 301 96 481

Jun-2003 33 127 31 691 14 904 9 285 7 652 2 323 784 319 99 999

Jun-2004 33 144 31 535 15 456 9 212 8 114 2 375 773 326 100 909

Jun-2005 32 400 30 767 15 852 8 909 8 318 2 409 722 326 99 688

Jun-2006 31 760 30 114 16 555 8 634 8 604 2 476 700 329 99 173

Jun-2007 31 975 30 274 17 440 8 652 9 278 2 648 719 340 101 325

Annual percentage change Jun-2002 1.4 -0.9 5.8 1.2 10.5 -3.8 13.8 7.1 2.1

Jun-2003 2.7 1.3 6.6 2.3 11.4 1.6 10.4 6.0 3.6

Jun-2004 0.1 -0.5 3.7 -0.8 6.0 2.2 -1.4 2.2 0.9

Jun-2005 -2.2 -2.4 2.6 -3.3 2.5 1.4 -6.6 0.0 -1.2

Jun-2006 -2.0 -2.1 4.4 -3.1 3.4 2.8 -3.0 0.9 -0.5

Jun-2007 0.7 0.5 5.3 0.2 7.8 6.9 2.7 3.3 2.2

Annual average percentage change 2002 to 2007 -0.2 -0.6 4.5 -0.9 6.2 3.0 0.3 2.5 1.0

(b) Chain volume measures. Reference year for chain volume measures is 2005-06 Source: Australian National Accounts: State Accounts, 2006-07, ABS (5220.0)

(a) Industry gross value added

Table 2.

Manufacturing industry (a) Share of total output New South

Wales Victoria Queensland South Australia Western

Australia Tasmania Northern Territory

Australian Capital Territory Australia

Percentage of state GSP (b) 2002 11 13 10 13 9 13 6 2 11

2007 10 12 9 13 8 13 7 2 10

Percentage of national manufacturing 2002 33.6 30.8 14.6 8.5 9.1 2.3 0.7 0.4 100

2007 32.0 28.4 17.2 8.3 10.2 2.6 1.0 0.3 100

(b) Percentage of GDP for Australia Source: Australian National Accounts: Australian State Accounts , 2006-07, ABS (5220.0)

(a) Industry gross value added

24

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 3.

Manufacturing industry (a) Real grwoth by industry sub-divisions

Food, beverages and tobacco

Textile, clothing and footw ear

W ood and paper products

Printing, publishing and recorded m edia

Petroleum , coal and chem ical products

N on-m etallic m ineral products

M etal products

M achinery and equipm ent

O ther m anufactuiring

Total m anufacturing

$ millions (b) Jun-2002 18 865 4 616 6 712 10 122 14 567 3 848 17 625 16 652 4 146 96 481

Jun-2003 19 054 4 252 6 843 10 370 15 397 4 175 18 256 17 829 4 365 99 999

Jun-2004 19 023 3 927 6 817 10 684 14 717 4 317 18 290 18 750 4 654 100 909

Jun-2005 19 195 3 195 6 870 10 419 14 717 4 529 17 770 18 851 4 283 99 688

Jun-2006 19 055 2 979 6 601 10 221 14 117 5 048 17 591 19 692 3 869 99 173

Jun-2007 19 228 2 932 6 443 10 463 13 935 5 156 19 437 19 644 3 867 101 104

Annual percentage change Jun-2002 -0.5 -12.3 4.2 1.8 0.9 6.4 7.5 0.2 9.6 2.1

Jun-2003 1.0 -7.9 2.0 2.5 5.7 8.5 3.6 7.1 5.3 3.6

Jun-2004 -0.2 -7.6 -0.4 3.0 -4.4 3.4 0.2 5.2 6.6 0.9

Jun-2005 0.9 -18.6 0.8 -2.5 0.0 4.9 -2.8 0.5 -8.0 -1.2

Jun-2006 -0.7 -6.8 -3.9 -1.9 -4.1 11.5 -1.0 4.5 -9.7 -0.5

Jun-2007 0.9 -1.6 -2.4 2.4 -1.3 2.1 10.5 -0.2 -0.1 1.9

Annual average change 2002 to 2007 0.4 -8.7 -0.8 0.7 -0.9 6.0 2.0 3.4 -1.4 0.9

(b) Chain volume measures. Reference year for chain volume measures is 2005-06 Source: Australian National Accounts: State Accounts, 2006-07, ABS (5220.0)

(a) industry gross value added

25

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 4.

Manufacturing industry Employment by industry sub-division Annual average employment year ending 30 June

F o o d , b ev erag es an d to b acco

T ex tile, clo th in g , fo o tw ear an d leath er

W o o d an d p ap er p ro d u cts

P rin tin g , p u b lish in g an d reco rd ed m ed ia

P etro leu m , co al, ch em ical an d asso ciated p ro d u cts

N o n -m etallic m in eral p ro d u cts

M etal p ro d u cts

M ach in ery an d eq u ip m en t

O th er m an u factu rin g

M an u factu rin g - n fd

T o tal

Australia Persons (thousands) 2002 182 74 70 105 107 43 155 242 82 21 1 081

2007 192 50 72 110 89 36 164 230 62 60 1 064

Percentage share of total manufacturing employment 2002 16.8 6.8 6.4 9.7 9.9 4.0 14.4 22.4 7.6 1.9 100

2007 18.1 4.7 6.8 10.3 8.3 3.3 15.4 21.6 5.8 5.7 100

Annual average percentage growth rate 2002 to 2007 1.1 -7.6 0.7 0.9 -3.8 -3.7 1.1 -1.1 -5.4 23.6 -0.3

New South Wales Persons (thousands) 2002 56 22 25 45 32 11 57 71 19 5 343

2007 50 14 23 43 29 9 45 59 17 31 320

Percentage share of total manufacturing employment 2002 16.3 6.5 7.2 13.2 9.3 3.2 16.6 20.7 5.7 1.4 100

2007 15.7 4.4 7.2 13.5 8.9 2.9 14.0 18.3 5.2 9.8 100

Annual average percentage growth rate 2002 to 2007 -2 -9 -2 -1 -2 -3 -5 -4 -3 46 -1.4

Victoria Persons (thousands) 2002 56 31 18 30 43 11 38 79 27 10 343

2007 64 21 22 31 32 10 41 79 17 10 327

Percentage share of total manufacturing employment 2002 16.2 9.2 5.3 8.8 12.4 3.2 11.1 22.9 7.9 2.9 100

2007 19.4 6.6 6.8 9.5 9.9 3.0 12.5 24.1 5.3 2.9 100

Annual average percentage growth rate 2002 to 2007 3 -7 4 1 -5 -3 1 0 -9 -1 -1.0

Continued next page

26

Australian manufacturing—structural trends 2001-02 to 2006-07

Manufacturing industry Employment by industry sub-division Annual average employment year ending 30 June

F o o d , b e v e ra g e s a n d to b a c c o

T e x tile , c lo th in g , fo o tw e a r a n d le a th e r

W o o d a n d p a p e r p ro d u c ts

P rin tin g , p u b lish in g a n d re c o rd e d m e d ia

P e tro le u m , c o a l, c h e m ic a l a n d a sso c ia te d p ro d u c ts

N o n -m e ta llic m in e ra l p ro d u c ts

M e ta l p ro d u c ts

M a c h in e ry a n d e q u ip m e n t

O th e r m a n u fa c tu rin g

M a n u fa c tu rin g - n fd

T o ta l

Queensland Persons (thousands) 2002 36 10 11 12 15 10 24 38 20 2 180

2007 40 8 11 18 12 8 34 37 14 10 193

Percentage share of total manufacturing employment 2002 20.1 5.4 6.2 6.8 8.5 5.7 13.4 21.2 11.2 1.4 100

2007 20.6 4.1 6.0 9.2 6.2 4.4 17.7 19.3 7.1 5.4 100

Annual average percentage growth rate 2002 to 2007 2 -4 0 8 -5 -4 7 -1 -7 34 1.3

South Australia Persons (thousands) 2002 15 4 6 7 8 4 11 31 6 3 95

2007 18 2 8 6 6 3 15 30 5 1 94

Percentage share of total manufacturing employment 2002 16.1 4.5 6.6 7.5 8.0 4.0 11.9 32.4 5.9 3.3 100

2007 18.6 2.3 9.0 6.6 6.8 2.9 15.5 31.5 5.7 1.1 100

Annual average percentage growth rate 2002 to 2007 3 -13 6 -3 -3 -7 5 -1 -1 -20 -0.2

Western Australia Persons (thousands) 2002 12 4 5 7 9 5 18 20 8 1 89

2007 14 3 3 7 8 4 24 21 7 7 100

Percentage share of total manufacturing employment 2002 13.2 4.5 5.7 8.0 9.8 6.0 20.8 22.6 8.8 0.6 100

2007 14.5 2.5 3.1 7.5 8.4 4.3 23.9 21.3 7.1 7.4 100

Annual average percentage growth rate 2002 to 2007 4 -9 -9 1 -1 -4 5 1 -2 70 2.4

Continued next page

27

Australian manufacturing—structural trends 2001-02 to 2006-07

Manufacturing industry Employment by industry sub-division Annual average employment year ending 30 June

F o o d , b e v e r a g e s a n d to b a c c o

T e x tile , c lo th in g , f o o tw e a r a n d le a th e r

W o o d a n d p a p e r p r o d u c ts

P r in tin g , p u b lis h in g a n d r e c o r d e d m e d ia

P e tr o le u m , c o a l, c h e m ic a l a n d a s s o c ia te d p r o d u c ts

N o n - m e ta llic m in e r a l p r o d u c ts

M e ta l p r o d u c ts

M a c h in e r y a n d e q u ip m e n t

O th e r m a n u f a c tu r in g

M a n u f a c tu r in g - n f d

T o ta l

Tasmania Persons (thousands) 2002 6 2 3 1 1 1 4 3 1 0 21

2007 6 1 3 2 1 1 4 3 1 0 22

Percentage share of total manufacturing employment 2002 27.6 7.1 15.3 6.2 4.0 3.2 20.2 12.2 3.6 0.5 100

2007 28.9 5.8 13.8 8.8 4.1 2.6 20.1 11.4 3.1 1.4 100

Annual average percentage growth rate 2002 to 2007 1 -3 -1 8 1 -3 0 -1 -3 25 0.6

Northern Territory Persons (thousands) 2002 0.4 0.4 0.2 0.4 0.3 0.5 2 1 0.2 n.a 5

2007 0.2 0.3 0.1 1 0.1 0.2 1 1 0.4 0.1 4

Percentage share of total manufacturing employment 2002 8.2 8.7 5.1 8.2 6.0 9.8 36.4 14.1 4.3 n.a 100.0

2007 4.8 7.4 2.8 13.8 2.8 6.4 29.0 25.5 9.7 3.4 100.0

Annual average percentage growth rate 2002 to 2007 -14 -8 -16 6 -18 -12 -9 7 12 n.a -5

Australian Capital Territory Persons (thousands) 2002 0.6 0.4 0.7 1 0.2 0.4 0.6 0.6 0.7 0.1 5

2007 0.4 0.2 0.8 2 0.2 0.3 0.3 0.9 0.7 0.4 5

Percentage share of total manufacturing employment 2002 11.4 7.9 11.9 26.0 3.7 6.8 10.0 11.0 13.2 1.8 100

2007 7.0 4.4 15.4 29.0 4.2 5.6 4.7 15.9 13.1 7.5 100

Annual average percentage growth rate 2002 to 2007 -10 -12 5 2 2 -4 -15 7 -1 32 -0.5

Source:

Labour Force, Australia, Detailed, Quarterly, May 2008 , ABS (6291.0.55.003 )

28

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 5.

Manufacturing industry Count of businesses As at 30 June 2007

Non

employing

0 to 19 employees

Small business

20-199 employees

200+

employees

No. %

Australia Food, beverage and tobacco 7 158 40 39 79 18 3 -0.1

Textile, clothing, footwear and leather 9 483 51 43 93 6 1 -4.8

Wood and paper products 8 106 44 47 91 9 1 -0.7

Printing, publishing and recorded media 12 507 46 46 92 7 1 -1.1

Petroleum, coal, chemical and associated pr

o 6 591 41 43 84 15 1 -0.3

Non-metallic mineral products 4 197 45 45 91 9 1 -2.4

Metal products 19 257 42 47 89 10 1 0.2

Machinery and equipment 23 136 44 46 90 9 1 0.2

Other manufacturing 15 306 50 43 93 7 0 -3.3

Total 105 741 45 45 90 9 1 -1.2

New South Wales Food, beverage and tobacco 2 016 39 41 80 18 3 -0.1

Textile, clothing, footwear and leather 3 207 50 45 95 5 0 -5.8

Wood and paper product 2 637 44 47 90 9 0 -1.4

Printing, publishing and recorded media 4 659 46 47 92 7 1 -1.4

Petroleum, coal and associated product 2 031 40 44 84 15 1 -2.2

Non-metallic mineral product 1 248 44 48 91 8 1 -3.4

Metal product 5 925 37 51 88 11 1 -0.6

Machinery and equipment 6 942 42 49 91 8 1 -1.0

Other manufacturing 4 758 49 45 94 6 0 -3.8

Total 33 423 43 47 90 9 1 -2.0

Victoria Food, beverage and tobacco 1 932 39 40 79 18 3 -0.3

Textile, clothing, footwear and leather 3 030 46 45 90 9 1 -6.2

Wood and paper product 2 199 39 50 89 10 1 -0.2

Printing, publishing and recorded media 3 438 46 46 92 8 1 -1.0

Petroleum, coal and associated product 1 995 41 42 82 16 2 0.2

Non-metallic mineral product 1 113 44 44 88 11 1 -3.3

Metal product 4 869 39 50 89 11 0 -0.2

Machinery and equipment 5 952 39 49 88 11 1 0.2

Other manufacturing 4 122 47 46 93 7 0 -3.1

Total 28 650 42 47 89 10 1 -1.5

Percentage of total

Business by employer size

Operating at end of

financial year

Annual average percentage change 2002-03 to 2006-07

Continued next page.

29

Australian manufacturing—structural trends 2001-02 to 2006-07

Manufacturing industry Count of businesses As at 30 June 2007

Non

employing

0 to 19 employees

Small business

20-199 employees

200+

employees

No. %

Queensland Food, beverage and tobacco 1 206 37 38 75 20 4 -1.7

Textile, clothing, footwear and leather 1 680 55 39 94 5 1 -1.7

Wood and paper product 1 596 47 43 91 9 1 -0.4

Printing, publishing and recorded media 2 199 45 47 92 7 1 0.3

Petroleum, coal and associated product 1 212 43 44 88 12 1 0.1

Non-metallic mineral product 822 47 43 90 9 1 0.2

Metal product 4 176 45 44 90 10 1 2.2

Machinery and equipment 5 100 48 42 90 9 1 2.3

Other manufacturing 3 111 52 40 93 7 0 -2.9

Total 21 102 47 42 90 9 1 0.3

South Australia Food, beverage and tobacco 954 46 37 83 15 2 2.1

Textile, clothing, footwear and leather 552 52 38 90 9 1 -2.9

Wood and paper product 510 49 43 92 7 2 -1.1

Printing, publishing and recorded media 738 46 45 91 8 1 -2.4

Petroleum, coal and associated product 468 40 43 83 15 2 0.8

Non-metallic mineral product 321 47 46 93 7 0 -1.6

Metal product 1 248 46 41 88 12 0 -1.3

Machinery and equipment 1 644 48 41 89 9 1 0.3

Other manufacturing 1 116 53 38 91 8 0 -3.2

Total 7 551 48 41 89 10 1 -1.0

Western Australia Food, beverage and tobacco 801 44 36 79 18 2 1.1

Textile, clothing, footwear and leather 801 58 37 95 5 0 -2.5

Wood and paper product 831 48 44 92 8 1 0.5

Printing, publishing and recorded media 1 035 44 47 91 9 0 -1.4

Petroleum, coal and associated product 741 43 41 85 15 0 1.9

Non-metallic mineral product 516 50 44 94 6 0 -2.1

Metal product 2 409 52 39 91 8 1 1.1

Machinery and equipment 2 817 48 44 92 8 1 0.5

Other manufacturing 1 749 51 42 93 6 0 -3.1

Total 11 700 49 42 91 9 1 -0.3

Percentage of total

Business by employer size

Operating at end of

financial year

Annual average percentage change 2002-03 to 2006-07

Continued next page.

30

Australian manufacturing—structural trends 2001-02 to 2006-07

Manufacturing industry Count of businesses As at 30 June 2007

Non

employing

0 to 19 employees

Small business

20-199 employees

200+

employees

No. %

Tasmania Food, beverage and tobacco 186 31 47 78 21 1 -1.2

Textile, clothing, footwear and leather 108 63 25 88 10 3 -5.9

Wood and paper product 213 49 47 96 4 0 -2.3

Printing, publishing and recorded media 174 49 48 97 3 0 -3.2

Petroleum, coal and associated product 90 48 33 82 15 3 -0.8

Non-metallic mineral product 105 42 55 97 3 0 -3.9

Metal product 363 46 43 89 9 2 0.4

Machinery and equipment 399 45 49 94 6 0 0.0

Other manufacturing 282 55 39 94 6 0 0.3

Total 1 920 47 44 91 8 1 -1.2

Nothern Territory Food, beverage and tobacco 12 25 50 75 25 0 -9.6

Textile, clothing, footwear and leather 24 78 22 100 0 0 -11.4

Wood and paper product 42 17 83 100 0 0 -3.3

Printing, publishing and recorded media 57 63 38 100 0 0 -1.3

Petroleum, coal and associated product 24 17 83 100 0 0 -5.4

Non-metallic mineral product 30 44 33 78 22 0 2.7

Metal product 165 52 36 89 10 2 -5.9

Machinery and equipment 150 50 46 96 4 0 -3.2

Other manufacturing 30 108 33 142 17 0 -27.4

Total 534 53 43 96 7 1 -

Australian Capital Territory Food, beverage and tobacco 51 41 47 88 12 0 3.2

Textile, clothing, footwear and leather 81 50 50 100 0 0 0.9

Wood and paper product 78 48 44 93 4 4 0.0

Printing, publishing and recorded media 207 47 43 90 7 3 -1.7

Petroleum, coal and associated product 30 40 50 90 10 0 25.7

Non-metallic mineral product 42 75 25 100 0 0 -1.7

Metal product 102 49 41 89 11 0 -2.7

Machinery and equipment 132 60 33 93 7 0 -7.8

Other manufacturing 138 50 41 91 9 0 -4.4

Total 861 51 41 92 7 1 -

Source: Counts of Australian Businesses, Including Entries and Exits, 2003 to 2007, ABS (8165.0)

Percentage of total

Business by employer size

Operating at end of

financial year

Annual average percentage change 2002-03 to 2006-07

6.9

2.2

31

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 6

Manufacturing Real expenditure on R&D - $ thousands (average 2005-06 prices) (a) Year ending 30 June 2002 2003 2004 2005 2006

Food, beverage & tobacco 269 470 309 477 332 320 360 251 331 350 5

Textile, clothing, footwear & leather 26 169 31 438 44 532 36 814 38 537 10

Wood & paper product 98 296 110 680 128 878 113 071 121 391 5

Printing, publishing & recorded media 21 162 28 284 49 438 74 602 92 919 45

Petroleum, coal, chemical & assoc. product 501 616 539 309 599 192 626 577 707 197 9

Non-metallic mineral product 86 879 98 332 105 411 73 260 103 880 5

Metal product 299 176 363 027 399 675 438 472 628 778 20

Machinery & equipment Motor vehicle & part 571 953 700 701 695 610 637 215 654 204 3

Other transport equipment 76 027 141 764 193 641 204 850 268 532 37

Photographic & scientific equip. 325 175 331 575 329 617 335 211 222 885 - 9

Electronic equipment 409 827 282 185 410 947 388 994 410 598 0

Electrical equipment & appliance 90 505 100 627 129 859 103 829 76 115 - 4

Industrial machinery & equipment 156 461 186 889 214 236 183 156 170 717 2

Total 1 629 949 1 743 742 1 973 910 1 853 254 1 803 051 3

Other manufacturing 27 509 23 650 43 486 63 344 61 639 22

Manufacturing total 2 960 226 3 247 939 3 676 841 3 639 644 3 888 742 7

(a) adjusted by non-farm GDP implicit price deflator

Annual average

percentage change 2002 to 2006

Source:

Research and Experimental Development, Business, Australia , ABS (8401.0). Australian Natinal Acconts, National Income, Product and Expenditure , ABS (5206.0)

32

Australian manufacturing—structural trends 2001-02 to 2006-07

Table 7

Manufacturing industry Real company gross operating profits $ millions (average 2007 prices) (a)

F o o d b e v e ra g e a n d to b a c c o

T e x tile , c lo th in g , f o o tw e a r a n d le a th e r

W o o d a n d p a p e r

p r o d u c t

P r in tin g , p u b lis h in g a n d re c o r d e d m e d ia

P e tro le u m , c o a l, c h e m ic a l a n d a s s o c ia te d p r o d u c t

N o n -m e tta lic m in e ra l p r o d u c t

m e ta l p r o d u c t

M a c h in e ry a n d e q u ip m e n t m

O th e r

m a n u f a c tu r in g

M a n u f a c tu r in g

T o ta l in d u s tr y

2002 8 316 591 2 445 2 791 4 825 1 734 5 055 4 647 817 31 219 134 834

2003 8 251 731 2 414 3 057 5 868 2 137 5 846 4 647 1 020 33 967 142 832

2004 7 958 1 015 2 679 3 399 6 717 2 079 6 813 4 933 1 209 36 717 147 516

2005 8 505 595 2 182 3 206 7 049 2 138 7 785 4 961 919 37 443 157 097

2006 8 090 538 1 818 2 712 7 524 2 315 7 679 4 859 761 36 364 170 068

2007 7 667 526 1 764 3 437 5 808 2 116 12 469 4 090 841 38 757 180 887

Annual average growth 2001-02 to 2006-07 -1.6 -2.3 -6.3 4.2 3.8 4.1 19.8 -2.5 0.6 4.4 6.1

(a) Adjusted by inplicit price deflator for non-farm GDP

Source: Business Indicators, Australia , ABS (5676.0)

33

Australian manufacturing—structural trends 2001-02 to 2006-07

34

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