Manufacturing in Australia – a political topic

| February 10, 2017

The structure of manufacturing in industrialised countries like Australia and the USA is very different now from what it was in the 1950s and 1960s. Veronica Sheen wonders if those demanding a revival of local manufacturing really know what they wish for.

Donald Trump gained huge popularity and the presidency on his promise to rebuild manufacturing in the USA, bring back all its long-lost jobs, and revive the struggling or derelict ‘rust belt’ communities.

As it turns out, the demise of manufacturing is also a massive issue in Australia according to a recent survey reported in the Fairfax press. The survey reveals that the vast majority of Australians want more goods to be made in Australia for a revival of manufacturing and its jobs.

But when people say that they want a revival of local manufacturing, do they know exactly what they mean and what they wish for?

What is it that they think that Australia (or the USA and other ‘industrialised countries’) has lost over the last 30 or 40 years? And what are they going to get when and if it can return?

I suspect most people have a vague idea about manufacturing, recalling the full employment era of the 1950s and 1960s when it accounted for around 25% of all jobs compared to 7.5% now. These were full-time, permanent jobs with a good enough pay packet to buy a modest house and raise a family – and of course they were mostly for men. Whole communities thrived and the post war migrants had a ticket to a new life. Then there was always an opening for the kids leaving school. You didn’t need grandiose qualifications for those jobs either. What’s not to like?

Much of the anger in the USA, which Trump played on so well, has been about the loss of these jobs to China, to Mexico and other countries in the developing world. And that is what they want them back especially for white working-class males.

But the manufacturing jobs in China and developing countries are quite different to what they were in the 1950s and 60s in Australia and the USA. And the structure of manufacturing in industrialised countries including Australia and the USA is very different now from what it was then also.

Manufacturing has many faces and encompasses a great variety of tasks and skill levels. It ranges from the production of complex machines and hi-tech devices to simple gadgets and the consumer goods of everyday life (See ABS list here.)

The jobs in contemporary manufacturing in Australia are similarly highly diverse and largely skilled. Labourers constitute just 17% of the manufacturing workforce, and machine operators and drivers another 12%. The rest of its workforce is made up of technicians and trades workers, managers, professionals and clerical/admin workers. Manufacturing in Australia – and the USA – has long ago shifted from its mass production character to much more niche design, development and production.

Essentially, what has long ago been offshored to China and other low cost countries is the mass production of all the consumer goods that we want to buy a lot of, and as cheaply as possible. Jobs in the factories in these countries are difficult, pressurised and with intense on-the-job monitoring and surveillance. The case of the IPhone assembly line workers in China give some insight into the pressures Chinese factory workers face.

These jobs cannot be compared to the factory jobs of the 1950s and 1960s. They are highly susceptible to automation or replacement by robots. This is essentially what would happen if per chance Trump (or any other western government) could persuade corporations to bring back their offshored manufacturing to the home turf. The 1950s and 1960s manufacturing jobs in Australia were not easy either with their high rates of musculoskeletal injury.

But it is possible to have a thriving manufacturing sector with high-skilled, well-paying and safe jobs. Germany leads in this domain with 18% of its workers still in manufacturing. This compares to around 9% in the USA and 7.5% in Australia.

There is a vast international interest in what Germany does right and what other countries could emulate. For a start, it doesn’t do 1950s/60s or Chinese-style mass production. It specialises in innovation and the development of advanced technologies. Both the public and private sector invest in research, and it has a sophisticated vocational education system geared to training up young people for skilled jobs. It has a low level of youth unemployment.

The question is whether realistically Australia could follow the German model for a revival of manufacturing as so many people want – just as in the USA. In fact, Australian manufacturing already does have some of the traits of the German model in terms of its diversity and niche outputs. This is a much smaller economy and so has fewer of that country’s competitive advantages. In terms of its manufacturing outputs globally, Australia has always been a secondary economy.

What also comes through many of the reviews of the German model is the centrality of public investment in research and education to levels that is hard to see an Australian (or US) government commit to. This boils down to being a very different social contract with its specific historical antecedents.

If we want manufacturing back here then, we will need to think long and hard about what strategy might achieve this, what jobs we want manufacturing to provide, and what we are prepared to invest. We need to certainly give up any idea of getting back the long-lost jobs of the post war era or those that are now done in China.