22 October 2014
Australian manufacturers must refocus knowledge-based goods and not to blame for industry woes
With "Made in China" labels everywhere, the villain in the decline of Australian manufacturing appears easy to spot. But a closer look reveals that Chinese imports have been responsible for little of manufacturing's woes. Moreover, China is shaping up as a source of salvation in the future, and not in the way we may imagine.
Earlier this year, research by Professor Jeff Borland showed manufacturing employment in Australia has declined by about 400,000 since the early 1970s. Meanwhile China has emerged as a "factory to the world". Connecting the dots is close to irresistible.
But even a casual reading of the data suggests caution. Half these job losses occurred during the 1970s. This immediately rules out China. The country didn't even begin to reintegrate into the global economy until 1979.
It was only during the 1990s that China's share of Australia's goods imports rose to 5 per cent and then to 14 per cent in the 2000s. But here's the kicker. From 1990 to 2008, Australian Bureau of Statistics data show that manufacturing employment didn't decline. Furthermore, the output produced by the sector actually rose by 31 per cent, reflecting productivity growth.