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You may not be aware that China now accounts for half the world’s manufacturing and has a standard of living around one-eighth of Australia’s, which means we are uncompetitive with our cost structure and our small volumes (lack of economies of scale). We are having to depend on the defensibility of some sectors due to high international freight costs, uniqueness in some areas of manufacturing or niche marketing.

Our overvalued dollar, while now receding, has had a devastating impact on the manufacturing industry. And other industries too, of course, such as important exporters in the form of inbound tourism, tertiary education and agriculture.

Our manufacturing industry at large has been losing, on average, 8,800 workers per year since its peak of 1.2 million employees in December 1989. All told, it has shed 205,000 jobs since then. But over the same time – almost a quarter of a century – the nation has created 3.9 million new jobs (almost 19 times more jobs than those lost from manufacturing), at a rate of 13,640 per month. Any suggestion that the demise of car manufacturing is some sort of a tragedy (other than emotional) is unfounded. It isn’t in wealth creation, standard of living or defence terms.

It is important to remember that our standard of living (GDP per capita) rose with the declining importance of agriculture, and the rise has been even steeper with the decline of the importance of manufacturing. And in 2013, the nation has the highest labour force participation rate since the end of the Convict Era over 150 years ago, with over 50% of the entire population (men, women and minors) currently employed!

We are always reminded that there are always new industries to take the place of the old, including the iconic old ones.

 Ref; (IBISWorld)


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