In good news for on-shoring Australia's manufacturing sector, manufacturers expect to increase production volumes in the next 12 months, supported by higher capital expenditure and investment in technology, a new CommBank report shows.


combank l23The new CommBank Manufacturing Insights 2023 report says 72% of manufacturers in Australia expect to increase production levels in the next 12 months, while the same proportion are planning to increase capital expenditure.

“The majority of Australian manufacturers surveyed are confident in the short-term outlook for business conditions, likely buoyed by a stronger-than-expected financial performance in the past year,” the report says. 75% of manufacturers reported profit growth in the past 12 months, compared to just 52 per cent last year. Manufacturers are optimistic with 74 per cent anticipating increased profits in the next 12 months.

“This is notwithstanding broad challenges facing the industry, with 75 per cent expecting increases in operating costs and 92 per cent saying lingering supply chain issues are holding back capacity or growth. Around 86 per cent of manufacturers said this is impacting on cash flow.”

jerry macey cba'Ramping up investment': Jerry Macey, CBAJerry Macey, CBA executive manager consumer diversified industries, says Australian manufacturers have a strong track record of rising to disruption by adapting their operational performance and investment programs to the operating environment.

“Manufacturers aren’t ignoring challenges but rather are ramping up their investment in become leaner, stronger and more productive. 

“Most are navigating rising costs, inflationary pressures and supply chain issues, which often combine to constrain cash flows. When viewed alongside talent shortages, this is driving innovation to achieve greater efficiencies and boost capacity to support an uplift in production.”

Technology investment tops business priorities in the next 12 months

The top-ranked business priority for Australian manufacturers in the year ahead is investing in new technology, with 87 per cent of manufacturers expect to increase expenditure — even higher in regional locations, where 99 per cent of manufacturers are planning to invest more.

Many manufacturers are turning to emerging technology to drive efficiencies and customer utility. The fastest-growing areas of adoption in the next two years are expected to be next-generation enterprise resource planning (ERP) systems (31 per cent), autonomous systems and equipment (31 per cent) and artificial intelligence (30 per cent).

Macey says the research shows that by 2025 many innovative technologies, from 3D printing to blockchain and digital twins, will be commonplace across the manufacturing industry.

“Given data is powering many of these solutions, greater cyber security vigilance is required. The most widespread process to mitigate cyber threats is a rigorous access and password policy, and that’s only in place among 36 per cent of manufacturers.

“Fewer manufacturers regularly update their systems and software (25 per cent) or conduct regular training for their teams (27 per cent), which are cornerstone activities, often recommended by cyber experts.”

Sustainable manufacturing a central business pillar

Manufacturers are turning to sustainability measures to have a positive impact and strengthen business outcomes. Eighty-eight per cent say sustainable manufacturing is an important part of their business strategy, and, of these, 36 per cent consider it an essential plank.

“There is a strong correlation between the manufacturers targeting growth in the year ahead and those adopting sustainability initiatives," says Macey. "It reiterates the links between sustainable practices and adaptability, resilience, and performance.” 

CommBank Manufacturing Insights research is based on an online quantitative survey conducted by ACA Research on behalf of the Commonwealth Bank. The survey was conducted during January 2023 and was completed by 300 key influencers or decision-makers from Australia’s manufacturing industry.

Full report here (PDF)


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