How Australian manufacturers can position themselves for success in an uncertain economy
Rob Cheesman, General Manager Atturra Manufacturing Softening economic conditions have created a challenging time for many Australian businesses. While JP Morgan in their 2023 Business Leaders Outlook: Australia[1] survey shows nearly half of leaders surveyed expect a recession this year, although right now, most modern economies around the world, including Australia, are managing to avoid this economic reckoning. Indeed, when attention turns to the nation’s manufacturing sector, a somewhat mixed picture emerges. Despite the global economic storm clouds that gathered during 2022, many organisations appear to be doing quite well. To some extent, this situation has been supported by a return to local manufacturing. While the Australian dollar has strengthened recently it is still relatively low. This means locally made products are attractive compared to imports. Mixed conditions ahead According to the February Australian Performance of Manufacturing Index[2], economic conditions are “falling rapidly”. However, if we drill further into these numbers, downstream manufacturing seems to be fairing much better. As 2023 unfolds, there are some key factors that will be worth monitoring. Together, they will shape the next 12 months for the entire domestic manufacturing sector. Five of the top factors are: 1. An ongoing increase in costs During 2022, the majority of domestic manufacturing firms appeared to have successfully weathered a period of inflation. Most were able to either absorb increases or pass them on to their customers. However, things could become a little more challenging over the next 12 months. When the rising cost of raw materials is added to increasing energy costs and wage increases, pressure on firms can become more acute. While most manufacturers should be able to continue to manage costs, ongoing rises could still put pressure on business bottom lines. 2. Staff shortages will ease As is the case for firms in other […]