By Terry Smagh, Infor Senior Vice President and General Manager, APJ

Australia’s manufacturing sector is at a crossroads. Rising operational and energy costs coupled with labour shortages are affecting local production. Despite the Government’s ambitious ‘Future Made in Australia’ policy that envisions a transformative path for Australia’s economy over the next decade, the manufacturing sector has struggled to maintain competitiveness, create jobs and attract global investment.

Securing Australia’s place in a rapidly changing global environment is vital to boost private sector investment and build a stronger and more resilient economy. Amid global geopolitical tensions, technology investments are vital to drive a transformation in manufacturing.

According to research by McKinsey, technology centricity is an imperative rather than an alternative. Nearly half of top-performing companies have adopted product- or platform-centric operating models. The rest are trying to catch up. Recent research from Infor found that 80% of organisations expect to increase investment in technology by 20% or more over the coming years.

Technology transformation is becoming an imperative in Australia as manufacturing businesses adopt advanced technologies like IoT, AI and cloud computing. These technology investments are effective when coupled with preparedness. Unfortunately, some Australian manufacturers are grappling with operational issues like staff shortages and resistance to adapting to new technologies. The nation’s ageing workforce, in particular, has widened this gap.

Bridging the industrial skills gap through tech

Adapting the workforce for a digital-first environment is critical for growth. Infor’s research sheds new light on this challenge, highlighting a significant gap between the most and least productive industrial organisations in terms of access to skilled talent, with a 22.7% difference in their ability to meet market demands.

The talent crisis is being intensified by the rapid evolution of manufacturing technologies, which demands a workforce with more advanced skills than ever before. This presents a dual challenge: while automation is phasing out many traditional roles, it is also driving strong demand for technically skilled professionals.

In response, forward-thinking organisations are ramping up investments in training and upskilling. Notably, the most productive companies invest 26.2% more in developing their workforce to adapt to new ways of working. This provides cause for hope. Many businesses struggle from the “value void” – the gap between the promise of impactful productivity from newly adopted technologies and what is so often delivered.

However, the right approach to upskilling and talent management can help bridge the void and put Australia’s industrial sector on much firmer footing. Government support through incentives can boost skills development, alongside collaborations with private companies and institutions for training programs and workforce development models.

Bridging the “value void” through workforce transformation

From working with industrial manufacturing businesses that are succeeding in their digital ambitions, we’ve identified several routes that help organisations find the right balance between man and machine, ensuring that their investments deliver the benefits they expect:

Continuous learning and upskilling

Companies should place continuous learning at the heart of their workforce strategy. With experienced employees retiring at a faster rate than new talent is entering the labour market, retaining and developing existing staff has become essential. This involves systematically identifying skill gaps and implementing tailored training programmes that address both current and future needs. Digital tools, including AI and machine learning, can significantly enhance the efficiency and personalisation of learning initiatives, helping employees stay ahead of technological shifts.

Apprenticeship programmes

To secure the next generation of industrial talent, companies should invest in compelling apprenticeship opportunities. These programmes offer hands-on, real-world experience while equipping young workers with the technical and soft skills necessary for long-term success in the sector. Well-structured apprenticeships can help bridge the skills gap while also improving retention by fostering early engagement and loyalty to the industry.

Collaboration with educational institutions

Forging strong partnerships with vocational schools, technical colleges and universities is vital to aligning education with evolving industry demands. By co-developing curricula and offering internships, companies can ensure that graduates enter the workforce with job-ready skills they need. Such collaboration also helps raise awareness of industrial careers among students and educators, enhancing the sector’s appeal.

Embracing technology as a training tool

Digital transformation changes how people learn. Organisations can harness automation, virtual simulations and e-learning platforms to enable agile, scalable training that empowers workers to reskill and upskill continuously. Technology-enabled learning has the power to improve adaptability while also fostering a culture of innovation and lifelong development.

Australia’s industrial sector is at the cusp of unlocking economic growth through manufacturing. Increases in costs for energy, labour and materials, paired with supply chain disruptions, and ever-changing political and regulatory demands are conspiring to offset productivity and hinder growth. Digital technology can and will play an important role in overcoming these challenges – indeed, our research suggests that 82% of organisations agree that success will depend on the use and adoptability of new technologies.

However, these investments must be made with an eye to the impact they will have on the workforce, and the new skills required to get the most out of machines and employees alike. Leading industrial manufacturing organisations have demonstrated that a strong focus on upskilling and developing the workforce to operate in new ways delivers the change required. If Australia’s industrial base is to build resilience and chart a course to future growth, then this is an approach that all organisations should embrace.