MANUFACTURING FROM SETTLEMENT TO THE START OF THE NEW CENTURY
The first Australian factories were based on the waterfront - repairing visiting vessels, brewing beer and making biscuits. The early industrialisation of the late 19th century led to an expansion into the fringe suburbs of the main coastal settlements, creating thousands of new jobs for boilermakers, engineers, iron founders and brickmakers. The decline in goldfields activity earlier in the century had left many English immigrants unemployed and, as was said, "threw them into" the newly industrialised workforce and suburbs. At the end of the century, despite rapid industrialisation the manufacturing sector was still dominated by many smaller factories. Even in Victoria, the most industrialised colony, factories of more than fifty employees drew only half of the registered workforce. The older trades in small workshops, such as saddlemaking, coachbuilding and dressmaking, still outnumbered the new, expanding engineering trades developed by the burgeoning tram and railways industries.
FEDERATION TO DEPRESSION
Federation and the dismantling of interstate tariffs allowed the manufacturing sector to trade and prosper across the nation. Total employment in the sector rose from 190,000 in 1903 to 328,000 in 1913. However, proportionally the sector remained small, contributing only 13% of GDP in 1911. International protective tariffs allowed the sector to grow more strongly as did the requirements of World War I. Federal population policies after the war depended on the steady growth of the manufacturing sector, under the protection of tariffs. The sector facilitated high rates of post-war immigration at a time when Australian rural export industries were actually shedding labour. The Newcastle Steelworks were opened during the war and hastened the growth and diversification of metal-working industries.
By 1929, 440,000 people were employed in Australian manufacturing. The previously dominant clothing and textiles industry had steadily declined in employment, while the metals and machinery industry emerged as a major contributor to both employment and production. In particular, the new motor vehicle industry of the 1920s strengthened this sector. With Holden already well established, Ford soon followed with a large motor body assembly plant in Geelong, in response to the growing demand for motor cars.
DEPRESSION AND WORLD WAR II
While employment had increased rapidly in the early years of Federation, the Great Depression had a devastating effect on national employment. Between 1901 and the start of the Depression, manufacturing's total employment had increased threefold. The rate of increase then declined to 1.8 times between the late 1920s and late 1940s, lowering manufacturing's share of total employment from 22% in 1921 to 18% in 1931. However, manufacturing led the recovery from the Depression, accounting for 25% of total employment by 1940-41, which overtook even the rural sector's share.
The 1940s surge in the relative importance of manufacturing coincided with periods of significant structural change in the sector. Traditional areas such as food processing, wood working and clothing gave way to the more industrially advanced areas of metals and engineering, and chemicals. World War II provided fertile ground for the development and expansion of key industries for the production of munitions, ships, aircraft, machinery and chemicals. Indeed World War II could well be thought of as marking the industrialisation of Australia. Although mass production of food, textiles clothing and footwear was already well established, the war gave great impetus to heavy industry, chemicals and specialised engineering. In particular, the outbreak of war with Japan and Australian responsibility for supplies in the south-west Pacific aided greatly the development of the sector, and it outstripped all previous levels.
Although World War II saw a peak in female participation in the manufacturing sector, there has been surprisingly little change in the relative participation rates of women in manufacturing in the 20th century. In 1901 female workers constituted 22% of the entire sector. While this proportion peaked during World War II at 30%, women had in fact already gained a share of 28% during World War I and the Depression. Today women make up 27% of the manufacturing work force and still predominate in the footwear, clothing and textiles industry. World War II did, however, contribute to a sharp fall in unemployment numbers, in developing the manufacturing sector and, of course, in the enlistment of men and women from the labour force into armed service. As well, the resultant skills acquisition and strategic development of industry, together with the rapid diversification of scientific and technical knowledge, established a sound basis for the expansion and growth in the post-war era.
1950s and 1960s - INDUSTRIALISATION AND GROWTH IN DEMAND FOR CONSUMER GOODS
The 1950s and 60s proved to be highly productive decades for the sector. Growth of manufacturing output per employee from Federation to World War II had varied from 1.0 to 1.3% per annum (excluding the years of the Great Depression). During the 1950s and 60s, however, growth rose dramatically to an average of 4.3% per annum. Over this period the expansion of manufacturing productivity per annum was 11% higher than in the agricultural sector and almost double that of the economy as a whole. The entire economy was expanding, fuelled by large scale immigration and technical and scientific innovation, as well as the increasing availability of raw materials after protracted wartime shortages. With manufacturing seen as vital for national development, the pre-war protective tariff remained, and import licensing restrictions and controls were retained until 1960. As a result, by the beginning of the1960s manufacturing's share of GDP and employment had reached historic heights.
Increased national income and population drove the demand for consumer goods. The white goods industry mushroomed after World War II, and by 1950 the first large scale production of Australian motor vehicles had begun. The development of the motor vehicle industry created further demands for steel, gas, plastics and rubber. In 1960 one person in 16 of the entire Australian workforce was employed in the manufacture, distribution or servicing of this industry. Traditional industries such as food, clothing, sawmilling and wood products continued to decline, in both production and employment. In contrast, the more capital intensive industries such as electrical goods, chemicals and industrial metals steadily increased in size. For example, employment in the metals and engineering industry, as a proportion of total manufacturing employment, increased from 18% in 1871 to 48% in 1968, reflecting its centrality to the Australian industrialisation process. This increase was matched by a steady decline in the relative importance of food processing (from 21% in 1871 to 11% in 1968), woodworking (13% to 7%) and textiles and clothing (23% to 14%). As well, demand for other consumer and producer goods in the 1960s provided a challenge for the development of Australian electronic industries.
During this period the structural changes to the sector were significant, but not so great as to ensure Australia's relative competitiveness, particularly in the 1960s. By this time the rapid growth afforded by the domestic market in the 1950s had ended and, although manufacturing exports increased, the rate of growth was small and compared poorly with that in other developed countries.
1970s and 1980s - RECESSION AND RECOVERY
By the 1970s the world economic environment had changed dramatically. The 'stagflation' of the Australian economy reflected the greater world recession, triggered by oil price rises in 1973-74. In Australia, both the manufacturing and rural sectors experienced substantial decline in employment levels between 1973 and 1980, by 80,000 and 15,000 respectively. Manufacturing fared worst of all sectors, its share of employment falling from 25% in 1970 to 18% in 1985. As well its proportion of total GDP fell from a high of 29% in 1960 to 18% in 1985. Throughout this period Australia's international competitiveness was affected by both external and domestic issues. Increasing competition from newly industrialised Asian nations and fluctuating exchange rates, together with domestic workforce developments, led to dramatic change in the Australian workforce and production across all sectors, and manufacturing in particular.
In 1947 Australia had 2.2 million people in paid work. By 1980 this figure had risen to 6.6 million. While the country's population had doubled, its workforce had trebled, even though young people were remaining in education longer, and workers were retiring earlier. Women and migrant workers fuelled the employment explosion. The campaign for equal pay and sharp rises in all real wage costs caused a squeeze from rapidly escalating costs and intensified import competition. Tariff cuts in particular compounded the problem and, accordingly, import quotas were imposed on those goods most affected by competitive external producers. The clothing industry, for example, was in sharp decline after its peak in 1971, and this industry, along with the textiles, footwear and whitegoods industries, was the subject of quantitative import restrictions.
Despite significant rationalisation, manufacturing responded to economic recovery in the 1980s more slowly than other sectors. In 1982 a difficult period for heavy industry was signalled by Australian Iron and Steel's announcement of the impending loss of 2,500 jobs in the Port Kembla steelworks. Meanwhile, at Whyalla in South Australia, BHP had closed its shipbuilding works in 1978, forced out of business, it was argued, by foreign competition. By the 1980s most manufacturing industries were adopting various forms of automation, especially for 'pick and place' tasks such as the loading and unloading of die-cast machines, spot welding, molten metal pouring and forging. For example, by 1980 production in the clay brick industry was 80% automated. 'Numerical control', involving the use of computer technology for improving the capability of machine tools, which had been used in the 1960s for the production of complex parts, was being applied by 1980 to more simple machinery tasks. Such automation was welcomed by manufacturers pressed by rising labour costs and vigorous import competition. However, in the 1980s Australia was already a 'post-industrial' society, in which manufacturing had come to account for a declining proportion of employment, and in which most net growth in employment occurred in service industries.
By 1988-89 manufacturing turnover was largest in the food, beverages and tobacco industry, which also employed the greatest number of workers in the sector. This industry's turnover, at $30,757m, represented 20% of the total for the sector. Despite industrial rationalisation, the basic metal products industry maintained a high share of both turnover and employment; in 1988-89 its turnover was $19,408m, 13% of the total for the sector. Clothing and footwear, however, had continued to decline, with turnover representing just 4% of the total for the sector.
INTERNATIONAL PERSPECTIVES - the 1980s and 1990s
From 1980 to 1997 manufacturing's contribution to Australia's GDP fell from 17% to 13%. This contrasted markedly with manufacturing's virtually unchanged share (19%) of the United States GDP, and the slight increase in Japan - from 25% to 27% - over the same period. In fact, the contribution of manufacturing to the GDP of all industrialised countries fell by only 2%, from 24% in 1980 to 22% in 1997.
Consistent with world trends, Australian manufacturing became increasingly export oriented throughout the 1980s and 1990s. In 1984-85 some 16% of the sales of manufacturing firms were to overseas markets. By 1997-98 this figure had risen to 26%. Import penetration of Australian markets increased more slowly over the same period, from 26% in 1984-85 to 36% by 1997-98. Australia's products featured competitively only in certain industries. In 1997 Australia ranked fifth for share of world value of non-ferrous metals, yet contributed only 4% of world supply. This share had remained relatively constant since 1985. In the supply of metal products Australia fell in world ranking from 10th to 12th in the same period, though its share of world supply remained unchanged. In food products, Australia's world ranking has remained at 12th, its share also remaining constant at 1.6%. In wearing apparel Australia's competitiveness has declined; in 1985 Australia ranked 14th, contributing 1.3% of production. However since 1995 Australia has not featured in the top 15 producers of wearing apparel.