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1301.0 - Year Book Australia, 2006  
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Contents >> Chapter 18 - Manufacturing >> Structure and performance of the manufacturing industry

STRUCTURE AND PERFORMANCE OF THE MANUFACTURING INDUSTRY

The major source for the statistics in this section is the annual Economic Activity Survey (EAS) of businesses conducted by the Australian Bureau of Statistics (ABS). Businesses in this collection are classified on the basis of their predominant activity, using the ANZSIC (1993 edition).

From 2001-02, estimates from EAS have been compiled using new statistical infrastructure. This new infrastructure makes better use of data available from the taxation system. As a consequence of this new infrastructure, a new statistical series has commenced from 2001-02, covering non-employing as well as employing businesses. More details are provided in Manufacturing Industry, Australia, 2001-02 and 2002-03 (8221.0).

Production of an industry can be measured in terms of industry value added (IVA), in much the same way as industry GVA. However, unlike industry GVA (the national accounts concept of production), IVA is not adjusted for a number of national accounting conventions, as the information to make these adjustments cannot be collected in the EAS. The advantage of IVA, however, is the availability of more detailed (component) industry and state estimates of manufacturing production.

SUMMARY OF OPERATIONS IN 2002-03

In 2002-03 manufacturing businesses paid $54 billion (b) in labour costs, and generated $309b of sales of goods and services income, and $89b of IVA (table 18.3).

Food, beverage and tobacco manufacturing was the largest contributor to total manufacturing sales and service income and total manufacturing IVA. This industry's sales and service income of $68b was 22% of the total for manufacturing, and its IVA of $18b accounted for 20%. Other industry subdivisions making major contributions were: Machinery and equipment manufacturing (19% of sales and service income and 19% of IVA); Metal product manufacturing (18% for both measures); and Petroleum, coal, chemical and associated product manufacturing (17% and 13%).

18.3 SUMMARY OF OPERATIONS - 2002–03

Labour costs(a)
Sales of goods and
services income(b)
Industry
value added
Manufacturing industry subdivision
$m
$m
$m

Food, beverage and tobacco manufacturing
10,114.0
67,899.5
17,535.5
Textile, clothing, footwear and leather manufacturing
2,290.0
11,057.8
3,207.4
Wood and paper product manufacturing
3,297.0
18,104.8
6,346.3
Printing, publishing and recorded media
5,438.0
21,218.5
9,111.8
Petroleum, coal, chemical and associated product manufacturing
6,192.0
51,510.1
11,290.2
Non-metallic mineral product manufacturing
2,407.0
12,662.2
4,528.4
Metal product manufacturing
9,095.0
55,302.0
16,132.8
Machinery and equipment manufacturing
12,372.0
60,113.1
16,695.0
Other manufacturing
2,733.0
12,415.0
3,841.0
Total manufacturing
53,938.0
309,283.1
88,688.3

(a) Includes wages and salaries, payroll tax, fringe benefits taxes, workers compensation costs and employers contributions to superannuation.
(b) Includes rent, leasing and hiring income.

Source: Manufacturing Industry, Australia, 2001-02 and 2002-03 (8221.0).


CONTRIBUTION TO STATE PRODUCTION

Table 18.4 shows the manufacturing industry's contribution to state production (in current prices). The trend for the manufacturing industry's share of total production in all states has generally been decreasing, even though Australian manufacturing production grew by 35% (in current prices) between 1996-97 and 2003-04. This is because the growth in manufacturing production has been at a slightly slower rate than the growth in other industries.

18.4 MANUFACTURING INDUSTRY'S CONTRIBUTION TO STATE PRODUCTION(a)

1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
%
%
%
%
%
%
%
%

New South Wales
13.7
13.9
13.4
12.9
12.2
12.0
12.1
12.1
Victoria
17.3
17.2
16.1
15.5
14.9
14.6
14.8
14.9
Queensland
11.0
11.3
10.8
10.0
10.1
10.0
9.9
9.9
South Australia
16.6
17.0
15.4
14.8
14.0
14.0
14.4
14.2
Western Australia
9.3
9.4
8.9
8.3
8.6
8.3
9.1
9.0
Tasmania
14.6
14.7
15.0
14.7
14.4
14.1
14.0
13.7
Northern Territory
4.3
4.5
3.8
3.8
3.3
3.8
3.8
3.6
Australian Capital Territory
2.2
1.9
1.7
1.8
1.8
1.8
1.7
1.6

(a) State production as measured by total factor income (in current prices).

Source: Australian National Accounts: State Accounts, 2003-04 (5220.0).


STATE DISTRIBUTION OF ACTIVITY

Graph 18.5 shows the relative contributions to overall manufacturing production by states and territories in 2002-03. New South Wales and Victoria continued to be the largest contributors to manufacturing production, accounting for 33% ($29b) and 31% ($27b) respectively. Together they contributed 63% of total manufacturing production. Of the other states, Queensland accounted for 16%, South Australia 8.8%, Western Australia 8.6% and Tasmania 2% of total manufacturing production. The Northern Territory and Australian Capital Territory both contributed less than 1% to total manufacturing production.

Graph 18.5: MANUFACTURING PRODUCTION(a), By state and territory - 2002-03


Table 18.6 shows the production by manufacturing industry subdivision by state and territory. In 2002-03, New South Wales contributed 43% of the total IVA of the Printing, publishing and recorded media industry ($9.1b) and between 30% and 34% of the total IVA of the remaining manufacturing industries. Victoria contributed 49% of the total IVA of the Textile, clothing, footwear and leather manufacturing industry ($3.2b), 37% of the total IVA of the Petroleum, coal, chemical and associated product manufacturing industry ($11.3b), and between 23% and 35% of the total IVA of the remaining manufacturing industries.


Food, beverage and tobacco manufacturing, and Machinery and equipment manufacturing were the largest manufacturing industries in New South Wales and Victoria, accounting for 21% and 17% respectively of the manufacturing IVA for New South Wales, and 19% and 22% for Victoria.

Queensland contributed 23% of the total IVA for Metal product manufacturing which was also the largest manufacturing industry (27%) in this state. The contributions of South Australia and Western Australia to total manufacturing IVA were $7.8b and $7.6b respectively, although the structure of the manufacturing industry was very different. Machinery and equipment manufacturing was the largest manufacturing industry in South Australia, accounting for 29% of state production and 14% of the total IVA for the industry. South Australia also contributed between 5% and 11% of the total IVA of the remaining manufacturing industries. Western Australia contributed more than 12% of both Non-metallic mineral product manufacturing and of total IVA for Metal product manufacturing. Metal product manufacturing was the largest manufacturing industry in the state, accounting for 26% of state production.

Manufacturing was not as significant for the remaining state and territories. Tasmania, which accounted for $2.1b of total manufacturing IVA, contributed 9% of total IVA for Wood and paper product manufacturing. The total production for the Northern Territory and the Australian Capital Territory were $0.7b and $0.4b respectively.

18.6 INDUSTRY VALUE ADDED - 2002–03

NSW
Vic.
Qld
SA
WA
Tas.
NT
ACT
Aust.
Manufacturing industry subdivision
$m
$m
$m
$m
$m
$m
$m
$m
$m

Food, beverage and tobacco manufacturing
6,042.7
5,155.4
2,926.4
1,747.3
1,100.8
501.4
30.2
31.2
17,535.5
Textile, clothing, footwear and leather manufacturing
946.9
1,566.2
295.6
147.1
169.1
68.9
n.p.
n.p.
3,207.4
Wood and paper product manufacturing
1,963.5
1,661.7
1,066.5
678.0
386.1
546.4
4.5
39.6
6,346.3
Printing, publishing and recorded media
3,886.6
2,657.4
1,107.5
589.3
599.1
102.0
33.6
136.1
9,111.8
Petroleum, coal, chemical and associated product manufacturing
3,426.0
4,195.8
1,380.3
766.7
1,298.2
167.7
39.5
16.1
11,290.2
Non-metallic mineral product manufacturing
1,482.8
1,212.6
717.9
359.6
560.7
126.9
39.6
28.2
4,528.4
Metal product manufacturing
4,883.0
3,694.9
3,773.9
982.9
1,978.9
315.8
n.p.
n.p.
16,132.8
Machinery and equipment manufacturing
4,942.5
5,900.6
2,095.6
2,269.4
1,190.7
194.4
42.3
59.4
16,695.0
Other manufacturing
1,252.3
1,211.7
709.4
259.9
334.2
36.0
n.p.
n.p.
3,841.0
Total manufacturing
28,826.5
27,256.3
14,073.0
7,800.3
7,617.9
2,059.6
687.8
366.8
88,688.3

Source: Manufacturing Industry, Australia, 2001-02 and 2002-03 (8221.0).


EMPLOYMENT

The number of full-time and part-time workers in each manufacturing subdivision is provided in table 18.7. The table includes directors who are not paid a salary and self-employed people (such as contractors, owner/drivers, consultants and people paid solely by commission without a retainer).

In May 2005 the manufacturing industry employed 11% of total people employed in Australia (9,969,700). Males outnumbered females by a ratio of almost 3 to 1 (73% males and 27% females). The majority of people employed in the manufacturing industry were employed full time (94% of males and 70% of females), which is higher than the proportion of people employed full time in all industries (85% of males and 54% of females).

The largest employers of males were Machinery and equipment manufacturing (173,100) and Metal product manufacturing (130,000). The largest employers of females were Food, beverage and tobacco manufacturing (69,200) and Printing, publishing and recorded media (46,000).

Further information on employed wage and salary earners and the characteristics of the manufacturing labour force is provided in the Labour chapter.

18.7 PERSONS EMPLOYED IN MANUFACTURING INDUSTRY - May 2005

Males
Females
Persons



Full time
Part time
Total
Full time
Part time
Total
Full time
Part time
Total
Manufacturing industry subdivision
'000
'000
'000
'000
'000
'000
'000
'000
'000

Food, beverage and tobacco manufacturing
117.2
10.3
127.5
46.6
22.6
69.2
163.8
32.9
196.6
Textile, clothing, footwear and leather manufacturing
17.7
1.6
19.3
24.2
9.0
33.2
41.9
10.5
52.5
Wood and paper product manufacturing
56.6
2.5
59.1
7.5
3.5
11.0
64.1
6.0
70.1
Printing, publishing and recorded media
57.2
6.1
63.3
31.4
14.7
46.0
88.5
20.8
109.3
Petroleum, coal, chemical and associated product manufacturing
59.8
3.5
63.3
20.5
7.6
28.1
80.3
11.2
91.4
Non-metallic mineral product manufacturing
32.4
1.3
33.7
3.9
1.8
5.7
36.4
3.1
39.4
Metal product manufacturing
126.1
3.9
130.0
13.1
6.9
19.9
139.1
10.8
149.9
Machinery and equipment manufacturing
167.3
5.8
173.1
27.5
10.6
38.1
194.8
16.4
211.2
Other manufacturing
51.6
5.3
56.9
10.3
4.5
14.7
61.9
9.7
71.6
Total manufacturing(a)
741.5
43.8
785.3
201.7
86.8
288.5
943.2
130.6
1,073.9

(a) Includes 72,500 persons employed full time and 9,300 persons employed part time not classified to an industry subdivision.

Source: Labour Force Australia, Detailed - Electronic Delivery (6291.0.55.001); Australian Labour Statistics, July 2005 (6105.0).


Table 18.8 presents information on average weekly earnings (i.e. ordinary time earnings plus overtime earnings) of employees in the manufacturing industry and all industries. Between May 1985 and May 2005 the average earnings of all employees (male and female) increased by $564 (156%) in the manufacturing industry, which was higher than the increase of $446 (129%) for all industries. The average earnings of full-time employees experienced similar changes between May 1985 and May 2005, increasing by $637 (164%) in the manufacturing industry and $652 (160%) for all industries.


In the manufacturing industry, the earnings of both male and female full-time employees increased but the increase for female employees was 20 percentage points more than the increase for male employees, although female earnings came from a lower base and were still well below average male earnings. The difference between the earnings of males and females had decreased between May 1985 and May 2005. The average weekly earnings for male full-time employees at May 2005 was higher by $231 (27%) than for female full-time employees. In May 1985 male full-time employees were earning $113 (38%) more than female full-time employees.

18.8 AVERAGE WEEKLY EARNINGS(a)(b)

All employees
Full-time employees


May 1985
May 2005
Change from May 1985 to May 2005
May 1985
May 2005
Change from May 1985 to May 2005
$
$
%
$
$
%

Males
Manufacturing
392.60
1,004.60
155.9
414.60
1,073.00
158.8
All industries
397.20
942.70
137.3
435.50
1,136.90
161.1
Females
Manufacturing
272.40
700.30
157.1
301.50
841.90
179.2
All industries
263.40
620.20
135.5
343.10
917.50
167.4
Persons
Manufacturing
362.00
926.00
155.8
388.70
1,025.50
163.8
All industries
344.10
789.70
129.5
406.90
1,058.50
160.1

(a) Derived by dividing estimates of weekly total earnings (including overtime) by estimates of number of employees. Changes in average weekly earnings may be affected not only by changes in the level of earnings of employees but also by changes in the overall composition of the wage and salary earner segment of the labour force.
(b) The actual reference period is the last pay period ending on or before the third Friday of the middle month of the quarter.

Source: Average Weekly Earnings, Australia (6302.0).


OPERATING PROFIT BEFORE TAX (OPBT)

The OPBT shows profits earned by all manufacturing businesses before extraordinary items are bought into account, and the deduction of tax and dividends paid.

Profits for eight industry subdivisions were higher in 2002-03 than they were for 2001-02 (table 18.9). Only the Food, beverage and tobacco manufacturing subdivision had lower profits in 2002-03 (down 15% or $0.7b). The Petroleum, coal, chemical and associated product manufacturing subdivision experienced the greatest increase in profits between 2001-02 and 2002-03 (53% or $1.0b). Other subdivisions that experienced substantial profit growth in the last financial year include: Non-metallic mineral product manufacturing (39% or $0.4b); Wood and paper product manufacturing (32% or $0.4b); and Textile, clothing, footwear and leather manufacturing (29% or $0.1b). All the OPBT for total manufacturing increased by 14% or $2.7b between 2001-02 and 2002-03.

Industry subdivisions contributing most to manufacturing industry profits for 2002-03 were: Metal product manufacturing (23% of total manufacturing OPBT); Food, beverage and tobacco manufacturing (19%); Petroleum, coal, chemical and associated product manufacturing (13%); and Machinery and equipment manufacturing (12%).

18.9 OPERATING PROFIT BEFORE TAX

2001-02
2002-03
Change from
2001-02 to 2002-03
Sub-division contribution
to total, 2002-03
Manufacturing industry subdivision
$m
$m
%
%

Food, beverage and tobacco manufacturing
4,819.5
4,093.2
-15.1
19.1
Textile, clothing, footwear and leather manufacturing
438.9
564.3
28.6
2.6
Wood and paper product manufacturing
1,313.6
1,737.2
32.2
8.1
Printing, publishing and recorded media
2,005.6
2,521.9
25.7
11.8
Petroleum, coal, chemical and associated product manufacturing
1,877.7
2,882.2
53.5
13.5
Non-metallic mineral product manufacturing
994.2
1,383.8
39.2
6.5
Metal product manufacturing
4,169.4
4,843.9
16.2
22.6
Machinery and equipment manufacturing
2,432.6
2,644.3
8.7
12.3
Other manufacturing
692.4
750.6
8.4
3.5
Total manufacturing
18,743.9
21,421.4
14.3
100.0

Source: Manufacturing Industry, Australia, 2001-02 and 2002-03 - Data cube (8221.0).


CAPITAL EXPENDITURE

Capital expenditure by the manufacturing industry increased by $1,361 million (m) (12%) from 2001-02 to 2002-03 (table 18.10).

A majority of manufacturing industry subdivisions recorded increases in capital expenditure in this period. The largest increases in percentage terms were in Food, beverage and tobacco manufacturing (32% or $813m); Non-metallic mineral product manufacturing (27% or $173m); and Printing, publishing and recorded media (26% or $229m). These increases were partly offset by decreases in expenditure in Other manufacturing (20% or $74m) and Metal product manufacturing (15% or $379m).

The manufacturing industry subdivisions with largest capital expenditure were: Food, beverage and tobacco manufacturing (26% of total manufacturing capital expenditure); Machinery and equipment manufacturing (18%); Metal product manufacturing (17%); and Petroleum, coal, chemical and associated product manufacturing (13%).

18.10 CAPITAL EXPENDITURE

2001–02
2002–03
Change from
2001–02 to 2002–03
Sub-division contribution
to total, 2002–03
Manufacturing industry subdivision
$m
$m
%
%

Food, beverage and tobacco manufacturing
2,573.8
3,387.1
31.6
26.1
Textile, clothing, footwear and leather manufacturing
278.3
309.4
11.2
2.4
Wood and paper product manufacturing
650.0
760.7
17.0
5.9
Printing, publishing and recorded media
891.1
1,120.4
25.7
8.6
Petroleum, coal, chemical and associated product manufacturing
1,451.0
1,737.0
19.7
13.4
Non-metallic mineral product manufacturing
650.8
823.9
26.6
6.3
Metal product manufacturing
2,570.8
2,191.6
-14.8
16.9
Machinery and equipment manufacturing
2,174.1
2,344.1
7.8
18.1
Other manufacturing
374.3
300.8
-19.6
2.3
Total manufacturing
11,614.2
12,974.9
11.7
100.0

Source: Manufacturing Industry, Australia, 2001-02 and 2002-03 (8221.0).


INTERNATIONAL TRADE BY INDUSTRY OF ORIGIN

Exports by industry of origin

The manufacturing industry dominates Australia's value of exports by industry of origin, accounting for 53% of total exports in 2004-05 (table 18.11). The value of manufacturing exports was 38% higher in 2004-05 than in 1995-96. However, the manufacturing industry share of total value of exports has been trending down each year since the high of 64% in 1995-96.

18.11 VALUE OF MERCHANDISE EXPORTS OF GOODS, By industry of origin(a)

Manufacturing
All industries
Manufacturing share
of total exports
$m
$m
%

1995-96
48,787
76,005
64.2
1996-97
48,494
78,932
61.4
1997-98
53,301
87,768
60.7
1998-99
52,073
85,991
60.6
1999-2000
57,982
97,286
59.6
2000-01
69,128
119,539
57.8
2001-02
69,111
121,108
57.1
2002-03
65,810
115,479
57.0
2003-04
62,442
108,906
57.3
2004-05
67,475
126,483
53.3

(a) On a free-on-board basis.

Source: ABS data available on request, International Trade.


Graph 18.12 shows the five main destinations for manufacturing commodities exported from Australia, during the period 1998-99 to 2004-05. Of these, the key destinations were Japan, New Zealand (NZ) and the United States of America (USA). Japan was the destination where most exports were directed to before it was overtaken by exports to the USA in 2000-01. In 2004-05, exports to the USA fell below the exports to Japan and NZ. The value of exports to the USA was $7.4b, compared with $8.1b to Japan and $7.5b to NZ.

Graph 18.12: MANUFACTURING EXPORTS, Main destinations


Imports by industry of origin

The manufacturing industry accounted for more than 90% of Australia's value of imports by industry of origin during the period 1995-96 to 2004-05 (table 18.13). The value of Australia's imports of manufactured goods was 88% more in 2004-05 than in 1995-96.

18.13 VALUE OF MERCHANDISE IMPORTS OF GOODS, By industry of origin(a)

Manufacturing
All industries
Manufacturing share
of total imports
$m
$m
%

1995-96
73,545
77,792
94.5
1996-97
73,747
78,998
93.4
1997-98
85,746
90,684
94.6
1998-99
92,437
97,611
94.7
1999-2000
102,382
110,078
93.0
2000-01
108,331
118,317
91.6
2001-02
111,162
119,649
92.9
2002-03
123,041
133,129
92.4
2003-04
122,844
130,997
93.8
2004-05
138,042
149,522
92.3

(a) Customs value.

Source: ABS data available on request, International Trade.


Graph 18.14 shows the value of manufacturing commodities imported from five main countries to Australia, in the period 1998-99 to 2004-05. In each year of this period, Australia imported more manufactured goods from the USA than from any other country. In 2004-05 China overtook Japan as the country providing the second largest amount of imports. The value of imports from China grew more than three times from $6b in 1998-99 to $19b in 2004-05.

18.14: MANUFACTURING IMPORTS(a), Selected countries


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