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Table 18.2 shows the industry GVA of the subdivisions (components) within the Manufacturing Division as defined in the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition (1292.0). The table also shows the contribution of the Manufacturing industry to Australia's GDP in the period 2000-01 to 2004-05.
In this period, the Manufacturing industry GVA (in volume terms) rose by 5.8%, while its contribution to GDP (in current prices) declined marginally from 11.6% in 2000-01 to 11.3% in 2004-05. The largest increase in production in the period was for Non-metallic mineral product manufacturing (26%), followed by Other manufacturing (15%) and Machinery and equipment manufacturing (14%). Production for Non-metallic mineral product manufacturing and Machinery and equipment manufacturing had been growing progressively each year from 2000-01.
Production for Textile, clothing, footwear and leather manufacturing fell by 39%. It was the only industry subdivision that recorded a fall over this period. Production in this subdivision has been declining each year since 1998-99.
Between 2003-04 and 2004-05, production decreased for Textile, clothing, footwear and leather manufacturing (19%), Other manufacturing (8.1%), Metal product manufacturing (2.3%) and Printing, publishing and recorded media (2.1%). The largest increase was for Non-metallic mineral product manufacturing (5.2%).
The Manufacturing industry is the largest contributor to Australia's export earnings. Its value of exports based on industry of origin accounted for 49% of total exports in 2005-06.
STRUCTURE AND PERFORMANCE
The major source of statistics in this section is the annual Economic Activity Survey (EAS) of businesses, conducted by the Australian Bureau of Statistics (ABS).
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 2003-04
In 2003-04 manufacturing businesses paid $55 billion (b) in labour costs, and generated $316b of sales and services income, and $90b of IVA (table 18.3).
Food, beverage and tobacco manufacturing was the largest contributor to total manufacturing sales and service income ($68b or 22%) and the second largest contributor to IVA ($18b or 19%). Machinery and equipment manufacturing contributed the most to total manufacturing IVA ($18b or 20%) and was the second largest contributor to total manufacturing sales and service income ($60b or 19%). Other industry subdivisions making major contributions were Metal product manufacturing (19% of sales and service income and 18% of IVA) and Petroleum, coal, chemical and associated product manufacturing (17% and 12%).
Contribution to state production
Graph 18.4 shows the Manufacturing industry's contribution to state production (in current prices) for 2004-05. 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 33% (in current prices) between 1997-98 and 2004-05. This is because the growth in manufacturing production has been at a slightly slower rate than the growth in other industries.
State distribution of activity
Graph 18.5 shows the relative contributions to overall manufacturing production by states and territories in 2003-04. New South Wales and Victoria continued to be the largest contributors to manufacturing production, accounting for 32% ($29b) and 31% ($28b) respectively.
Table 18.6 shows the production by Manufacturing industry subdivision by state and territory. In 2003-04, New South Wales contributed 38% of the total IVA of the Printing, publishing and recorded media industry ($9.3b) and between 29% and 36% of the total IVA of the remaining manufacturing industries. Victoria contributed 45% of the total IVA of the Textile, clothing, footwear and leather manufacturing industry ($3.2b), 38% 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 22% and 18% respectively of the manufacturing IVA for New South Wales, and 18% and 22% for Victoria.
Queensland contributed 20% of the total IVA for Metal product manufacturing which was also the largest manufacturing industry (23%) in this state. The contributions of South Australia and Western Australia to total manufacturing IVA were $8.0b and $8.4b 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 32% 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 16% of total IVA for Metal product manufacturing and 13% of total IVA for Non-metallic mineral product manufacturing. Metal product manufacturing was the largest manufacturing industry in the state, accounting for 31% of state production.
Manufacturing was not as significant for the remaining state and territories. Tasmania, which accounted for $2.2b 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.
The number of full-time and part-time workers in each Manufacturing industry 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 2006 the Manufacturing industry employed 10% (1,061,500) of all people employed in Australia (10,142,200). Males outnumbered females by a ratio of almost 3 to 1 (74% males and 26% females). The majority of people employed in the Manufacturing industry were employed full time (94% of males and 68% 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 (198,300) and Metal product manufacturing (147,200). The largest employers of females were Food, beverage and tobacco manufacturing (59,600) and Printing, publishing and recorded media (45,200).
Table 18.8 presents information on average weekly earnings (i.e. ordinary time earnings plus overtime earnings) of employees in the Manufacturing industry compared with all industries. Between May 1986 and May 2006 the average earnings of all employees (male and female) increased by $592 (154%) in the Manufacturing industry. The increase in the Manufacturing industry was higher than the increase of $460 (126%) for all industries. The average earnings of full-time employees experienced similar changes between May 1986 and May 2006, increasing by $651 (157%) in the Manufacturing industry and $653 (150%) 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 15 percentage points more than the increase for male employees. Despite this increase, female earnings remain well below average male earnings. The difference, in percentage terms, between the earnings of males and females had decreased between May 1986 and May 2006. The average weekly earnings for male full-time employees at May 2006 was higher by $256 (30%) than for female full-time employees. In May 1986 male full-time employees were earning $120 (37%) more than female full-time employees.
Operating profit before tax (OPBT)
OPBT is a measure if profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid).
Profits for six industry subdivisions were higher in 2003-04 than they were for 2002-03 (table 18.9). Manufacturing industries with lower profits in 2003-04 were Wood and paper product manufacturing (down 2.2% or $38 million (m)), Petroleum, coal, chemical and associated product manufacturing (down 8.3% or $230m) and Metal product manufacturing (down 6.2% or $284m). The Food, beverage and tobacco industry experienced the greatest increase in profits between 2002-03 and 2003-04 (59% or $2,230m). Other industries that experienced substantial profit growth in the last financial year include Textile, clothing, footwear and leather manufacturing (37% or $190m), Other manufacturing (37% or $257m) and Machinery and equipment manufacturing (17% or $495m). The OPBT for total manufacturing increased by 14% or $2,900m between 2002-03 and 2003-04.
Industries contributing most to total manufacturing industry profits for 2003-04 were Food, beverage and tobacco manufacturing (25% of total manufacturing OPBT), Metal product manufacturing (18%), Machinery and equipment manufacturing (14%) and Printing, publishing and recorded media (12%).
Overall, capital expenditure by the Manufacturing industry increased by $399m (3.1%) from 2002-03 to 2003-04 (table 18.10).
Six of the nine Manufacturing industry subdivisions recorded increases in capital expenditure in this period. The largest increases in percentage terms were in Petroleum, coal, chemical and associated product manufacturing (35% or $588m), Wood and paper product manufacturing (33% or $243m), and Other manufacturing (26% or $70m). These increases were partly offset by decreases in expenditure in Machinery and equipment manufacturing (26% or $609m) and Food, beverage and tobacco manufacturing (16% or $525m).
The manufacturing industries with largest capital expenditure were Food, beverage and tobacco manufacturing (21% of total manufacturing capital expenditure), Metal product manufacturing (20%), Petroleum, coal, chemical and associated product manufacturing (17%) and Machinery and equipment manufacturing (13%).
RESEARCH AND EXPERIMENTAL DEVELOPMENT (R&D)
In the business context R&D is defined as systematic investigation or experimentation involving innovation or technical risk, the outcome of which is new knowledge, with or without a specific practical application or new or improved products, processes, materials, devices or services. R&D activity also extends to modifications to existing products and processes. Surveys conducted by the ABS of R&D are based on a complete enumeration of businesses identified as likely R&D performers. Businesses mainly engaged in the Agriculture, forestry and fishing industry are excluded.
Total R&D expenditure by the Manufacturing industry increased by $125m (4%) in 2004-05 (table 18.11). Industries contributing the most to manufacturing R&D expenditure in 2004-05 were Motor vehicle and part and other transport equipment manufacturing (27%), Petroleum, coal, chemical and associated product manufacturing (17%), Metal product manufacturing (12%) and Electronic and electrical equipment and appliance manufacturing (10%). Together, these industries accounted for 66% of total R&D expenditure by the Manufacturing industry and 27% of the total R&D expenditure by all industries.
Of Manufacturing industry total R&D expenditure in 2004-05, 7% was on capital expenditure, 45% on labour costs and 48% on other current expenditure (table 18.12). The Motor vehicle and part and other transport equipment manufacturing industry contributed the largest expenditure on R&D by the Manufacturing industry for each of labour costs (29%), and other current expenditure (24%). The Petroleum, coal, chemical and associated product manufacturing industry was the largest contributor for capital expenditure (24%) with Motor vehicle and part and other transport equipment manufacturing being the second largest contributor (23%). Manufacturing accounted for 45% of the capital expenditure, 43% of the labour costs, and 39% of other current expenditure on R&D by all industries.
The ABS compiles two price indexes relating to the Manufacturing industry - the Price Index of Materials Used in Manufacturing Industries and the Price Index of Articles Produced by Manufacturing Industries. Information on recent trends in the prices of materials used and articles produced in individual manufacturing industries is provided in the section Producer price indexes in the Prices chapter.
The Manufacturing industry dominates Australia's value of exports by industry of origin, accounting for 49% of total exports in 2005-06 (table 18.13). The value of manufacturing exports was 55% higher in 2005-06 than in 1996-97. However, the Manufacturing industry share of total value of exports has been trending down over this period.
Graph 18.14 shows the five main destinations for manufacturing commodities exported from Australia, during the period 1999-2000 to 2005-06. Of these, the key destinations were Japan, New Zealand (NZ) and the United States of America (USA). In 2005-06, the value of exports to Japan was $8.0b, compared with $7.4b for both USA and NZ. Over the period 1999-2000 to 2005-06 the value of exports to China has almost tripled from $1.3b to $3.6b.
More than 90% of Australia's total value of imports during the period 1996-97 to 2005-06 were manufactured goods (table 18.15). The value of Australia's imports of manufactured goods more than doubled over this period, from $74b to $153b.
Graph 18.16 shows the value of manufacturing commodities imported from five main countries to Australia, in the period 1999-2000 to 2005-06. From 1999-2000 to 2004-05 Australia imported more manufactured goods from the USA than from any other country. However, in 2005-06, China overtook the USA as the country providing the largest amount of imports. The value of imports from China grew more than three times from $7.3b in 1999-2000 to $22.6b in 2005-06.