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20.1 MANUFACTURING PRODUCTION(a)(b)
Total production of the manufacturing industry, as measured by industry GVA (in volume terms), increased between 1991-92 to 2003-04 (graph 20.1). During this period, production increased by 31%. Manufacturing production decreased between 2003-04 and 2005-06, before increasing to $107 billion (b) in 2007-08.
Table 20.2 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 (1292.0). The contribution of the manufacturing industry to Australia's GDP between 2003-04 and 2007-08 fell from 11% to 10%.
For these periods the manufacturing industry GVA (in volume terms) rose by $4b or 4%. The largest increase in production in the period was for non-metallic mineral products manufacturing (25%), followed by metal products manufacturing (18%).
Production for textile, clothing, footwear and leather manufacturing fell by 29%. Other industry subdivisions that recorded falls over this period were wood and paper products manufacturing (9%), other manufacturing (7%) and petroleum, coal, chemical and associated products manufacturing (3%).
Between 2006-07 and 2007-08, production increased for six of the nine manufacturing industry subdivisions. The largest increases were for other manufacturing (12%), metal products manufacturing (11%) and non-metallic mineral products manufacturing (4%). The greatest decreases were for textile, clothing, footwear and leather manufacturing and wood and paper products manufacturing (both 4%).
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 2007-08
In 2007-08 manufacturing businesses paid $62b in labour costs, and generated $396b of sales and service income and $105b of Industry Value Added (IVA) (table 20.3).
Food product manufacturing was the largest contributor to total manufacturing sales and service income ($68b or 17%), the largest contributor to total labour costs ($11b or 18%), and also contributed the most to total manufacturing IVA ($16b or 15%). Other industry subdivisions making major contributions were primary metal and metal product manufacturing (just under 17% of sales and service income and 15% of IVA), petroleum and coal product manufacturing (10% of sales and service income) and machinery and equipment manufacturing (10% of IVA).
Contribution to state production
Graph 20.4 shows the manufacturing industry's contribution to state production (in current prices) for 2007-08. Tasmania and South Australia had the highest contribution to state production from manufacturing (both 14%), followed by Victoria (13%) and New South Wales (11%). The Australian Capital Territory had the lowest contribution by manufacturing in 2007-08, with 1%.
20.4 MANUFACTURING INDUSTRY'S CONTRIBUTION TO STATE PRODUCTION(a) - 2007-08
State distribution of activity
Graph 20.5 shows the relative contributions to overall manufacturing production by states and territories in 2004-05. New South Wales and Victoria continued to be the largest contributors to manufacturing production, accounting for 32% ($32b) and 31% ($30b) respectively.
20.5 MANUFACTURING PRODUCTION(a) - 2004-05
Table 20.6 shows the production by manufacturing industry subdivision by state and territory. In 2004-05, New South Wales contributed 39% of the total IVA of the printing, publishing and recorded media industry ($10b) and between 29% and 35% of the total IVA of the remaining manufacturing industries. Victoria contributed 42% of the total IVA of the textile, clothing, footwear and leather manufacturing industry ($3b), 37% of the total IVA of the petroleum, coal, chemical and associated product manufacturing industry ($13b), and between 21% and 35% of the total IVA of the remaining manufacturing industries.
Food, beverage and tobacco manufacturing, and metal manufacturing were the largest manufacturing industries in New South Wales accounting for 20% each of total manufacturing IVA for that state. In Victoria, machinery and equipment manufacturing and food, beverage and tobacco manufacturing were the largest with 23% and 19% respectively.
Queensland contributed 20% of the total IVA for metal product manufacturing which was also the largest manufacturing industry (24%) in this state. The contributions of South Australia and Western Australia to total manufacturing IVA were $8b and $9b 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 13% 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 14% 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 28% of state production.
Manufacturing was not as significant for the remaining states and territories. Tasmania, which accounted for $2b of total manufacturing IVA, contributed 8% of total IVA for wood and paper product manufacturing. The total production for the Northern Territory and the Australian Capital Territory were $0.8b and $0.4b respectively.
Employment and earnings
The number of male and female workers in each manufacturing industry subdivision for 2007-08 and 2008-09 is provided in table 20.7. 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 2008-09 the manufacturing industry employed 9% (1,016,700) of all people employed in Australia (10,766,600). Males outnumbered females by a ratio of around 3 to 1 (74% males and 26% females).
The largest employers of males in 2008-09 were food product manufacturing (114,900) and machinery and equipment manufacturing (94,100). The largest employers of females were food product manufacturing (78,600) and textile, leather, clothing and footwear manufacturing (31,100).
Table 20.8 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 1999 and May 2009 the average earnings of all employees increased by $331 (46%) in the manufacturing industry. The increase in the manufacturing industry was higher (in dollar terms) than the increase of $308 for all industries, though lower in percentage terms. The increase in average earnings of full-time employees between May 1999 and May 2009 (in percentage terms) was lower in the manufacturing industry than for all industries (48% versus 57%).
In the manufacturing industry, the earnings of both male and female full-time employees increased but the increase for female employees was 13 percentage points more than the increase for male employees. Despite this increase, female earnings remain below average male earnings. The average weekly earnings for the manufacturing industry for male full-time employees at May 2009 was higher by $186 (18%) than for female full-time employees. In May 1999 male full-time employees were earning $186 (29%) more than female full-time employees.
Operating profit before tax (OPBT)
OPBT is a measure of 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 eleven industry subdivisions were higher in 2007-08 than they were for 2006-07 (table 20.9). Manufacturing industries with lower OPBT in 2007-08 were beverage and tobacco product manufacturing, down 24% or $781 million (m), machinery and equipment manufacturing (down 5% or $177m), fabricated metal product manufacturing (down 2% or $47m) and primary metal and metal product manufacturing (down less than 1% or $67m).
The furniture and other manufacturing industry subdivision experienced the greatest increase in OPBT between 2006-07 and 2007-08 (113% or $512m). Other industries that experienced substantial profit growth over these periods included petroleum and coal product manufacturing (77% or $864m) and polymer product and rubber product manufacturing (50% or $624m). The OPBT for total manufacturing increased by 11% or $3,485m between 2006-07 and 2007-08.
Industries contributing most to total manufacturing industry profits for 2007-08 were primary metal and metal product manufacturing (24% of total manufacturing OPBT), food product manufacturing (10%) and basic chemical and chemical product manufacturing and machinery and equipment manufacturing (both 9%).
Overall, capital expenditure by the manufacturing industry increased by $1,484m (9%) between 2006-07 and 2007-08 (table 20.10).
Eight of the fifteen manufacturing industry subdivisions recorded increases in capital expenditure in this period. The largest increases in percentage terms were in fabricated metal product manufacturing (70% or $662m), food product manufacturing (39% or $846m), and wood product manufacturing (32% or $132m). These increases were partly offset by decreases in expenditure in transport equipment manufacturing (down 19% or $341m), polymer product and rubber product manufacturing (down 18% or $109m) and primary metal and metal product manufacturing (down 6% or $221m).
The manufacturing industries with the largest capital expenditure were primary metal and metal product manufacturing (19% of total manufacturing capital expenditure), food product manufacturing (17%) and fabricated metal product manufacturing and basic chemical and chemical product manufacturing (both 9%).
Research and experimental development (R and D)
In the business context, R and 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 and D activity extends to modifications to existing products and processes. R and D activity ceases and pre-production begins when work is no longer experimental.
Total R and D business expenditure by the manufacturing industry increased by $126m (3%) between 2005-06 and 2006-07 (table 20.11). Industries contributing the most to manufacturing R and D expenditure in 2006-07 were motor vehicle and part and other transport equipment manufacturing (22%), petroleum, coal, chemical and associated product manufacturing (17%), metal product manufacturing (16%) and photographic and scientific equipment manufacturing (11%). Together, these industries accounted for 66% of total R and D expenditure by the manufacturing industry and 21% of the total R and D expenditure by all industries.
Of manufacturing industry total R and D business expenditure in 2006-07, 7% was on capital expenditure, 42% on labour costs and 51% on other current expenditure (table 20.12). The motor vehicle and part and other transport equipment manufacturing industry contributed the largest expenditure on R and D by the manufacturing industry for labour costs (26%). The petroleum, coal, chemical and associated product manufacturing industry was the largest contributor for capital expenditure (24%). Manufacturing accounted for 34% of the capital expenditure, 39% of the labour costs, and 29% of other current expenditure on R and 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 (PPI) in the Prices chapter.
The manufacturing industry is a significant component of Australia's value of merchandise exports by industry of origin, accounting for 40% of total exports in 2008-09 (table 20.13). The value of manufacturing exports was 59% higher in 2008-09 than in 1999-2000. However, the manufacturing industry share of the total value of merchandise exports has been trending down over this period, in particular falling significantly between 2007-08 and 2008-09.
Graph 20.14 shows the five main destinations, by value, for manufacturing commodities exported from Australia during the period 2002-03 to 2008-09. Of these, the key destinations in 2008-09 were the United Kingdom, the United States of America (USA), and Japan. In 2008-09, the value of exports to the United Kingdom was just under $10b, compared with just over $8b for the USA and just under $8b for Japan. Over the period 2002-03 to 2008-09 the value of exports to India has increased by around two and half times (from just under $3b to just over $7b).
20.14 Manufacturing exports, Main destinations
More than 90% of Australia's total value of imports during the period 1999-2000 to 2007-08 were manufactured goods (table 20.15). In 2008-09 this figure dropped slightly to 89%. The value of Australia's imports of manufactured goods almost doubled for the period 1999-2000 to 2007-08, from $102b to $195b.
Graph 20.16 shows the value of manufacturing commodities imported from five selected countries to Australia, in the period 2002-03 to 2008-09. From 2002-03 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 by 86% (from $19b to $36b) between 2004-05 and 2008-09.
20.16 Manufacturing imports(a), Selected countries