In Australia, the manufacturing sector has grown at an average rate of 0.9% p.a. for more than a decade. Companies within the manufacturing sector employ almost one million people and account for 8.7% of GDP.
The manufacturing sector is now the second largest export contributor (after mining). Manufacturing accounted for 40% of total exports during 2009-10, demonstrating its importance in the domestic economy¹.
However, the manufacturing sector faces constant pressure from low cost manufacturing economies such as India and China.
This is further intensified by the strong Australian dollar, rising input costs and increasing social and environmental expectations of consumers.
Following the introduction of carbon tax the consumers will expect prices to rise. However, in future, manufacturers will have the opportunity to make the most of consumer preferences for products that are produced in an environmentally friendly manner and therefore do not include the carbon tax impost.
So what’s the key to success in manufacturing?
Manufacturing businesses and business leaders need to increase their focus on key success factors such as:
Innovation – Innovation is not just about retention and development, or the latest technology. It’s also about practical and efficient problem solving and business transformation.
In the manufacturing industry, this can be achieved by:
- Refining or exploring new supply and distribution channels
- Establishing new business offerings
- Developing leaner organisational arrangements
- Improving processes
- Providing a better customer experience
- Accessing green, clean technology – high on the agenda for environmentally conscious customers.
Productivity improvement – A focus on increasing revenue, not just cost cutting, will lead to the longevity and success of a business.
In the manufacturing industry, this means:
- Efficiency in internal processes
- Having in-depth knowledge of your customers and the market
- Embracing the latest production technology.
Investment in people and skills – The knowledge and skills of people contributes to innovation and productivity improvement.
Increasing pressures on the manufacturing sector stem from skills shortages and growing competition for talent.
People in the workforce can no longer afford to have just technical skills. They need a range of capabilities that also includes creative thinking and problem solving.
Furthermore, networking skills are critical to success. Well-connected people who are capable of collaborating and have access to peer knowledge can contribute to the success of a business.
Funding – Funding enables manufacturing businesses to innovate, improve productivity and remain competitive.
Short-term dips in cash flow are normal in the business cycle. Having access to funds that can help bridge those dips is vital in financial management. For more information on funding have a look at our 3 Steps To Capital Raising blog.
Manufacturing businesses that focus on these key success factors will increase their chance of success against global competition and changing customer expectations.
Vantage Performance is one of Australia’s leading turnaround management and profit improvement firms – solving complex problems for businesses experiencing major change.
Reference: ¹Manufacturing futures (April 2011) A paper by the Australian Business Foundation for the NSW Business Chamber.