In a post-pandemic world, it is time for Australia to focus on value adding its economy

The COVID-19 pandemic has impacted global health and economic activity, exposing the weaknesses and strengths of our political and social systems, and accelerating forces that were already transforming the world’s economies.

The forced isolation and disruption to global supply chains has triggered renewed discussion over the need to revive our local manufacturing sector, and to become more self-sufficient. These calls have merit, because economic recovery will require greater investment in productivity and value adding within industries.

Value adding to products at each stage of their production is a foundation of manufacturing, and remains a key measure of economic performance. 

To many people, the closure of local car manufacturing from 2014 was a sign that Australia had become a country that no longer made things. At the time, I wrote an article in The Conversation explaining the history of car making in Australia, highlighting the importance of manufacturing to national economic growth.

The good news is that Australia still has a strong manufacturing sector. As the Australian Industry Group reported in 2019, it is the nation’s seventh-largest industry sector in terms of employment, and the sixth in terms of output, contributing around 11 per cent of our annual exports. More importantly, it is the most significant sector in relation to business expenditure on research and development (BERD), which is a key measure of how innovative a country is.

One of the challenges facing manufacturing is the digital transformation of the Fourth Industrial Revolution. This is the introduction of digital technologies such as cyber physical systems (CPS), artificial intelligence, the Internet of Things, 3D printing, machine learning and big-data analytics.

Australian manufacturing is already embracing these technologies, but they will have an impact on all industries. However, these technologies are only tools within a wider framework of how organisations innovate their existing business models.

This requires a mindset for adaptive change, innovative thinking, and a willingness to ‘bundle’ physical, intellectual and human resources into new combinations that can add value throughout the production process.

This can be applied to all organisations including services. Let’s get started.