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David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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22/12/11

Modern economies need manufacturing


Print-friendly 1 comment(s) Posted in: 3rd party

Ray Keefe writes about a presentation from Professor Goran Roos to the South East Business Network on Australian manufacturing:

Here is the short list on what manufacturing does for an economy:

  • R&D is driven by it.
  • Innovation is primarily manufacturing related.
  • Value added exports are usually manufactured.
  • Creates more indirect jobs per direct job than other sectors.
  • Many service companies have a manufacturing core.
  • Is the fastest knowledge growth domain.
  • Is essential for a highly competitive economy.
  • His primary point is that "A healthy manufacturing sector is a must for any advanced economy with ambitions to maintain both economic and social wellbeing".

Now he has my attention big time. Because this is something I have inherently believed my entire working life. Australia needs manufacturing.

Manufacturing creates employment

Next he looked at the contribution of manufacturing to employment and why we have employment issues in Australia. Yes I know the official unemployment figure is low, but that is because many people looking for work are not included in the official figure. So here is how is pans out for employment:

  • For each manufacturing job, there are 2.5 other jobs created around it.
  • In Australia where there are 1 million jobs in manufacturing, that means there are 3.5 million jobs in total associated with manufacturing.
  • For each working person, there is a dependent person relying on them for income. These can be relatives, children, spouse etc.
  • So in total there are 7 million people in Australia dependent on manufacturing.

Now lets look at mining:

  • For each mining job, there is another job created around it.
  • In Australia where there are 200 thousand jobs in mining, that means there are 400 thousand jobs in total associated with mining.
  • For each working person, there is a dependent person relying on them for income. These can be relatives, children, spouse etc.
  • So in total there are 400 thousand people in Australia dependent on mining
  • So the current government policies and industry practices of reducing manufacturing and increasing mining for direct export are actually economic suicide.

The service industry is even worse for indirect job creation though it does employ more people than mining ever will:

  • For each service industry job, there is 0.5 jobs created around it.
  • The ABS statistics for 2010 show roughly 3 million people working in service industries in total including the 0.5 jobs created.
  • For each working person, there is a dependent person relying on them for income. These can be relatives, children, spouse etc.
  • So in total there are 6 million people in Australia dependent on service industry jobs.

What this means is that manufacturing is actually the most critical sector in Australia in terms of job creation and future prosperity.

So lose manufacturing, and you lose a huge number of jobs.

The USA has shed 5 million manufacturing jobs since 2000, primarily to offshoring manufacturing to lower cost economies. These jobs were replaced by low paying personal service jobs. The net result is record levels of unemployment and a trade deficit in every manufacturing category.


 



tags: goran roos, r&d, innovation

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