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APPENDIX - A brief profile of manufacturing in New South Wales

 

While the relative economic importance of manufacturing to NSW has declined the manufacturing sector contributes around $40 billion to the State economy per year (in 2007-08 value added was $35.1 billion; total sales were $91.5 billion). Manufactured exports from NSW presently exceed $16 billion.  In a typical year annual capital expenditure by manufacturing businesses in NSW on new plant, machinery and equipment (excluding property and buildings) is estimated to exceed $6 billion (expenditure on plant etc by all sectors exceeds $25 billion annually - ABS 52200.02 Australian National Accounts – State Accounts, NSW).

In all economic sectors there are strong, dynamic world competitive enterprises; in addition to providers of products and services no longer relevant or able to compete (in banking: traditional book keepers; or in manufacturing: consumer audio tape). Australia has low levels of unemployment and a strongly growing economy based on the ebb and flow of business formation; including their quick demise when they lose their competitive advantage. 

The overall mix of these business activities is set by the prevailing competitive environment and economic policy settings. Some areas of manufacturing activity, that may be strong overseas, are not competitively viable in Australia due to these economic realities (like a high dollar or distance from market) or alternatively, the lack of the unique intellectual property (technology, knowledge, skills or management) that would confer an advantage. 

In such cases, an initiative to attract an overseas company with the necessary intellectual property may be a fruitful local or government strategy. This is in contrast to some government 'investment attraction' initiatives that are often political 'window dressing', at best or at worst, counter-productive attempts to interfere in commercial investment decision making. These may include incentives to redirect new capital investment to one location or another; albeit on an infinitesimal scale relative to overall business investment and capital expenditure in the economy.

The following table provides a sectoral comparison for the presently dominant sectors in NSW

 

Sector

Employment at end of June 2007

no.

Wages and Salaries
 

$m

Wages and Salaries per Employee

$000

Sales of goods and services

$m

Number of Locations
 

no.

Primary metal and metal product mfg

18,366

1,337

72.8

13,614

823

Beverage and tobacco product mfg

9,287

599

64.5

6,117

481

Machinery and equipment mfg

37,477

2,084

55.6

11,422

3,453

Printing (including the reproduction of recorded media)

17,459

904

51.8

3,845

2,774

Non-metallic mineral product mfg

12,909

752

58.3

4,072

1,300

Fabricated metal product mfg

29,518

1,395

47.3

6,852

4,590

Wood product mfg

13,277

540

40.7

2,856

2,296

Food product mfg

54,017

2,575

47.7

18,404

3,139

Source: Australian Bureau of Statistics 82210DO010_200607 Manufacturing Industry, Australia, 2006-07 (Additional Datacube) Released at 11:30 am (Canberra time) Tues 14 Apr 2009 Table 1 Manufacturing Census, Industry Class by State

 

 

The following diagram depicts the export orientation of the broad industry sectors at a national level:

image003

 

After the resourced based manufacturing sectors (dominated by meat, dairy and wine in the food sector) ‘machinery and equipment manufacturing’ is the subdivision containing the greatest number of firms competing in international markets.

It is clear that many enterprises within the ‘machinery and equipment manufacturing’ subcategory are important to NSW, collectively representing about 14% of total manufacturing employment in the State and slightly higher value added.  This subcategory is also the dominant source of elaborately transformed manufactured exports. It aggregates a number of businesses that are enjoying a comparative advantage when compared to other sectors and other States and this comparative advantage appears to be based mainly on their intellectual property (technology, knowledge, skill and management capability).

A more detailed breakdown of this sector follows:

Item

Employment at end of June 2007

no.

Wages and Salaries
 

$m

Wages and Salaries per Employee

$000

Sales of goods and services

$m

Medical and surgical equipment mfg

4,085

227

55.6

1,472

Other electronic equipment mfg

3,833

258

67.3

964

Other electrical equipment mfg

3,421

172

50.3

1,273

Lifting and material handling equipment mfg

2,883

168

58.3

977

Other professional and scientific equipment mfg

2,418

147

60.8

583

Other machinery and equipment mfg n.e.c.

2,246

127

56.5

542

Mining and construction machinery mfg*

2,207

121

54.8

896

Electric lighting equipment mfg

2,132

106

49.7

420

Communication equipment mfg*

2,006

110

54.8

545

Other specialised machinery and equipment mfg

1,693

91

53.8

394

Fixed space heating, cooling and ventilation equipment mfg

1,525

81

53.1

405

Other domestic appliance mfg

1,324

na

 

266

Pump and compressor mfg

1,263

80

63.3

326

Whiteware appliance mfg

1,227

na

 

265

Computer and electronic office equipment mfg*

1,222

67

54.8

714

Machine tool and parts mfg*

1,222

67

54.8

252

Electric cable and wire mfg

1,124

64

56.9

779

Agricultural machinery and equipment mfg

1,038

47

45.3

250

Photographic, optical and ophthalmic equipment mfg

609

27

44.3

98

Total machinery and equipment mfg

37,477

2,084

55.6

11,422

 Source: as above
* employment data not published (withheld) – number estimated from total wages and published total

Also important for its contribution to exports and value of sales (relative to employment) is: ‘human pharmaceutical and medicinal product manufacturing’ (within the ‘basic chemical and chemical product manufacturing subdivision’).

 

 

 

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