Australia was home to prehistoric settlers from Southeast Asia 40,000 years before Captain James Cook claimed the east coast for Britain. The creation of the Western Australia colony brought the total number of British colonies to six and the country became the Commonwealth of Australia in 1901. Australia, the largest country without land borders, occupies the entirety of the world’s smallest continent, but remains the sixth largest country in the world, with a land-mass about the size of the continental United States.
Manufacturing in Australia
Manufacturing is a natural focus for Australia because of its abundance of raw materials. Manufacturing and industry made up about 26 percent of the GDP in 2017 while industrial production grew about 1 percent.
Primary manufacturing industries include industrial and transportation equipment, food, chemicals, steel and mining. In fact, Australia is the world’s largest exporter of coal at 29 percent of all coal exports.
Much of the manufacturing is located along the periphery of the country where the population is clustered. Much of the interior of the country is sparsely populated.
Other Important Industries
Australia is also a player in the global financial industry. Financial services and other services make up about 70 percent of the GDP and employs about 75 percent of the workforce. Agriculture comprises about 3.6 percent of the GDP and employs 3.6 percent of the workforce. Primary agricultural commodities include wheat, barley, sugarcane, fruit, cattle, sheep and poultry. Australia exports much of its agricultural production, primarily to other countries in the region.
Supply Chain Infrastructure for Manufacturing
Australia’s supply chain infrastructure is robust, as you would expect from a country that is so isolated. There are few restrictions on trade, so movement of goods into and out of the country is fast, inexpensive and usually reliable.
Australia has 480 airports, most of which can be used for freight movement. This enables Australia to move goods and materials quickly to and from industrialized areas.
Australia has more than 33,000 Km of railroads, making it the seventh most well-equipped country in the world for moving bulk commodities such as coal, ores and chemicals. Roads in the populated areas are well maintained for ease of travel and transport.
While Australia has several seaports, most of the inland waterways are used only for recreation. Australia has recently undertaken a project to add more intermodal terminals and to strengthen facilities at its existing intermodal terminals to streamline the transfer of goods.
Australia’s workforce was estimated at around 12.9 million people in 2017, most of which is well educated. Furthermore, the unemployment rate has been hovering around 5.5 percent for the past few years. The number of people engaged in the manufacturing industry, however, has been declining for several years. Although wages have been rising since around 2010, this suggests that it may be difficult to attract workers with the right skills to the manufacturing sector.
Australia’s economy grew steadily for many years because of the stable government, low debt and inflation, and stable financial and legal systems. However, as growth in Australia’s primary trading partners—notably China—slows, Australia may be faced with economic challenges to its own growth. The drop in commodity prices could also cause a slowdown.
However, Australia is an open market with very few trade restrictions on goods and services, and it is open to foreign investments such as the recent Gorgon Liquid Natural Gas project which is expected to add significant growth to the natural resources sector.
Australia’s GDP was $1.235 trillion in 2017, making it the 20th largest in the world. Inflation is low, averaging one to two percentage points annually. In 2017, exports were $224.5 billion, and imports were $215.4 billion. Primary imports included motor vehicles, telecommunications equipment, crude and refined petroleum products, medicines and computers. Exports were primarily commodities such as iron ore, coal natural gas and agricultural products.
The Commonwealth of Australia is a parliamentary democracy under a constitutional monarchy, making Queen Elizabeth II the head of state, although there is also a prime minister who is elected by the ruling parliamentary party. The capital city is Canberra and the country’s legal system is based on English Common Law.
Australia’s statutory tax rate on corporate income is 30 percent. There are also taxes on payroll, workers’ compensation, fringe benefits, land and vehicles as well as value-added tax (VAT). This leaves Australia with a 47.5 percent total tax and contribution rate on corporate profit. The World Bank ranks Australia at number 26 in the world for ease of paying taxes and number seven for ease of starting a business.
While it’s easy to register land and property or receive approval for building permits for new construction and renovations, it can take up to 75 days to get connected to electric power. Once connected, the power grid is robust and stable, so factor the lag time into construction plans.
The Australian government mandates national employment standards. There are regulations covering 10 minimum standards that employers must provide. They cover maximum hours per week, request for flexible work arrangements, parental and family leave, annual leave, personal care and compassionate leave, community service leave, public holidays, long service leave, notice of termination and redundancy pay. There is also a national minimum wage rate in effect.
Getting Down to Business
Australia offers open and friendly circumstances for starting or operating a manufacturing company. The abundance of natural resources, robust supply chain infrastructure and well-educated workforce all combine to make Australia an attractive home for manufacturers. Australia also offers modern telecommunications and a robust Internet infrastructure that makes it ideal for cloud computing and achieving optimized supply chain visibility.
How would you describe the state of Manufacturing in Australia? Learn more about manufacturing and doing business in other great countries around the world.