1301.0 - Year Book Australia, 2008
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 07/02/2008
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MANUFACTURING INDUSTRY Table 20.2 shows the industry GVA of the subdivisions (components) within the Manufacturing Division as defined in the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (1292.0). The contribution of the Manufacturing industry to Australia's GDP in the period 2001-02 to 2005-06 declined (in current prices) from 11.0% to 10.1%.
In this period, the Manufacturing industry GVA (in volume terms) rose by 3.1%, while its contribution to GDP (in current prices) declined from 11.0% in 2001-02 to 10.1% in 2005-06. The largest increase in production in the period was for Non-metallic mineral product manufacturing (32%), followed by Machinery and equipment manufacturing (20%). Production for Non-metallic mineral product manufacturing and Machinery and equipment manufacturing had been growing progressively each year from 2001-02.Production for Textile, clothing, footwear and leather manufacturing fell by 35%. Production in this subdivision has been declining each year since 1998-99. Other industry subdivisions that recorded falls over this period were Other manufacturing (6.7%), Petroleum, coal, chemical and associated product manufacturing (2.9%) and Wood and paper product manufacturing (1.4%). Between 2004-05 and 2005-06, production decreased for seven out of the nine manufacturing industry subdivisions. The largest decreases were for Other manufacturing (9.5%), Textile, clothing, footwear and leather manufacturing (6.6%) and Petroleum, coal, chemical and associated product manufacturing (4.0%). The increases were for Non-metallic mineral product manufacturing (11.5%) and Machinery and equipment manufacturing (5.7%). The Manufacturing industry is the largest contributor to Australia's merchandise export earnings. Its value of exports based on industry of origin accounted for 51% of total merchandise exports in 2006-07. Structure and performance The major source of statistics in this section is the annual Economic Activity Survey (EAS) of businesses, conducted by the Australian Bureau of Statistics (ABS). Production of an industry can be measured in terms of industry value added (IVA), in much the same way as industry GVA. However, unlike industry GVA (the national accounts concept of production), IVA is not adjusted for a number of national accounting conventions, as the information to make these adjustments cannot be collected in the EAS. The advantage of IVA, however, is the availability of more detailed (component) industry and state estimates of manufacturing production. Summary of operations in 2004-05 In 2004-05 manufacturing businesses paid $60 billion (b) in labour costs, and generated $339b of sales and service income and $98b of IVA (table 20.3).Food, beverage and tobacco manufacturing was the largest contributor to total manufacturing sales and service income ($72b or 21%) and the second largest contributor to selected labour costs ($11b or 18%). Machinery and equipment manufacturing contributed the most to total manufacturing IVA ($19b or 20%) and selected labour costs ($14b or 23%). Other industry subdivisions making major contributions were Metal product manufacturing (19% of sales and service income and 19% of IVA) and Petroleum, coal, chemical and associated product manufacturing (18% and 13%).
Contribution to state production Graph 20.4 shows the Manufacturing industry's contribution to state production (in current prices) for 2005-06. The trend for the Manufacturing industry's share of total production in all states has generally been decreasing, even though Australian manufacturing production grew by 28% (in current prices) between 1997-98 and 2005-06. This is because the growth in manufacturing production has been at a slightly slower rate than the growth in other industries. State distribution of activity Graph 20.5 shows the relative contributions to overall manufacturing production by states and territories in 2004-05. New South Wales and Victoria continued to be the largest contributors to manufacturing production, accounting for 32% ($32b) and 31% ($30b) respectively. Table 20.6 shows the production by Manufacturing industry subdivision by state and territory. In 2004-05, New South Wales contributed 39% of the total IVA of the Printing, publishing and recorded media industry ($10.1b) and between 29% and 35% of the total IVA of the remaining manufacturing industries. Victoria contributed 42% of the total IVA of the Textile, clothing, footwear and leather manufacturing industry ($2.9b), 37% of the total IVA of the Petroleum, coal, chemical and associated product manufacturing industry ($12.9b), and between 21% and 35% of the total IVA of the remaining manufacturing industries. Food, beverage and tobacco manufacturing, and Metal manufacturing were the largest manufacturing industries in New South Wales accounting for 20% each of total manufacturing IVA for that state. In Victoria, Machinery and equipment manufacturing and Food, beverage and tobacco manufacturing were the largest with 23% and 19% respectively. Queensland contributed 20% of the total IVA for Metal product manufacturing which was also the largest manufacturing industry (24%) in this state. The contributions of South Australia and Western Australia to total manufacturing IVA were $8.2b and $9.2b respectively, although the structure of the Manufacturing industry was very different. Machinery and equipment manufacturing was the largest manufacturing industry in South Australia, accounting for 29% of state production and 13% of the total IVA for the industry. South Australia also contributed between 5% and 11% of the total IVA of the remaining manufacturing industries. Western Australia contributed 14% of total IVA for Metal product manufacturing and 13% of total IVA for Non-metallic mineral product manufacturing. Metal product manufacturing was the largest manufacturing industry in the state, accounting for 28% of state production. Manufacturing was not as significant for the remaining states and territories. Tasmania, which accounted for $2.3b of total manufacturing IVA, contributed 8% of total IVA for Wood and paper product manufacturing. The total production for the Northern Territory and the Australian Capital Territory were $0.8b and $0.4b respectively.
Employment The number of full-time and part-time workers in each Manufacturing industry subdivision is provided in table 20.7. The table includes directors who are not paid a salary and self-employed people (such as contractors, owner/drivers, consultants and people paid solely by commission without a retainer).In May 2007 the Manufacturing industry employed 10% (1,086,700) of all people employed in Australia (10,451,200). Males outnumbered females by a ratio of 3 to 1 (75% males and 25% females). The majority of people employed in the Manufacturing industry were employed full time (93% of males and 70% of females), which is higher than the proportion of people employed full time in all industries (85% of males and 55% of females). The largest employers of males were Machinery and equipment manufacturing (198,100) and Food, beverage and tobacco manufacturing (139,200). The largest employers of females were Food, beverage and tobacco manufacturing (67,000) and Printing, publishing and recorded media (47,500).
Table 20.8 presents information on average weekly earnings (i.e. ordinary time earnings plus overtime earnings) of employees in the Manufacturing industry compared with all industries. Between May 1987 and May 2007 the average earnings of all employees (male and female) increased by $582 (140%) in the Manufacturing industry. The increase in the Manufacturing industry was higher than the increase of $476 (123%) for all industries. The increase in average earnings of full-time employees between May 1987 and May 2007 was however lower in the Manufacturing industry than for all industries ($635 or 141% and $672 or 145% respectively). In the Manufacturing industry, the earnings of both male and female full-time employees increased but the increase for female employees was 22 percentage points more than the increase for male employees. Despite this increase, female earnings remain well below average male earnings. The difference, in percentage terms, between the earnings of males and females had decreased between May 1987 and May 2007. The average weekly earnings for male full-time employees at May 2007 was higher by $213 (23%) than for female full-time employees. In May 1987 male full-time employees were earning $123 (35%) more than female full-time employees.
Operating profit before tax (OPBT) OPBT is a measure of profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid). Profits for five industry subdivisions were higher in 2004-05 than they were for 2003-04 (table 20.9). Manufacturing industries with lower profits in 2004-05 were Non-metallic mineral product manufacturing (down 15% or $277 million (m)), Wood and paper product manufacturing (down 12% or $200m), Textile, clothing, footwear and leather manufacturing (down 10% or $74m) and Food, beverage and tobacco manufacturing (down 6.9% or $417m). The Metal product manufacturing industry experienced the greatest increase in profits between 2003-04 and 2004-05 (59% or $2,777m). Other industries that experienced substantial profit growth in the last financial year include, Petroleum, coal, chemical and associated product manufacturing (46% or $1,183m) and Printing, publishing and recorded media (21% or $600m). The OPBT for total manufacturing increased by 17% or $4,177m between 2003-04 and 2004-05. Industries contributing most to total manufacturing industry profits for 2004-05 were Metal product manufacturing (26% of total manufacturing OPBT), Food, beverage and tobacco manufacturing (20%), Machinery and equipment manufacturing (14%), Petroleum, coal, chemical and associated product manufacturing (13%) and Printing, publishing and recorded media (12%).
Capital expenditure Overall, capital expenditure by the Manufacturing industry increased by $2,372m (17%) from 2003-04 to 2004-05 (table 20.10). Six of the nine Manufacturing industry subdivisions recorded increases in capital expenditure in this period. The largest increases in percentage terms were in Petroleum, coal, chemical and associated product manufacturing (32% or $728m), Metal product manufacturing (30% or $802m), and Other manufacturing (24% or $80m). These increases were partly offset by decreases in expenditure in Wood and paper product manufacturing (18% or $174m), Textile, clothing, footwear and leather manufacturing (12% or $42m) and Non-metallic mineral product manufacturing (11% or $114m). The manufacturing industries with largest capital expenditure were Metal product manufacturing (22% of total manufacturing capital expenditure), Food, beverage and tobacco manufacturing (21%), Petroleum, coal, chemical and associated product manufacturing (19%) and Machinery and equipment manufacturing (17%).
Research and experimental development (R&D) In the business context R&D is defined as systematic investigation or experimentation involving innovation or technical risk, the outcome of which is new knowledge, with or without a specific practical application or new or improved products, processes, materials, devices or services. R&D activity extends to modifications to existing products and processes. R&D activity ceases and pre-production begins when work is no longer experimental. The ABS survey of R&D up to and including 2004-05 was based on a complete enumeration of businesses identified as likely R&D performers. Businesses mainly engaged in the Agriculture, forestry and fishing industry were excluded. Commencing with the 2005-06 survey cycle, the scope was adjusted to exclude businesses with expenditure on R&D of less than $100,000 in the reference period. Offsetting this change, however was the inclusion of businesses classified to the Agriculture, forestry and fishing industry. The scope changes were not backcast for previous reference periods, given their offsetting nature and their relatively minor impact on key survey estimates. Total R&D expenditure by the Manufacturing industry increased by $417m (12%) in 2005-06 (table 20.11). Industries contributing the most to manufacturing R&D expenditure in 2005-06 were Motor vehicle and part and other transport equipment manufacturing (24%), Petroleum, coal, chemical and associated product manufacturing (18%), Metal product manufacturing (16%) and Electronic and electrical equipment and appliance manufacturing (13%). Together, these industries accounted for 71% of total R&D expenditure by the Manufacturing industry and 27% of the total R&D expenditure by all industries.
Of Manufacturing industry total R&D expenditure in 2005-06, 7% was on capital expenditure, 42% on labour costs and 50% on other current expenditure (table 20.12). The Motor vehicle and part and other transport equipment manufacturing industry contributed the largest expenditure on R&D by the Manufacturing industry for labour costs (31%). The Petroleum, coal, chemical and associated product manufacturing industry was the largest contributor for capital expenditure (29%) with Metal product manufacturing being the second largest contributor (20%). Manufacturing accounted for 45% of the capital expenditure, 42% of the labour costs, and 38% of other current expenditure on R&D by all industries.
Price indexes The ABS compiles two price indexes relating to the Manufacturing industry - the Price Index of Materials Used in Manufacturing Industries and the Price Index of Articles Produced by Manufacturing Industries. Information on recent trends in the prices of materials used and articles produced in individual manufacturing industries is provided in the section Producer price indexes in the Prices chapter. International trade The Manufacturing industry dominates Australia's value of merchandise exports by industry of origin, accounting for 51% of total exports in 2006-07 (table 20.13). The value of manufacturing exports was 60% higher in 2006-07 than in 1997-98. However, the Manufacturing industry share of total value of merchandise exports has been trending down over this period.
Graph 20.14 shows the five main destinations for manufacturing commodities exported from Australia, during the period 2000-01 to 2006-07. Of these, the key destinations were Japan, New Zealand (NZ) and the United States of America (USA). In 2006-07, the value of exports to Japan was $8.5b, compared with $7.7b for NZ and $7.4b for the USA. Over the period 2000-01 to 2006-07 the value of exports to India has increased over eight times (from $0.7b to $5.7b). More than 90% of Australia's total value of imports during the period 1997-98 to 2006-07 were manufactured goods (table 20.15). The value of Australia's imports of manufactured goods almost doubled over this period, from $86b to $164b.
Graph 20.16 shows the value of manufacturing commodities imported from five main countries to Australia, in the period 2000-01 to 2006-07. From 2000-01 to 2004-05 Australia imported more manufactured goods from the USA than from any other country. However, in 2005-06, China overtook the USA as the country providing the largest amount of imports. The value of imports from China grew almost three times from $9.6b in 2000-01 to $26.4b in 2006-07.
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