Struggles of Manufacturing

Written By Adrian Macri

Australia’s manufacturing sector is at a critical turning point. With renewed focus on sovereign capability, local production, and value-added processing, many businesses are looking to manufacture products or process materials locally. Despite strong opportunities, manufacturers are facing a number of structural and operational challenges that make growth difficult.

Here’s a closer look at the biggest issues currently impacting Australian manufacturing.

1. Skills Shortages Are Slowing Growth

One of the most significant barriers to manufacturing expansion is access to skilled labour.

Many businesses struggle to find:

  • CNC machinists

  • Toolmakers and patternmakers

  • Maintenance fitters

  • Engineers (mechanical, mechatronics, automation)

  • Skilled production supervisors

Australia’s manufacturing workforce is ageing, and fewer young people are entering traditional trades. Meanwhile, modern manufacturing now requires digital capability, robotics, automation systems, CAD/CAM software, and data-driven production processes.

Upskilling existing workers takes time and investment, while recruiting internationally has become more complex and competitive.

The result?

Projects get delayed, expansion plans stall, and productivity suffers.

2. Supply Chain Vulnerabilities

Global supply chain disruptions over recent years exposed how dependent Australia is on imported inputs.

Many manufacturers rely on overseas suppliers for:

  • Raw materials

  • Precision components

  • Tooling and dies

  • Electronic parts

  • Specialty chemicals

Shipping delays, geopolitical tensions, and freight costs have created unpredictability in lead times and pricing.

Additionally, Australia’s domestic supplier base in certain specialist areas, such as toolmaking and advanced component manufacturing, has shrunk over decades of offshoring. This makes it difficult to “onshore” production quickly, even when there is demand.

Manufacturers are now trying to build more resilient supply chains, but doing so requires investment and long-term strategy.

3. High Energy Costs

Energy-intensive industries, including metals processing, plastics manufacturing, food production, and chemical processing, are particularly exposed to rising electricity and gas prices.

Compared to some global competitors, Australian manufacturers often face:

  • Higher energy costs

  • Grid reliability concerns in certain regions

  • Transition uncertainty around renewable integration

For businesses operating on tight margins, fluctuating energy costs can significantly impact competitiveness, especially when competing against low-cost international producers.

4. Global Competition and Cost Pressures

Australian manufacturing operates in a high-cost environment.

Key cost pressures include:

  • Labour costs

  • Compliance and regulatory costs

  • Workplace safety obligations

  • Environmental standards

  • Insurance and financing costs

While these standards are important and protect workers and communities, they can make it difficult to compete with lower-cost manufacturing hubs in Asia.

As a result, Australian manufacturers must compete on:

  • Quality

  • Innovation

  • Customisation

  • Speed to market

  • Technical capability

Competing purely on price is rarely viable.

5. Capital Investment and Technology Adoption

Advanced manufacturing requires investment in:

  • Automation and robotics

  • CNC machinery

  • Digital production systems

  • Additive manufacturing

  • Smart factory technologies

However, capital equipment is expensive. Smaller and mid-sized manufacturers often struggle with:

  • Access to finance

  • Investment risk

  • Uncertainty about ROI

  • Rapid technological change

Without upgrading, businesses risk falling behind. However, upgrading requires confidence in long-term demand, which isn’t always guaranteed.

The Opportunity Ahead

Despite these challenges, Australian manufacturing is far from declining. In fact, there is growing momentum around:

  • Value-added processing of raw materials

  • Defence and sovereign capability

  • Renewable energy components

  • Medical and pharmaceutical manufacturing

  • Advanced materials and technology manufacturing

Government initiatives, reshoring trends, and increased awareness of supply chain resilience are creating new opportunities.

The key question is not whether Australia can manufacture, it absolutely can. The real challenge is how businesses adapt to operate competitively in a high-cost, high-standard environment.

Manufacturers who invest in skills, technology, resilience, and niche expertise are best positioned to succeed.

This is where Macri Engineering can help. We provide specialised capabilities in Manufacturing equipment Automation, DFM/DFA, CAD design and Model validation to FEA.

Most manufacturers stop here, neglecting to consider the possibilities of engaging an external specialist such as ourselves that have the capacity to delve into the specifics of the particular manufacturing operations and help deliver clear and decisive steps on how to move forwards.

Adrian Macri