Inside manufacturing: subs, food and electronics key to South Australia’s economic future

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By David Russell

Manufacturing in South Australia is in a state of flux, with the automotive industry winding-down at the same time as new industries emerge and establish themselves as economic linchpins for the state.

Someone who is optimistic about the future of manufacturing in South Australia is Swedish academic, innovation expert and member of the Economic Development Board Göran Roos, who believes there is huge capacity for job creation in some key existing industries.

“The greatest opportunity is in the continuous build of surface and submarine military vessels,” Goran told Inside South Australia.

“The supply chain of a submarine contains around 1500 companies and 25,000 people… The task of companies is to make themselves available in that supply chain and then leverage the knowledge they gain into other products that they can sell to the rest of the world.”

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The ASC shipbuilding facility at Osborne, South Australia.

The case for a continuous build program in Australia has gained momentum in recent weeks, with current Chief of Navy Tim Barrett adding his voice to the chorus calling for locally-built fleets in order to protect our sovereign capability and keep advanced manufacturing skills on Australian shores.

But it isn’t just defence offering the chance for companies to innovate and diversify their offerings. The rise of the middle class in Asia has, according to Goran, created a “food boom” not dissimilar to the mining boom, presenting a huge export opportunity as well as the potential to develop a support industry around food processing.

“We are seeing rapid growth… in the food industry and supporting industries, particularly in high value-add sectors (like) science-based food processing and high-end, premium products.

“We could have a world-leading high value-adding food industry… (but) the food boom will last 20 to 30 years… after that it will be gone. So unless we want to be at that point looking back saying ‘there’s nothing left’, we need to value-add to the raw material and very rapidly build a support industry.

“For mining it was the mining equipment and technology services industry… it was only at the end (of the mining boom) that people realised that was a good industry.”

The other key sector poised for high growth is electronics manufacturing, already bigger in South Australia than in any other state.

“We have around 300 companies in this industry in South Australia, which is about 40 per cent of the electronics industry in Australia.

“It’s an extremely high value-added industry. It has about 11,000 employees and turns over about $4 billion, and it’s growing quite dramatically.”

Despite the fact that many of these companies sprung up from the automotive industry, today they export most of what they produce, and the impact on them of the decline of car manufacturing will be minimal. Goran says the industry has the potential to create a lot of jobs in South Australia.

“You want companies (in South Australia) who are world-leading in productivity improvement and who are serving markets that are growing faster than their productivity improvement, which means they need to employ more people. Those are sustainable jobs, and the electronics industry is a classic industry of that nature because the markets they serve grow very rapidly.”

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