We would be shocked if you hadn’t started thinking about 2020.
What do you expect the coming year to deliver for Australian manufacturers? Prosperity driven by cleverness, the adoption of new technologies, and homegrown ingenuity? This is our hope, of course.
It’s the beginning of December, meaning it’s time for news websites and others to look back and make sense of a year that’s nearly through, or to speculate about the one coming up. We have the same access to a functioning crystal ball as anybody else, but will take a punt on four developments for 2020.
To start with a hope/prediction, we will start to think more about scaling up manufacturing. Yes, the local market is small, and yes, there are obvious challenges/costs to operating here versus elsewhere (see below.) But there are countless examples of Aussie manufacturers whose products are valued abroad, and we’ll be reminded of this by the winners at tomorrow night’s 57th Australian Export Awards.
International (and local) markets offer a chance to expand, and there’s plenty of room for our manufacturers to do so. The overwhelming majority of Australian companies are small (1 – 19). Last week’s announcement of a $520 million SME investment fund – with $100 million from the feds and the rest from banks – is welcome news, and we look forward to learning more details. Hopefully it improves access to equity investments for manufacturers seeking it, and the results can see them expand here and abroad.
Energy prices will claim more casualties next year. This year high gas prices within Australia – set to become the world’s leading LNG exporter – have shut factories owned by Remapak and Dow Chemical. Industry has been warning about the unsustainability of elevated gas costs for years. There is no sign of significant relief next year, and pressures remain on plastics, chemicals and other companies.
Alcoa at Portland and Rio Tinto’s three aluminium smelter sites have been struggling for some time under high electricity prices, with the latter recently calling its Australian aluminium operations ”not sustainable” at this rate.
It is a sad yet very real possibility we will see more operations shut in 2020 due to energy costs.
The circular economy trend will pick up pace. We’ve seen large companies make C.E. announcements lately, for example Lion showing off a recycled bar at the Melbourne Cup Carnival, Woolies offering a pale ale made of unused bread, and Officeworks collecting used pens and batteries at their stores.
Whether they are long-time conservationists or not, Australians are caring more about waste, and businesses will respond. Add to this the disappearing option to export recyclables, and it will be imperative that plastics and other products get repurposed as products and sold.
Expect to see more events and publicity around the circular economy, as well as more concrete efforts to reuse waste. Speaking of, last week Venlo Investments announced a US distro deal for its TuffBlock product, an alternative to concrete footings for decking projects. According to the company, a shipping container full of these saves 3.2 million bottle caps from landfill. It’s a good story, and you’ll hear more such stories next year.
Another sustainability-oriented trend, bioenergy, will gain momentum in 2020. ARENA will deliver a bioenergy roadmap to the federal government by mid-next year. There is a lot of room to improve the proportion of bioenergy in Australia’s energy mix – it makes up only 4 per cent of the total at present, below the OECD average of 7 per cent – as well as a lot of potential in the form of agricultural waste. We have some clever manufacturers turning waste to energy – for example Capricorn Power, Licella and Mercurius – whose clever ideas might have their moment next year.
Anybody else willing to take a punt on 2020 can get in touch.
– Brent Balinski, editor, @AuManufacturing
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