Manufacturing looks to efficiency, productivity and sustainability – Comm Bank

Australian manufacturers expect to increase production volumes in the next 12 months, supported by higher capital expenditure and investment in technology, a new CommBank report shows.

The new 2023 CommBank Manufacturing Insights Report reveals that 72 per cent of manufacturers in Australia expect to increase production levels in the next 12 months, while the same proportion are planning to increase capital expenditure.

The majority of Australian manufacturers surveyed are confident in the short-term outlook for business conditions, likely buoyed by a stronger-than-expected financial performance in the past year.

Seventy per cent of manufacturers reported profit growth in the past 12 months, compared to 52 per cent last year.

And manufacturers remain optimistic – 74 per cent are anticipating increased profits in the next 12 months.

This is notwithstanding broad challenges facing the industry, with 75 per cent expecting increases in operating costs and 92 per cent saying lingering supply chain issues are holding back capacity or growth. Around 86 per cent of manufacturers said this is impacting on cash flow.

CBA Executive Manager Consumer Diversified Industries Jerry Macey said Australian manufacturers had a strong track record of rising to disruption by adapting their operational performance and investment programs to the operating environment.

Macey said: “We share the broad-based optimism of the manufacturing sector and we are here to support their growth aspirations.

“Manufacturers aren’t ignoring challenges but rather are ramping up their investment in become leaner, stronger and more productive.

“Most are navigating rising costs, inflationary pressures and supply chain issues, which often combine to constrain cash flows. When viewed alongside talent shortages, this is driving innovation to achieve greater efficiencies and boost capacity to support an uplift in production.”

The top-ranked business priority for Australian manufacturers in the year ahead is investing in new technology, with 87 per cent of manufacturers expect to increase expenditure — even higher in regional locations, where 99 per cent of manufacturers are planning to invest more.

The fastest-growing areas of adoption in the next two years are expected to be next-generation enterprise resource planning (ERP) systems (31 per cent), autonomous systems and equipment (31 per cent) and artificial intelligence (30 per cent).

Macey said the research shows that by 2025 many innovative technologies, from 3D printing to blockchain and digital twins, will be commonplace across the manufacturing industry.

“Given data is powering many of these solutions, greater cyber security vigilance is required. The most widespread process to mitigate cyber threats is a rigorous access and password policy, and that’s only in place among 36 per cent of manufacturers.

“Fewer manufacturers regularly update their systems and software (25 per cent) or conduct regular training for their teams (27 per cent), which are cornerstone activities, often recommended by cyber experts.”

Picture: Commonwealth Bank