Cost of production in manufacturing industry in Australia
Essence of the story:
Manufacturing industry as a long-standing glory and significantly contributes to Australia’s economic prosperity. Over the past two decades, Australia has shown unprecedented economic growth but the manufacturing sector has shown steady decline as a share of overall economic output. Manufacturing sector, one of the biggest contributor of Australia’s economic expansion is a state of huge crisis today. The Domestic manufacturersare facing huge competition from low cost economies especially from China. Moreover, the appreciation of Australian dollar driven by high commodity prices have put downward pressure on manufacturer for structural change within the sector. Beyond the influence of foreign competition and pressure from exchange rate, the domestic cost of production especially the labour cost is one of the most critical challenge facing by the sector.(Langcake, 2016)
A recent research study on 25 largest exporting countries has observed that the cost of production in Australia’s manufacturing sector is 30 % higher than United States and highest among all the countries involved in the research. This has significantly affect the manufacturing investment decision in the country. High cost of manufacturing is a worrying concern today. The manufacturing sector is currently undergoing a huge structural shift from low cost production to high skilled, high tech valued added products. (Australianmanufacturing, 2014)
Economic Analysis:
A thorough economic analysis can be performed to better understand the cost implications of Australia’s manufacturing sector.
(I.C. RS 7681)