A Breath of Fresh Air for the Australian Food & Beverage Industry
What does the governments Modern Manufacturing Strategy mean for the Industry?
“Food and beverage manufacturing [has been] one of the fastest growing parts of our manufacturing sector in recent years and the largest employer in our manufacturing sector, [which is why it is a main] area of focus as part of this strategy.”
- Scott Morrison, Prime Minister of Australia, in a public speech made in October 2020
This statement came after the premier announced a $1.5 billion investment package through the government’s Modern Manufacturing Strategy. The package is a part of the JobMaker Plan that seeks to pull Australia through the Covid-19 slump and create more employment by breathing new life into the industries that support the national economy.
However, why is there such an emphasis on the food and beverage sector in particular? What challenges did it face in the past months that made this package a much-needed move? How will it help the industry scale up and become resilient? This article will help you develop a much better understanding of the current situation and what the future holds for the industry.
A pillar of strength for the economy
The food and beverage sector accounts for 32% of the total manufacturing turnover in Australia. Combined with the grocery and fresh produce industries, it is worth over $122 billion to the national economy. That is why it is appropriate to call it the ‘pillar of strength’ for Australia, given the impact it has on strengthening the country’s economy.
On top of the financial value, the industry also provides employment to over 273,000 people with 39% of these coming from the regional and rural communities of Australia. Therefore, there is no surprise that the Prime Minister would choose to single out food and beverage as an important industry that the planned strategy will focus on.
A rising tide of challenges
The global Covid-19 pandemic brought along with it a series of challenges for a number of industries, particularly manufacturing. These challenges forced thousands of businesses to shut down across the world and had a significant impact on the 15,000+ businesses that operate on various scales within the food and beverage sector of Australia.
One of these challenges was the disruption of global supply chains. Before 2020, companies looked out to international suppliers of raw materials and goods in order to cut down their own manufacturing costs. This resulted in food and beverage supply chains in Australia that relied on internationally-sourced materials for production. However, with Covid-19 shutting down transport routes (in some cases cutting off entire countries like China), manufacturers were faced with the dire problem of sourcing goods, without which they could not meet local demands.
This exposed a previously unnoticed vulnerability in supply chains, and put across a clear message: supply chains would have to evolve through modern technology and better planning to become more resilient and flexible to any such future events.
Coupled with this was another major issue: a severe pressure on cash-flows. Restaurants and other high-profit revenue streams all over the country were shut down and replaced by in-home consumption, reducing the revenue and profit generated by the F&B sector. This made it difficult to make the increasing (because of changing currency rates) import payments, putting a lot of financial pressure on smaller manufacturers. All of this has had a sizeable effect on the national economy, slowing it down and decreasing the financial health of a number of sectors.
A new age for Australian manufacturing
In an effort to rebuild the economy, create jobs, and help the country recover from the losses produced by Covid-19, the government of Prime Minister Scott Morrison announced the Modern Manufacturing Strategy as part of the JobMaker Plan in October 2020. The initiative will oversee the investment of $1.5 billion over the next 4 years with the aim to build a sector that is globally competitive, resilient, and that can scale up its operations. It placed a strong emphasis on improving Australia’s ability to keep making things by itself.
The strategy outlines a number of ways in which these critical goals will be achieved. Foremost among these is the $1.3 billion Modern Manufacturing Initiative (MMI) which the government will use to strategically invest in projects, R&D, and other ventures that will help create more employment by scaling up the current manufacturing industry. The government will lead a focused effort to bring the industry, research, and education sectors on the same platform and create a synergy between them so that each contributes towards the ultimate goal of scaling up manufacturing.
Science and technology will undoubtedly play a crucial role in this area. The $52.8 million Manufacturing Modernization Fund will seek to revamp industries that are still stuck with old technologies and methods, and bring them up to speed with global cutting-edge standards to increase their flexibility. After all, the times when manufacturers produced a single product at mass scale are over. Industries now need to be flexible enough to modify production based on the demand forces that come from both local and overseas markets.
Another important piece of the puzzle will be the $107.2 million Supply Chain Resilience Initiative that will support projects working on fixing vulnerabilities and weaknesses in supply chains to make them more resilient and flexible to global events and uncertainties. As we’ve seen already, this was a key takeaway from the pandemic – we can no longer leave our supply chains dependent on international suppliers.
The $1.5 billion Modern Manufacturing Strategy has come forward as a breath of fresh air for the Australian food and beverage industry. Along with all the technological developments and innovations, it will produce a massive ripple of employment, creating thousands of high-paying jobs in sectors ranging from manufacturing, all the way to retail and R&D.
Segen is ready to play its role in this huge revival – we will be the bridge between the opportunities springing up in the industry, and those who are in search of employment.