Manufacturing Destruction

Australia’s unemployment numbers are in, and no amount of NDIS and public sector jobs (which accounted for 83% of all ‘new’ jobs in 2024) can mask the rapid decline of the nation’s productive economy. Australia’s sacrifice of manufacturing jobs for service and mining over the last 20 years was to some extent reasonable based on the size of our economy, but the reasonableness of it has worn thin with so much capability loss that we are now incapable of anything but digging and sending. As the U.S. becomes more isolationist, Australia is starting to look vulnerable and incompetent – when will enough be enough?

Unemployment in Australia

The seasonally adjusted unemployment rate remained steady at 4.1 per cent in February, according to data released today by the Australian Bureau of Statistics (ABS). Although a strong-sounding number, the devil is always in the details with only 11,000 jobs created in February and the participation rate dropping again. The Australian dollar dropped sharply on the back of the numbers down nearly a cent. Is the lucky country finally becoming a victim of the hollowing out of our economy?

Compared to the independent survey conducted by Roy Morgan research, real unemployment increased in February by 214,000 to 11.5%. The ABS categorises unemployed under 3 criteria; not working more than one hour in the reference week; actively looking for work in the previous four weeks; and being available to start work in the reference week. Roy Morgan uses a simpler methodology as a person is classified as unemployed if they are looking for work, no matter when.

Since 2011 the gap between Roy Morgan research and the ABS has been widening showing a consistent deterioration in the Australian economy and its unemployment rate.

Oceania Glass

In the bureaucracy of Australia that we all pay dearly for, it is disappointing to hear that Australia’s last architectural glass manufacturer has gone into administration. The blame sits squarely on the government’s shoulders and its inability to use said bureaucracy to make any timely or fair decision. Back in 2021 with rising energy costs, Oceania flagged to the Anti-Dumping Commission that there was cheap glass coming from Asia making it hard to compete. Four years later and with another delayed decision, Oceania called time on their loss-making business calling in the receivers Grant Thornton to find a buyer or shut down the loss-making business.

Oceania sold its first glass in 1856, but the last 20 years have seen the demise and destruction of businesses to make Australia wholly dependent on their neighbours and hopeful their neighbours never become a problem, backed by the U.S. As the U.S. becomes more isolationist, Australia – the island with huge mineral resources sitting in the middle of the Southern Hemisphere now finds itself with fewer allies and fewer self-reliant capabilities.

To name a few of our incapabilities - we cannot build ships, we cannot manufacture glass, we do not make plastic, we have limited oil refining capabilities, and we do not make cars. But all good we give our NDIS providers AU$100/hour to pay minimum wage recipients to look after our growing disabled population holding down employment numbers whilst destroying the productive economy.

Employment in Manufacturing Collapsing

Australia’s manufacturing losses over the last 60-years reflects a deliberate pivot away from industrial self-sufficiency toward a resource-and-service economy. The collapse of the automotive industry symbolised this shift, while the decline of steel, refining, and consumer goods production highlights the broader trend of deindustrialisation. By 2025, what’s left is a shadow of the sector’s 1960s peak (25% of GDP). The past two decades have seen Australia trade factory floors for mines and offices—a transformation that’s left it poorer in industrial diversity and more vulnerable than ever.

Peak manufacturing in Australia occurred in 1973 with around 1.46 million workers or around 25% of the Australian workforce. Since then, the deterioration has been dramatic, with tariff reduction in 1984 seeing the workforce drop to around 1.1 million or 16.7%. The sharp increase in energy prices since around 2000 has seen manufacturing reduce even further to today’s woeful employment of 900,000 or 6.2%.

Australia doesn’t have to manufacture everything, we are a small country with huge mineral resources, so it makes sense to employ in this industry. But as more mines come online in Africa and Central America our mineral resources are not looking as amazing as they previously did. Additionally, Australia has managed to sell these resources to the highest bidder at the time, sacrificing long-term national benefit and failing future generations’ ability to gain strategic advantage. Look no further than the gas industry, where Australians now pay four times what we sell gas to Japan for. Australia has closed so many industries; we now have more incapabilities than capabilities. When the next world recession hits, Australia will be hit harder than ever as we have closed down so much of what made this country great and the jobs and skills that came with it. In an increasingly uncertain global economy, with fewer local industries to rely on, gold remains one of the few assets Australians can turn to as a true safe haven in times of crisis.

Watch the Ainslie Insights video discussion of this article here: https://www.youtube.com/watch?v=yARhyFyAiS0