Industrial manufacturing in Australia: top 5 trends to watch in 2023

May 25, 2023 by Mark Dingley

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There’s no denying that as it approached, 2023 wasn’t looking promising for local manufacturing.

After a positive post-pandemic rebound in 2022, the landscape darkened substantially as the Russia-Ukraine war drastically impacted supply chains, labour shortages lingered, energy prices started to rise, and an economic slowdown loomed.

However, with 2023 now well underway, the tables are turning and it’s not all doom and gloom for industrial manufacturing. There are some strong opportunities to be grasped for those manufacturers who can move quickly and invest in the right places.

Here’s what to look for this year in industrial manufacturing – from decarbonisation to skilled worker shortages and soaring energy prices:

1. Global transition to decarbonisation

The time has come for industrial manufacturers to address carbon emissions. The industrial, mining and manufacturing sectors combined account directly for approximately one-third of Australia's emissions.

Now, manufacturers are under pressure to accelerate their transition to a greener future, thanks to a combination of factors:

The Federal Government is cracking down on carbon emissions in a big way. As of January this year, Australia’s biggest carbon emitters will be forced to reduce their emissions at least 30% by 2030, as part of reforms to the Safeguard Mechanism.

This limits the emissions of 215 of Australia’s industrial polluters in oil, gas, mining and manufacturing industries. These facilities are responsible for 28% of Australia’s emissions, and will therefore be responsible for 28% of emissions reduction.

There’s support available for those making the transition. For example, four high-emitting manufacturers in New South Wales are being supported to transform into low-carbon facilities through partnership agreements with the State Government to progress decarbonisation in heavy industry.

Funding of $855,000 was announced to support decarbonisation studies by chemical manufacturer Orica, metal manufacturer Tomago Aluminium, cement producer Boral, and starch manufacturer Manildra Group. Their facilities combined emit more than 10 million tonnes of carbon per year, which is equivalent to emissions from more than 3.5 million cars.

The studies will help the companies meet their obligations under the new changes to the Safeguard Mechanism, which requires them to reduce emissions by 4.9% every year to 2030.

2. Demand for environmental, social & governance (ESG) transparency

Industrial manufacturers are facing increased pressure to pursue their environmental, social and governance (ESG) objectives.

This means not only making changes to meet environmental goals (such as decarbonisation, as outlined above), but to also take a more proactive approach to societal issues, with focusing on human rights or ethical sourcingbeing two prime examples.

Embracing the “circular economy” is expected to be a key trend in 2023. The manufacturing sector is recognising it needs to shift from a linear “take-make-waste” system to a circular economy.

For example, in Australia, Visy remanufactures sustainable packaging from materials that are both recycled and recyclable.

One of the most significant opportunities for industrial manufacturers is the growing demand for sustainable and eco-friendly products, including in construction and other industries, which is creating huge opportunities for those able to produce high-quality products using sustainable methods.

This has led to an increased focus on renewable energy sources, waste reduction, and the use of sustainable raw materials in production, as well investing in technology.

A case in point: the Australian Steel Institute recently launched a Steel Sustainability Australia (SSA) certification program to assure “steelwork provided by certified suppliers is sustainably made and processed – and sourced through responsible and ethical supply chains”.

The SSA is open to any downstream steel-processing business, including fabrication, reinforcing processing and roll-form businesses, and is a recognised initiative under the Green Building Council of Australia (GBCA) Responsible Products Framework (RPF) and Green Star rating system.

3. Diversifying supply chains

Supply chains have been a roller coaster for manufacturers, thanks to the pandemic and geopolitical uncertainty. But some trends are reversing – there is increased shipping capacity on some trade routes, for example.

To mitigate vulnerabilities, industrial manufacturers are diversifying their supply chains, with some investing close to major markets or forming strategic partnerships and alliances to help gain more control of supply chains and build better business relationships.

Ongoing global tensions have also caused manufacturers to rethink their international strategies. According to a KPMG International survey, 88% of manufacturers have discontinued operations in Russia in response to the war in Ukraine.

4. Shortage of skills, or skills shift?

A major challenge for industrial manufacturers in Australia is the growing shortage of skilled labour. The talent shortage has hit its stride in Australia, with a decline in the number of workers with the necessary skills to operate and maintain increasingly complex manufacturing equipment.

The severe skills shortage means employers need to do more to attract and retain talent to meet current production goals, not to mention pursue their growth objectives.

In some industries, a shorter working week is being trialled to attract workers. For example, NIB, Medibank, Unilever and Telstra are experimenting with a four-day work week in 2023 – something that’s shaping up to be the biggest workplace trend of the year.

As well as a skills shortage, there’s also a skills shift. With digitisation on the rise, high-end information technology skills – from artificial intelligence (AI) to data science – are in strong demand within the Australian industrial manufacturing industry. Manufacturers need these skills in their ranks to compete and optimise their factories to meet future opportunities for growth.

And along with the transition to automation, robotics and AI, manufacturing employees are relying more and more on digital tools – such as collaboration platforms, work-based social media and instant messaging – to complete their work.

In Victoria last year, the State Government launched the $4.5 million Digital Jobs for Manufacturing program to help local manufacturers equip workers with the digital skills they need to create high paying jobs and maintain their competitive advantage.

The program, which runs until June 2024, provides up to $5000 for a manufacturer to fund up to five employees in online, part-time, industry-endorsed digital courses, such as machine learning and AI, cloud computing, cyber security, and data analytics.

5. Rising energy prices

Energy prices have been rising for some time now. Back in May 2021, industrial energy users faced price increases of 12% or more for electricity, and gas bills that were almost triple.

ACCI chief executive Andrew McKellar said in December there would be little reprieve for manufacturers on the horizon, especially for those exposed to higher gas and power prices.

In December, the Federal Government announced changes to mitigate the expected price surge for energy bills, which included a 12-month cap on coal and gas prices. However energy-intensive firms will still face higher costs in 2023 with many being locked into long-term contracts.

Some manufacturers are taking matters into their own hands. Australia’s largest ceramic tile producer National Ceramic Industries Australia (NCIA) is one of the largest single-site users of natural gas. The manufacturer was already using sensors and software to monitor production performance in real time, so they worked to build on this to track energy use versus production.

They use the data to accurately predict the amount of energy required to produce every single product, joule by joule, so they can get better deals from gas suppliers by matching the production schedule with energy usage.

To date the manufacturer reports savings of $40,000 per month, or almost half a million dollars annually.

Did you know… Matthews has partnered to develop iDSnet Manager, an integrated industry 4.0 software solution that helps make significant gains in productivity, via the delivery of a real-time production information and paperless digital factory solution.


The industrial manufacturing sector in Australia is facing a range of challenges and opportunities in 2023. But manufacturers shouldn't take their eye off the overarching goal: sustainable, profitable growth. Those that are able to move swiftly to take advantage of these trends as opportunities will be well positioned for success.