Apr 30, 2026 by Mark Dingley
There’s a question coming up more often across Australian manufacturing right now.
For some businesses, it’s a new production line. For others, it’s upgrading ageing equipment, meeting compliance requirements, or replacing assets that have been stretched well beyond their intended life.
The conversation has gained momentum with the Federal Government fast-tracking $6.15 billion through the National Reconstruction Fund. This includes $1 billion in zero-interest loans through the Economic Resilience Program, available for up to two years on loans of up to $5 million.
It’s a significant shift. But while access to low-cost finance makes investment more attractive, it does not remove risk. In many cases, it can speed up decisions that need careful planning.
At the same time, many manufacturers are running equipment harder than ever, in an environment where the margin for error is tightening.
Image credit: BlackSalmon
While food and beverage often lead the conversation around sovereign manufacturing, the pressure is being felt across a broader range of sectors.
Fertiliser, plastics, packaging and industrial manufacturing have all faced ongoing disruption. Supply chain instability, rising energy costs, stricter compliance requirements and the push to localise production are all reshaping how businesses operate.
The fertiliser sector highlights this clearly. Global disruptions during 2022 and 2023, driven by the Ukraine conflict and resulting sanctions on Russian and Belarusian exports, which together accounted for roughly 40% of global potash supply, exposed how dependent Australian agriculture had become on international supply. For many, investing in domestic capability quickly became a priority.
Plastics and packaging manufacturers are navigating similar challenges, with the added complexity of evolving sustainability and traceability regulations.
While the drivers may differ, the core question is the same. How do you invest in a way that strengthens your operation without overextending?
The COVID period remains one of the most useful reference points for capital investment under uncertainty.
It created a unique mix of demand spikes, supply chain disruption and government support. Some manufacturers came out stronger. Others faced ongoing challenges.
Understanding why is important.
The strongest performers were not always the ones who spent the most. They were the ones who invested with purpose.
Rather than simply adding capacity, they focused on:
In food production, this often meant strengthening coding, labelling and traceability systems as retailer expectations increased.
In industrial environments, it focused more on improving efficiency and process control.
These were targeted investments that improved performance under pressure. The financial returns followed because the operational foundations were solid.
Image credit: Wildpixel
Other manufacturers expanded based on conditions that did not last.
Common issues included:
Australia’s wine industry provides a clear example. The industry built significant production capacity on the back of strong export demand into China, at its peak, China was taking nearly $800 million in Australian wine annually. When tariffs of up to 218% were imposed in late 2020, that market closed almost overnight. Stockpiles grew to over two billion litres. At least 20% of bearing vines were assessed as surplus to requirements, with little prospect of recovery. Even now, with tariffs lifted, China is taking less than half the volume it did at peak, and domestic consumption has declined a further 3% year-on-year.
The lesson is not that expansion is risky. It’s that poorly aligned investment can take years to recover from.
While over-investment often gets the attention, under-investment carries its own risks.
Many Australian manufacturers have delayed capital spending in recent years, choosing to push existing assets further. While this protects cash in the short term, it can introduce long-term operational issues.
Equipment typically moves through three stages. Early issues, a stable operating period, and eventually a wear-out phase where failures increase.
Most manufacturers aim to operate in that stable middle period. But real-world conditions can shift this balance.
Higher production speeds, reduced maintenance, tighter compliance requirements and more complex processes can all accelerate wear. This is exactly what many Australian production environments look like today.
The signs are often gradual:
Individually, these issues can be managed. Together, they start to impact performance, delivery reliability, customer relationships and audit outcomes.
Deferring investment in this environment isn't a neutral decision. It's a decision to accept rising operational risk in exchange for short-term capital preservation.
Downtime is often discussed during investment planning, but it is rarely measured or priced accurately.
An ABB survey of Australian industrial businesses found unplanned downtime can cost typical Australian operations close to $349,000 per hour. That’s significantly more than the global average of $194,000 per hour, reflecting the labour costs, geographic remoteness from parts and service support, and thinner margins that characterise much of Australian manufacturing. For packaging and manufacturing operations specifically, Australian industry data points to a range of $1,000 to $10,000 per hour, with much higher impacts on larger, high-throughput lines.
But the real cost goes beyond lost production, including:
Image credit: CraigRJD
In competitive retail environments, even a single disruption can have lasting effects.
When downtime is treated qualitatively rather than quantitatively in investment decisions, it creates a systematic distortion. A lower upfront capital cost looks attractive even when it carries a higher risk profile. Multiple vendors appear to save money even when they increase the probability of integration failures and slow fault resolution. Retaining legacy systems appears prudent even when they represent the weakest link in an otherwise modern line.
If downtime were fully priced into the investment decision, a lot of choices would look very different.
Instead of asking “should we invest now?”, a more useful question is: What level of operational risk are we carrying today, and how will this investment change it?
For some businesses, the answer will support moving quickly. The risk profile is elevated, the available finance terms are favourable, and the opportunity cost of continued deferral is real and measurable.
For others, it will highlight the need for better planning before committing. Not because the investment shouldn't happen, but because the decisions made before equipment selection determine most of what happens after.
Either way, focusing on risk leads to clearer decisions than focusing on cost alone.
One of the most common challenges in capital projects is fragmentation.
Multiple hardware vendors. Multiple software providers. Multiple integrators. Multiple points of accountability.
Everything may work in isolation. The factory acceptance test passes. Commissioning goes reasonably well. And then, three months into production, something goes wrong at the intersection of two systems. The hardware vendor points to the integration. The integration partner points to the software specification. The software provider points back to the hardware. Meanwhile, the line is down, production is waiting, and the cost is accumulating.
In Australian manufacturing, where service response times are genuinely limited by geography, and where the pool of experienced technicians who understand a given system deeply is smaller than in most comparable markets, the value of a partner who owns the full system isn't theoretical. It's operational.
Working with a partner who understands the full system, from coding and labelling to inspection and traceability, can make a significant difference.
Because when a line stops, the only question that matters is how quickly it starts again.
Image credit: Dina Ivanova
The manufacturers seeing the best results today are not necessarily spending more. They are investing more strategically:
This approach doesn't eliminate risk, nothing does. But it substantially reduces the probability that small issues compound into major disruptions. And it changes the conversation with the business about capital investment: from a cost decision to a risk management decision.
At Matthews, most capital project discussions begin before equipment is selected.
The focus is on understanding how a production line needs to perform under real conditions and what failure would actually cost.
This includes:
Image credit: Dzmitry Dzemidovich
It also means being accountable across hardware, software and service. Not because that's how we prefer to structure commercial arrangements, but because from an operational perspective there is no meaningful separation. There is one outcome that matters: is the line running, and is it running the way it's supposed to?
With current funding opportunities available through programs like the Economic Resilience Program or the broader NRF framework, now is a genuinely useful time to review upcoming projects and ensure the right equipment decisions are made early. The finance terms available right now are the best they've been in years. The decisions made in the planning phase determine most of what happens after commissioning.
Market conditions and government programs can influence when you invest. But they do not determine success.
That comes down to the decisions made before implementation begins.
The level of integration built into your systems. The strength of your operational planning. And the partners you choose to work with.
If you are considering your next capital project, the key question is not just when you invest. It is how confidently your operation will perform once you do.
If you are reviewing an upcoming equipment investment, start with four practical questions:
The right capital investment does more than add capacity. It strengthens performance and protects your operation for the long term.
Image credit: Pla2na
Matthews Australasia partners with manufacturers across Australia and New Zealand to deliver integrated coding, labelling, inspection and traceability solutions.
If you are considering a capital project, our team can help you assess the operational and technical requirements before decisions are made. Visit nrf.gov.au/erp for program eligibility details.
