Bush Summit 2024: Regional manufacturers overwhelmingly optimistic

About nine in 10 manufacturers and distributors headquartered in regional Australia are confident about future economic conditions, a new report reveals.

About nine in 10 manufacturers and distributors headquartered in regional Australia are confident about future economic conditions, with many increasing their capital spending and hiring more people to lift productivity.

The positive industry sentiment is according to the latest CommBank’s Regional Manufacturers and Distributors in Focus report, released on Friday.

This story is part of News Corp Australia’s Bush Summit series celebrating rural and regional Australia and championing the issues that matter most to those living in the bush. You can read all our coverage here

The report revealed the majority of about 110 regional manufacturers and distributors surveyed across Australia were expecting an up lift in revenue (68 per cent) and profit (67 per cent) in the year ahead.

As a result, two in three were seeking to increase output levels amid demand for local producers, while the positive outlook was also supporting stronger overall technology investment.

In the next 12 months, it was found 83 per cent planned to increase technology investment, with 52 per cent forecasting a moderate increase and 31 per cent a significant budget uplift.

Regional manufacturers were also setting the pace for sustainable manufacturing practices, with 60 per cent having implemented multiple sustainability practices like renewable energy.

It was found, on average, regional manufacturers and distributors were sourcing 41 per cent of their total energy supply from renewable sources, compared to an average of 30 per cent for metropolitan businesses.

The Tyree Transformers facility at Mittagong in regional NSW.

The issues expected to have the most significant impacted on the businesses in 2024 included “higher interest rates, energy costs, inflation and workforce optimisation”.

To counteract this, many regional manufacturers are directing capital expenditure towards boosting productivity in supply chain enhancements (60 per cent), technology, software and operating systems (each 42 per cent).

To support productivity, reskilling was noted as the most crucial enabler.

CommBank Regional and Agribusiness Banking executive general manager Paul Fowler said regional manufacturers had continued investing through the economic cycle to help build capacity and much-needed skills.

“Regional businesses have been busy adapting to changing customer expectations, including demand for higher quality products and a preference for local suppliers,” he said.

“To lift output while managing persistent talent shortages, many manufacturers and distributors are searching for new ways to drive productivity and efficiency gains.

“According to our research, regional manufacturers are demonstrating stronger productivity and higher intentions to invest in supply chain efficiencies, technology and labour when compared to their metropolitan peers.”

In April, the Federal Government announced a $22.7 billion Future Made in Australia plan to revitalise manufacturing.

The Government committed to creating a Future Made in Australia Act and establish a National Interest Framework to identify priority industries and ensures investments were responsible and targeted.

It intends to boost investment and increase government funding for local manufacturing, and in particular, renewable energy.

It aims to create jobs, stimulate the economy, enable Australia to become more self-sufficient, and help compete internationally.

News Corp Australia’s exclusive Mood of the Nation July survey asked Australians to what extent they support or opposed the plan.

Of the 2021 people surveyed by SEC Newgate Australia, 67 per cent had some level of support for the plan, slightly up from 64 per cent in April, while 11 per cent had opposition, down from 13 in the last report.

Respondents in metro Queensland had the strongest levels of support at 74 per cent but in direct contrast, regional Queensland had the strongest opposition with 18 per cent.

Respondents in metro New South Wales had the lowest levels of opposition at 7 per cent.

Tyree Transformers laser operator Paul Richardson

Tyree Transformers in Mittagong in regional New South Wales is one manufacturer expanding production.

Originally established in 1946 by Sir William Tyree, the company is now Australia’s second-largest transformer manufacturer with business booming amid the transition to renewable energy.

Over the past seven years, the company has reported an average annual revenue growth rate of 20 per cent, and have grown their workforce from 70 in 2005 to 370.

They are also training over 25 apprentices for electrical work, mechanical fitting and boiler making.

The company said that Australia’s renewable energy transition was their “most significant opportunity”, with demand for transformers likely to increase tenfold over the next decade.

Tyree Transformers Group chief financial officer David Ward said demand for locally manufactured transformers had been boosted as offshore suppliers often fell short of standards required or they were unable to meet short lead times and large volume requirements.

He said the challenge for Tyree was in managing workflows to meet demand peaks and short lead-time requirements.

“We’re expanding our capacity by investing in people and state-of-the-art machinery because that’s where the growth is,” Mr Ward says.

“We are also rapidly expanding the available space in our factory floor plan at our Braemar operations and opening a new modern manufacturing site in Auckland to support both our New Zealand and Australian customers.”

Originally published as Bush Summit 2024: Regional manufacturers overwhelmingly optimistic