This Ai Group factsheet delves into the geographic differences in manufacturing across the Australian states. Using ABS data, it maps how business performance, sub-industry composition, workforce and employment trends, and regional dynamics shape this crucial national industry. It complements Ai Group’s Manufacturing in Australia Benchmark Report 2024 by unpacking how national level trends play out locally.
WA is the only state to show an increase in its real (i.e. inflation-adjusted) output its manufacturing industry has grown by 12% over the last decade. Manufacturing output has declined by 15% in SA, and fallen marginally in QLD, NSW and VIC. The geography of the Australian manufacturing industry is evolving in line with our broader economic structure.
This shift reflects two underlying dynamics – the closure of the Australian auto industry (which was primarily located in SA) and links to the growing mining industry (which is predominantly WA-based).
Despite these changes, relativities between the states remain fairly constant. NSW remains the largest manufacturing state ($38.0 billion or 31% of national output), with VIC close behind ($33.5b or 28%).
Food manufacturing is the largest sub-sector nationally and in each state (except WA), reflecting the importance of consumer markets to the industry. But following food, significant state differences can be found:
These large interstate differences caution against treating Australian manufacturing as a monolithic whole. The data interactive below allows you to explore the internal composition of each state, and shows the growth or reduction in each sub-industry since the pandemic.
New capital expenditure reach $3,280 million for the Australian manufacturing sector in March 2024. . Following a dip during the disruption of the pandemic, capex levels have risen by 20% in the last two years. This was partially driven by Australia’s broader post-COVID economic rebound, and partially due to demand for locally manufactured goods arising from supply chain disruptions.
Most states have enjoyed a healthy uptick in manufacturing capex levels, with WA posting particularly strong growth on the back of mining demand. However QLD is an outlier, with very limited increase in capex levels. If this trend continues, QLD’s share of national manufacturing output may weaken in the medium term.
The Australian manufacturing workforce has remained largely stable – at between 850 to 900 thousand employees – over the last decade. Workforces across the states have remained relatively stable as well. VIC and NSW remain the largest manufacturing employers, each accounting for around 30% of the national workforce. QLD’s share has increased marginally (from around 19% to 21%), while SA and WA have seen slight declines.
Nationally, food manufacturing employs the largest workforce in Australia, followed by machinery and equipment. Sub-sectors such as furniture, metal products, and transport equipment also have significant numbers of workers nationwide.
At a state level, workforce features broadly track industry composition. Food manufacturing is the largest employer in all states except WA, with VIC boasting the largest workforce in this sector. WA, however, leads in machinery and equipment manufacturing for mining and resource extraction. QLD and SA have similar employment distributions, with larger workforces in food manufacturing, machinery and equipment, transport, and furniture, but very few workers employed in the paper, textile, petroleum, and coal sectors.
Job vacancy rates in the manufacturing sector remain notably elevated, at double the usual levels, despite easing from record highs in 2023. As of March 2024, the manufacturing vacancy rate stands at 2.5%, slightly above the national average of 2.3% for all industries. This remains well-above the pre-pandemic average of 1.2% for manufacturing.
In VIC, the manufacturing job vacancy rate was 2.2% in June 2023, reflecting an easing in the job market compared to the post-pandemic period. QLD’s vacancy rate returned to its pre-pandemic level of 1.8% in June 2023. Meanwhile, job vacancies in SA and WA continue to be linger above pre-pandemic averages.
Employee earnings for the manufacturing industry vary significantly across Australian states. WA and VIC have the highest average salaries ($47 per hour), with other states slightly lower. However, state differences at the occupational level vary widely:
The majority of the manufacturing workforce across Australia hold either secondary education (38%) or VET (36%) as their highest level of qualification. However, there are marked state-based differences:
These qualification patterns relate to occupational differences between state manufacturing industries. VET rates are associated with use of trades occupations, higher education rates with professionals, and secondary with labourers and operators.
Women currently make up 30% of the manufacturing workforce in Australia. Workforce gender composition is relatively even across the states. It is slightly lower in SA (26%) and QLD (24%) and slightly higher in VIC (33%), but generally is marked by only very small differences.
Gender composition in manufacturing has changed very little over time. Nationally, the female share in 2023 was the same as it was in 2014. However, there was a meaningful increase in the female rate of manufacturing employment in 2024, rising from 27% to 30% of the workforce.
Nationally, 85% of males in manufacturing work full-time, compared to 80% of females. Most states display the same pattern. Unlike other industries, there isn’t a pronounced difference in part-time rates by gender.
Occupational segregation by gender is very pronounced in Australian manufacturing.
These patterns of occupational segregation are relatively even across the states. NSW and Victoria have more women in high-skilled occupations; Western Australia and Queensland have more women in lower-skilled jobs.
Nationally, migrants comprise a third of the manufacturing workforce, 28% of those are adult migrants (arrived over the age of 15). The rate of child migrants is fairly constant across the states, reflecting broader demographic trends. However, adult migrant rates – those who are most likely to have migrated for employment reasons – vary across the states
These state differences likely reflect local patterns associated with skilled and general migration, including location-specific skilled migration pathways.
Thirty-two percent of the Australian manufacturing workforce is situated in regional areas, this has been relatively stable over the past decade. However, there remains major differences in the rate of regionalisation between states.
In 2021-22, Australia's manufacturing sector allocated 1.1% of its income to research and development (R&D), maintaining a similar level of R&D intensity to previous years.
Among the various manufacturing subsectors, machinery and equipment manufacturing emerged as the most R&D intensive industry, followed by transport equipment and chemical manufacturing. Manufacturing subsectors associated with forestry, fibre and food had the lowest R&D intensity.
Across the states, Victoria (1.4%) had the highest R&D intensity in manufacturing, followed by NSW (1.0%). Much of the difference between states in R&D intensity is due to the composition of manufacturing, with those holding larger shares of high R&D industries like machinery and transport having higher state averages.
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
