Read the whole thing
Today’s Fin (subscription required) has the first in a series of articles on Australian manufacturing, by Peter Roberts. There’s an odd disconnect between the front page (and the editorial referring to it) and the body of the article. The opening includes the optimistic declaration
The Australian manufacturing sector is now made up, not of survivors, but successful competitors in home and export markets
But the main body of the article is rather less positive. It’s not surprising to learn that manufacturing has shrunk from about 20 per cent of GDP and employment in 1975 to 12 per cent today. But those who haven’t been following the news may be surprised to learn that manufactured exports are declining in nominal terms, and that as the article notes
there has been a seemingly inexorable rise in the manufacturing trade deficit … concentrated in areas such as chemicals, IT and telecommunications … From a high of $37.6 billion in 2000-01, manufacturing exports slumped to $32.9 billion in 2003-04
That’s a decline of about 15 per cent in nominal terms, more than 20 per cent in real terms and more than 30 per cent relative to GDP. Meanwhile imports have risen above $100 billion. I’ve previously looked at the stagnant export performance of the “elaborately transformed manufactures” sector, much-touted under Hawke and Keating, but this is worse than I had realised.
An economic rationalist might respond by saying that if manufacturing is declining, that must be a reflection of market forces and comparative advantage and therefore desirable. This at least a consistent position, though one with which I have some significant disagreements. But it seems silly to me to pretend that things are going well in manufacturing when the numbers clearly point to a rapid decline in all sectors exposed to competition.