With the Federal Budget due to be handed down in May 2023 in Australia, there is intense discussion throughout how the country will navigate these challenging times while dealing with high interest rates and rising inflation.

Industry – comprising manufacturing, construction and mining – contributes 27.7% towards Australia’s economy and will likely garner a fair bit of attention in the forthcoming budget. Manufacturing in particular offers significant opportunities in the period ahead.

A recent report in The AFR details the National Reconstruction Fund where the Federal Government proposes setting up a A$15 billion fund to support manufacturing and research. The proposal sets aside $1 billion to invest in innovative Australian technologies critical for the future of the country and economy, such as artificial intelligence, quantum computing, robotics, and software development.

Smart manufacturing has long been identified as one of the better ways forward for Australia and the new 2023 Plex State of Smart Manufacturing Report offers valuable insights. For the first time, this landmark global report includes responses from 75 of Australia’s manufacturing industry leaders (49% of whom were women) and highlights the primary areas that need to be addressed.

Artificial Intelligence (AI) is being embraced by local manufacturers with the survey revealing that 35% have already invested in this technology. “It bodes well for Australia with 40% of the local respondents planning to invest in AI in 2022-23,” says Anthony Wong, regional director, South Pacific for Rockwell Automation. In some ways the local industry is playing catch-up. Of the US manufacturers surveyed, 64 percent have already invested in AI whereas in the UK and Germany, 52% have made this investment.

“In general, Australian manufacturers are keen to adopt new technologies,” says Wong. “Robotic process automation (RPA) is an example where 48% of Australian companies have already invested in the technology while 46% have expressed an intention to invest. This is comparable to manufacturers in the US where 49% have already invested in RPA.”

Despite Australian manufacturers expressing a high level of interest in implementing technology solutions, over a third of the respondents highlighted the challenge of retaining workers and knowledge as the biggest obstacle to their company’s growth in 2023. In fact, 43% cited onboarding new employees second only to the difficulty of balancing quality and growth.

A major cause of this is the lack of adequate skilled resources – retaining workers and knowledge was cited by 39% of the survey respondents as the biggest internal obstacle to growth.

Peak industry body Ai Group reports that 47% of businesses have increased their investment in staff training in 2022, the highest reported business investment in the ten-year history of their survey. With businesses facing the tightest labour market since the 1970s, companies are willing to employ people with similar skill sets and further train them to fit their role.

An obvious solution to overcoming the skills shortage is to invest in technology solutions, however, this throws up another conundrum. Although smart manufacturing is key to Australia’s progress, only 25% of the country’s manufacturing industry leaders said they were extremely familiar with these technologies. This compares poorly with survey respondents from the US and France where familiarity with smart manufacturing technologies is vastly higher with numbers close to double that of Australia’s. This is despite 73% of local respondents stating that smart manufacturing is very important.

This may explain why 71% of Australia’s C-suite leaders identify technology paralysis as one of the largest barriers to growth. “An excess of technology options is making selection and adoption much more challenging, especially when familiarity with the solutions is relatively low,” says Wong.

The country’s scarce technology resources also affect the ability of businesses to adequately deal with cybersecurity risks. In fact, 47% of the survey respondents from Australia ranked cybersecurity as their biggest external obstacle to their growth in 2023.