Rose you must be living in a bubble. Can you name a country that is slightly larger then a postage stamp that is operating its economy in the service indutry section. instead of flying around to to various talkfest speaking to likeminded talkers how about you travel to a group of doers. How about some real world examples where a place like Elizabeth in Adelaide shifts it's employement from manufacturing to tourism.

My guess is you can not and will not do so. I'd be surprised if you've even talked to an Australian working in manufacturing.

Australia will become a back water if it's doesn't have a strong primary and secondary industries for it's people.

The factory of the future is going to be run by an accountant and a dog. The accountant is there to look after the money and feed the dog, the dog is there to make sure nobody touches anything. In the future it will be perfectly possible to conduct manufacturing in Australia, modern computer controlled machines and robots, will be become so versatile, that the cost of production will have very little relation to labour costs. The only factor which is an issue is the high Aussie dollar and that’s heading south faster than Amundsen.

Australian manufacturing will not die, but it will change. We can’t compete on low-value-added products where competitiveness depends on low labour costs (basic clothing manufacture), or on goods that need high volumes, massive economies of scale and low transport costs (cars). But we can compete on products where competitive advantages comes from technological sophistication or intellectual property, or which can leverage our comparative advantages in other areas (like mining software).

Manufacturing employment has fallen a lot in recent years, but manufacturing output hasn’t. This, I think, will be the trend in future, too – less direct employment but growing sophistication and specialisation, and higher productivity. Not quite warmair's one man and a dog, but not the mass employers of the past, either.

That is certainly the theory, Rhian.

>>But we can compete on products where competitive advantages comes from technological sophistication or intellectual property, or which can leverage our comparative advantages in other areas (like mining software)<<

Sadly, our education system falls a long way short of nurturing "technological sophistication". Or indeed, sophistication of any sort whatsoever. We seem to have no interest in designing curricula that reflect even an arbitrary assessment of what might be needed in the future. Instead, we are happy to plod along repeating the same old stuff, simply because we are too lethargic (read: tenured) to do anything about it.

As for intellectual property, we have none that constitutes more than a fleeting advantage. Moreover, we seem to be perfectly happy to roll over and play dead when the US decides to align the IP rules to its own advantage, and to our detriment. Put crudely, we would not stand a chance against the USA's arrayed masses of highly-focussed IP lawyers, who would rapidly bankrupt anyone who stands in their clients' way.

Manufacturing will become more attractive to Australian investors (the only people who have any chance of making it happen) when we find a niche where our overseas competitors have priced themselves out of contention through the increasing costs associated with a more affluent workforce.

In the meantime, we should make the country more welcoming to overseas tourists, instead of providing them with a fundamentally second-rate experience. Does anyone in our hospitality industry ever travel overseas? Sure doesn't seem like it.

The problem is our high wages in fact if we are going to compete as other have said it's going to be in the high value area were you do want highly skilled workers.

our education system doesn't need fixing it's our parenting systems that do. Their either porducing little know it all trying to fix the world with no real world experience or want everything handed to them.

Industry and our governements need to invest into these higher value products. but thats not going to happen investors will put their money were into contries that already have the act together, and governement s will do a study and maybe go on a fact finding trip to italy.
unless it's the South Australian government then they'll build another foot bridge across the Torrens designed by a visiting resident thinker.

I wonder how much longer & how many more failures it will take before people stop lauding Keating & Button for opening up our industry to cheap import competition? To make it stronger they said.

All it did was tie it in a straight jacket, all the easier for Rudd & Gillard to kill it off with their labour policies. We did have one possible savior, cheap power, the cheapest in the world. They soon killed that with their alternate energy policy & a carbon tax.

No one can earn a decent income taking in some poor mans washing, & that is about all we have left now. Service industries provide great wealth for a very few, & drudgery for most. They are the first to close in a down turn, & the last to start again in the upswing.

It is dreadful to realise that our manufacturing industry did not survive even a single lifetime. I was involved in introducing & supplying plastics to 7 companies in NSW alone, producing radios & TVs, now long.

I drove in the first Holden Dealers Team, I guess I'll live to see the last man drive in one. I wonder what happened to Luigi, the bloke who used to screw them together.

We know what happened to his sons. They got Arts degrees, one tutors more arts students, & the other pushes bits of paper around a government office, & every single thing they own comes from Asia, made from our iron ore & coal.

Ah what progress