Developed countries such as Australia still have a place in manufacturing despite big shifts to China and India in the last decade, says a global industry expert.
The global manufacturing partner of Deloitte's manufacturing group, Hans Roehm, who is visiting Australia from Germany, said developed countries were still well placed to make goods such as ships, planes or cars that carried more software and electronics.
"There will be two-way development - low-cost [manufacturing] and the complex, system-driven manufacturing for developed countries like Australia and developed countries in Europe," Roehm said.
"Low-cost labour is clearly an advantage for mass production and simplified production like textiles, but the tendency within low-cost production is that the [manufacturing] plants will be shifted rather than stay in one place."
Roehm said manufacturers in China had benefited for a long time from low-cost production, but even in China costs were rising, forcing some manufacturers to move away from the eastern coastal cities to western inland regions, or to other countries such as Vietnam.
Roehm said it was hard to foresee if higher transportation costs would offset the advantages of such moves.
For countries such as Australia to secure a future in high-end manufacturing, Roehm said they needed to create the appropriate infrastructure for innovation and product development.
"You don't want to get rid of an automotive industry because it generates so much innovation," he said.
Roehm said the global manufacturing sector was growing faster than population growth but higher prices for oil, steel and food could slow down expansion in the sector.
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