Manufacturing Job Losses to Come

22 Aug 11

The Gillard government is facing more intense job losses in the manufacturing sector and AWU chief Paul Howes has declared that manufacturing has entered a "major crisis".

The problem lies in the resources boom and the high dollar which is making it more difficult for other sectors of the economy to survive. Whilst Mr Howes has called for Australia to back a US campaign to force China to appreciate its exchange rate, this would have little immediate impact despites its validity.

The Australian newspaper reports that the core demand coming from industry and the unions is that Labor abandon the passive stance of its economic advisers that manufacturing and other sectors merely contract to allow the investment surge into the resources sector, to continue.

It is noteworthy that AMTIL Manufacturelink has previously reported that Manufacturing contributes 10 per cent to GDP (Resources sector 7 percent) and employs 10 per cent of Australia's (Resources 2 percent).

It is reported that Tony Abbott has seen this crisis coming and has declared himself a believer in an Australia that manufactures things and an economy that is not just a big mine, a big hotel or a big tertiary institution.

The dual dilemma of the two speed economy needs to fuel debate about innovation, cost containment, Chinese competition and the right settings for monetary policy where the Australian economy faces the dilemma of the need  for both interest rate rises and cuts.

The Gillard government needs to act swiftly to shore up the future of Australia's manufacturing industry.