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Can quarrying make its mark in a post-manufacturing economy?

As the Australian economy undergoes potentially historic and painful structural changes with the fall of traditional industries, Damian Christie ponders what future the quarrying industry may have in a post-manufacturing economy.
Australia has a proud history as a primary producer and a manufacturer. Since settlement, we have relied on an abundance of natural commodities and in the 20th century became a high quality manufacturer as well. The prosperity that we have enjoyed since the 1950s can be partly attributed to a manufacturing boom in clothing and textile production, food processing, motor vehicle assembly, aerospace engineering, pharmaceuticals and chemicals production and minerals smelting and processing, to name a few.

By the 1960s, our manufacturing sector accounted for 25 per cent of GDP. Today, manufacturing accounts for less than 10 per cent of GDP. Competition from Asia, coupled with the lowering of tariff walls, a high Australian dollar, regulation and wages growth, has made it less attractive for even homegrown brands to manufacture here.

The last month was historic for the wrong reasons. The demise of car manufacturing was sealed with the announcement that Toyota will cease production in 2017. Alcoa announced it will close its aluminium smelter in Port Henry and associated rolling works in Geelong and its rolling milling and recycling unit at Yennora. This follows the likes of Xstrata phasing out their copper smelter and refining businesses in the past few years.

Traditionally, Australia could fall back on its primary resources to right the ship, particularly in the Global Financial Crisis. However, the mining sector is also downsizing and its focus is changing from production to an export mindset. This is going to release mining labour into the economy and, coupled with redundancies in the manufacturing sector, there will be competition for jobs.

Perhaps this is a good thing. The country has a skills shortage in a range of sectors and the quarry industry will benefit from the return of workers who may have started out in quarrying but went into mining to take advantage of the boom. There is the potential for increased quarrying activity to partly fill the void left by manufacturing but it is conditional on what the Federal Government does next.

The Abbott Government has made no secret that it wants to encourage a new wave of infrastructure projects to drive growth but its approach so far has been half-hearted. Recent remarks by Federal Treasurer Joe Hockey (that super funds should start investing in Australian infrastructure projects) and Deputy Prime Minister Warren Truss (calling for tenders for the Toowoomba Second Range Crossing) indicate that the government wants private industry to do more of the heavy lifting. It isn’t surprising that these pleas are falling on deaf ears – correctly or not, the private sector is averse to funding big tickets projects without underwriting from governments in good times, let alone lean times.

It is the job of government to promote confidence in the economy. Federal and state governments must not only remove regulatory impediments that clog the infrastructure investment pipeline but co-invest in long term projects . If they do that, then private investment will follow. In turn, if building begins, the demand for aggregate will bring quarries into the mix. In turn, quarries will be able to pick the best mine workers in the job market.

The great thing about the quarry industry is that despite all the structural changes to the economy, the demand for infrastructure should always be there – but it’s not something that should be taken for granted. The quarry industry would benefit from more proactive lobbying of government – to influence conditions in which it can flourish. This includes pushing for more streamlined processes for greenfields and expansion applications, particularly as communities encroach on extractive reserves, and arguing for a lifting of cement manufacture imposts that will make cheaper overseas cement supplies less attractive.

If government listens and acts, and the quarrying industry is eager and ambitious, then there is no reason why quarrying can’t yet make its mark in the post-manufacturing economy.

DAMIAN CHRISTIE
Editor









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Tuesday, 22 October, 2019 8:12am
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