COVID-19 Recovery Buzz Words

By Rebecca Hegarty

A slight and gradual relaxing of COVID-19 restrictions has just started. Talk is turning to the recovery phase from COVID-19 in terms of the economy and we are hearing a lot of buzz words at the moment surrounding that talk, generally and for the manufacturing industry. So, it is an opportune time to drill down and have a look at what three key buzz words mean in simple terms.

‘Economic Sovereignty’ – without getting bogged down in economic theory, this can be interpreted as economic independence in making ‘rules for ourselves’. It has arisen in terms of the COVID-19 crisis highlighting the gaps and risks in our supply chains where Australia’s dependence on imports of manufactured goods, stymies our ability to meet local demand for such goods when that chain of supply is threatened. This is why the talk has turned to bolstering and supporting local manufacturing. This is not to say this will be to the exclusion of our global economic relationships, but it may redress some of the current imbalance.

‘On-Shoring’ – this means bringing production back within our national borders, whereas once production or the manufacturing process may have been conducted overseas. The advantage of ‘on-shoring’ is that there are less lead times, more control over quality, a better ability to transport products in a shorter timeframe and, of course, less import taxes. This could apply to parts of a manufacturing process or all of that process.

‘Manufacturing pivot’ – this refers to diversification in manufacturing, such that a manufacturer may move into the production of products outside its traditional sphere to meet market demand or may expand into supply for industries outside of its usual market.

The use of this buzz words bodes well for increase support for the manufacturing industry, which can play a vital role in recovery from the COVID-19 crisis. This will be a slow recovery and investment in digital technology, people and processes however it is important that the rhetoric is matched by action. Australia’s Treasurer, The Hon Josh Frydenburg MP, was recently quoted in an interview with Sabra Lane on ABC, as saying:

So we have to have a level of self-sufficiency. It doesn’t mean we need to produce everything here in Australia, there are economies of scale that other countries may have that Australia doesn’t have. We’re pretty self-sufficient when it comes to agriculture. We have a degree of manufacturing here. But these are issues that we, as a Government, will be looking at over the course of the period after the coronavirus.

The Hon Josh Frydenburg MP

It is with these words, that the Australian manufacturing sector moves towards recovery phase.

1 Interview with Sabra Lane, RN Breakfast , ABC 9 April 2020 https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/interview-sabra-lane-rn-breakfast-abc