The government’s announcement late last year that it is injecting $1.3 billion into its Modern Manufacturing Initiative (MMI) underscores just how important manufacturing is to Australia’s economic recovery.
Australia has a rich history in manufacturing and now that status is being significantly elevated as businesses pursue world-leading, high-value practices with the intention of securing the country’s future, whatever the threat.
Prime Minister Scott Morrison told the National Press Club the policy objective was to build scale and capture income in high-value areas of manufacturing in which Australia has either established a competitive strength or for emerging priorities.
Key industries include:
- Food and beverage production
- Medical products
- Renewables and clean energy
- Agricultural Technology (AgTech) Manufacturing
The pandemic has exposed our dependence on critical supplies produced offshore. This is a golden opportunity for Australian manufacturers to upskill their workforce, adopt leading-edge technology and efficient production techniques, and commercialise clever ideas on a global scale.
As the prime minister says, we know how to do this stuff. We have a global reputation on food security and produce more than enough to feed ourselves. Our medical production is globally competitive and the renewables sector is overflowing with clever thinkers and keen investors.
Government investment plus working capital
Manufacturing employs around 860,000 people and before the pandemic it generated more than $100 billion in economic value1.
The MMI is an investment vehicle driven by the government and will partner with industry and research institutions.
Manufacturers will need plants, equipment and working capital to meet these stretch targets and that’s where the Commonwealth Bank comes in. We embrace our role in Australia’s economic recovery and want to support customers and manufacturers as they innovate and integrate smart technology.
We’ve established a national team to focus specifically on this important national imperative to assess how we can provide the appropriate working capital solutions for manufacturers and asset finance requirements for the sector.
So what does that look like? We’re working with our clients to better understand their business and their working capital needs – to bridge necessary gaps in cash flow.
We estimate there is $35 billion trapped in working capital in our customers’ operations. Through technology and improved processes, we commit to making better and faster decisions so we can say “yes” to clients’ working capital facilities.
Using inventory and receivables as security will allow our manufacturing customers to use their homes, commercial property and other fixed assets for longer term investments. For small business owners or sole traders, this means these assets can be used to increase their personal wealth, not to support business working capital.
We’ll be implementing market-leading technology to help inform our customers on the value of their receivables and inventory and how much funding this unlocks on an ongoing basis. This will also help us to dynamically value our security and how we’re exposed to it.
We’re working towards building a resilient Australia. Please get in touch to learn more about how we can help you.
About the Author
Mike Vacy-Lyle is the Group Executive of Business Banking at Commonwealth Bank and is committed to connecting with Australian businesses and clients to understand their unique needs.
He’s held various roles in Commercial Banking throughout his career including finance, pricing, product, capital management, sales and relationship management. He seeks to lead people towards a common goal and designing best-in-class digital tools and services to make it easier for customers and staff to get things done.
Banks are systemically important to the economy and one of Mike’s aims is to be on the forefront of technology to drive future growth.