Article by Graeme Evans, Regional Vice President ANZ & Pacific, Epicor
The sovereign imperative
Australia’s manufacturing sector is extremely small and niche in comparison to other global countries like the US. The Australian manufacturing sector fell from 19% in the 1980s to less than 5% today. We are seeing major power nations refocusing on their manufacturing abilities in order to re-industrialise and increase sovereign capability, which in the current geo-political market enforces strength, resilience and includes the benefits of increasing jobs, and promoting positive economic drivers. The manufacturing sector is worth $16.8 trillion globally, making it imperative for Australia to bolster its onshore manufacturing to remain globally competitive.
Economic leadership
The current manufacturing landscape in Australia faces mounting pressures from global shipping volatility and a challenging local labour market. These challenges are characterised by a widening skills gap and a high rate of recruitment difficulty that sees critical positions remain unfilled for months. With countries around the world wanting to build sovereign resilience, industrial leaders are re-evaluating what it means to manufacture goods domestically. While the sentiment of patriotic reshoring is understandable, industrial success requires a shift in focus from the location of production to the efficiency of the underlying systems. For Australia, this transition is no longer just about industrial pride; it is a structural necessity to safeguard our standard of living as we pivot from a ‘dig-and-ship’ commodity model to a high-value, Net Zero economy. Sustainable growth now depends on an ability to turn raw data into a strategic asset that powers productivity across every factory floor.
Global insurance policy
The pursuit of sovereign capability is a critical insurance policy for national resilience. Australia is geographically isolated and highly trade?dependent, making it vulnerable to global shocks like pandemics or geopolitical tensions. Recent history showed that over?reliance on offshore production can leave the country short of medical supplies, defence technologies, and energy infrastructure. Sovereign manufacturing does not mean making everything locally; it ensures Australia can make what it must when global supply chains fail.
Furthermore, manufacturing depth provides economic sovereignty. Without it, Australia risks becoming a price taker in strategic sectors like critical minerals processing, food agri?processing, and clean energy systems. It allows Australia to move from being resource rich to value rich by adding value onshore to raw materials before they are exported. This shift also acts as a skills multiplier, driving R&D and digital adoption that spills over into mining, construction, and software sectors.
Hidden data lakes
One common barrier to this transition is the belief that existing data is insufficient for advanced technology. However, manufacturers often underestimate their own data readiness. Modern systems are designed to operate effectively with the structured data already housed within current enterprise resource planning platforms. Rather than waiting for pristine information, organisations can use tools that help clean and enrich datasets during implementation.
Job displacement concerns also frequently surface. In practice, data-driven tools deliver the most value when they augment human judgment rather than replacing it. Modern manufacturing increasingly offers high-wage, technical roles, and stable regional employment. Technology complements this labour by automating repetitive tasks, allowing the workforce to shift toward more impactful responsibilities. These digital assistants enhance visibility and help teams make faster, more informed decisions.
AI cost savings
Another misconception is that advanced technology is too expensive for smaller operations. Low-code platforms and pre-trained models have lowered these barriers, allowing businesses to bypass the need for large in-house data science teams. For small and medium enterprises (SMEs) seeking to integrate into high-value defence and industrial supply chains, tactical sovereignty begins with digital readiness. Organisations should first map existing equipment and identify where manual workarounds, like paper instructions, impede visibility. Following this, they must document KPIs like scrap rates and uptime to establish a reliability baseline for large-scale partners.
Importance of traceability & sustainability
Integration of data flows is the next essential step. By connecting machines and sensors, smaller manufacturers can provide the transparency tier-one suppliers demand. This includes creating digital birth certificates for components to ensure the rigorous traceability required in sectors like defence. A connected factory links machines, systems, and people to create an agile environment. This visibility allows teams to identify bottlenecks before they impact delivery, reducing unplanned downtime.
Beyond operations, digital integration supports sustainability. Monitoring energy consumption at the machine level allows factories to reduce their carbon footprint without sacrificing quality. This assists in meeting the rising expectations of customers who demand sustainable, defect-free products.
Strategic & selective for long-term success
Ultimately, sovereign manufacturing must be selective, focused on strategic sectors, and industry-led with government as an enabler. It is about partnering globally, not isolating locally. By embracing data-driven productivity, Australian firms can ensure that “Made in Australia” becomes synonymous with advanced, resilient, and world-class manufacturing.
For Australian businesses considering tapping into the opportunity of sovereign manufacturing the way forward isn’t as complex as it might seem and there is support out there.
