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The Australian Government is manufacturing a new future for our nation. Manufacturing is critical to a modern Australian economy—a key part of almost every supply chain that adds significant value to all sectors. The Modern Manufacturing Strategy (MMS) is led by industry, for industry, to help manufacturers scale‑up, become more competitive and build more resilient supply chains. The Australian Government will be a strategic investor in this, notably through the 6 national manufacturing priority sectors, in order to drive productivity and create jobs for Australians, both now and for generations to come.

On 1 October 2020, the Australian Government announced a $1.5 billion investment in the MMS to help Australian manufacturers be more competitive, resilient and build scale in the global market. The 6 key areas of focus are:

  • Resources Technology & Critical Minerals Processing
  • Food & Beverage
  • Medical products
  • Recycling & Clean Energy
  • Defence
  • Space 

Road maps have been developed with industry to set out plans for both industry and Government to strengthen Australia’s manufacturing capability. The road maps have been led by industry taskforces to identify and set a future vision for the priority areas with clear goals, opportunities and actions over the next 2, 5 and 10 years. This road map is designed to be dynamic—it will evolve with the industry and with other external forces such as economic and global trends as they affect the industry. As the MMS is implemented, we will continue to work with industry to ensure the road map evolves over its life, to take account of emerging opportunities and actions to support the sector to scale‑up, become increasingly competitive and for businesses to integrate their commercial solutions with global supply chains and markets.

Through the MMS, the Government wants to support projects from industry that will transform manufacturing in Australia. The Space National Manufacturing Priority road map will help inform investment decisions that both Government and industry make across the next 10 years to support projects that will:

  • harness and grow the sector’s strategic strengths and advantages
  • provide innovative solutions to overcome constraints that limit value creation and that may prevent the sector achieving its full potential
  • transform the space manufacturing sector by facilitating the growth of a capable and sustainable industry.

Getting the economic conditions right

The MMS starts with a whole-of-government agenda to help grow Australian manufacturing to ensure manufacturers can harness global opportunities and achieve scale. Getting the economic conditions right is the first pillar of the Strategy, noting affordable and reliable energy, lower taxes, industrial relations, training and skills, and cutting red tape are key determinants of success of Australia’s manufacturing businesses.

The Australian Government is getting the economic conditions right for manufacturers, paving the way for growth and improved competitiveness in all sectors. Manufacturers need a pipeline of skilled workers as they transform and scale. The Government is investing $7 billion this financial year to keep apprentices in jobs, to help jobseekers re‑skill and to promote vocational training. We are working to ensure that we are creating the jobs of the future and that we have a pipeline of skilled workers to support new and emerging industries, including in manufacturing. The Government’s reforms to higher education will boost the number of graduates in areas of employment growth, including STEM.

A gas-fired recovery will ensure Australian gas is working for local businesses and manufacturers, with a 13-point plan and $49.8 million investment to unlock supply. This complements the Government’s initiatives to reduce electricity prices, boost liquid fuels security and invest in low emissions energy technology through Australia’s Technology Investment Roadmap.

The Government is harnessing opportunities from emerging technologies and building business digital capability, including growing Australian business’ cyber security resilience. Work to implement a Simplified Trade System will support Australia’s exporters and importers to invest and grow local jobs by making it easier for businesses to integrate into global supply chains.

The Government is focused on making and sustaining jobs through the JobMaker scheme. This will unlock investment, expand the productive capacity of the nation through expanding the instant asset write-off and temporarily allowing businesses with a turnover of $5 billion to offset tax losses against previous profits.

Why space manufacturing?

Australia’s reputation as a reliable and high‑value manufacturing nation positions us to achieve excellence in Australian space manufacturing. It will allow us to build a competitive edge in key space activities, create platforms for exports, and meet emerging critical national needs. Australia’s strengths and advantages in space (such as capabilities in advanced communication technologies and services, Earth observation, and robotics and automation, as well as our unique geographical location) provide significant opportunity for growth. The sector is also a key enabler of the broader economy, able to create highly-skilled jobs, and open up new markets for existing industries in manufacturing.

Investors see this potential, with the total investment pipeline for the Australian civil space sector estimated to be worth approximately $2 billion (including government and university investment) from financial years 2018–19 to 2027–28. Around $775 million of the $2 billion is inbound capital investment from industry, private foundations and international space agencies.[1] However, only a very small proportion of this investment is directed to advanced manufacturing. There is a strategic opportunity to expand our local manufacturing sector and the Government will work with industry to develop a vibrant and successful space sector.

Developing solutions to create value in manufacturing

The purpose of this road map is to identify industry‑led and Government‑backed projects and investments that will increase space manufacturing activity over the next decade. The Government will work with industry to invest in projects that will enhance the industry’s strengths and seek to overcome constraints to future competitiveness, scale and growth.

Currently, the industry could benefit from a more certain and consistent pipeline of projects in order to grow. This is particularly the case for space manufacturing. Likewise, the sector also faces the challenge of a competitive and rapidly growing global space economy.

As a relatively new sector in Australia, with a small local market and customer base, Government and industry investment in strategic projects is vital. Government will co‑invest in projects proposed by industry to build a strategic and sustainable space manufacturing sector. Read more about the opportunities to create value in manufacturing in the space industry.

An emerging sector

Given space manufacturing is an emerging sector, there is still work to be done to identify the criticality of certain manufacturing capabilities, and where Australia should have domestic capability. The taskforce acknowledged that while this road map goes some of the way to doing that, Australia’s space needs are still emerging. As the sector matures, critical areas of Australian capability will become clear, and more areas of competitive advantage will emerge.

Globally, the space sector is expected to grow from US$350 billion to US$1 trillion by 2040.[2] ‘Space 2.0’ also known as ‘New Space’ represents the ongoing structural shift in how value is generated in the space sector—from government‑led projects towards more private commercial activity. 40 years ago, governments contributed about 80% of global space revenue. By contrast, in 2015 commercial space revenue accounted for 76% of the global space revenue. This shift has been fuelled by technological advances leading to cheaper access to space and greater capability.

Australia’s existing proficiency in space‑related R&D and the rapid pace of commercialisation in space activities provides an immense opportunity. Through strategic investment with industry, we can increase our share in the growing global space economy, leveraging global partnerships to include Australian innovators.

Focusing on opportunities and common goals

This road map focuses on opportunities across space manufacturing, covering technologies and solutions that flow on to many sectors. Australia’s location, quality of R&D, and talent demonstrate our potential for success and differentiate us from other nations.

The space sector is emerging and growing at pace. Many of the issues raised with the taskforce relate to those commonly faced by small and medium enterprises (SMEs), such as demonstrating capability and commercialising ideas. Focusing on improving collaboration, adopting new technologies, gaining access to capital, and attracting and retaining talent are common goals for Australian manufacturers and SMEs alike.[3] Added to this, in space manufacturing the requirements and procurement policies of the ‘primes’ and government agencies which currently dominate space activity, are particularly critical to shaping market opportunities.[4]

Australia’s space sector is growing rapidly, and Australian manufacturing will play a crucial role in enabling that growth. Future opportunities in space for Australian manufacturers lie in areas of commercial opportunity, investment in Australian space capabilities and international supply chains and collaborations.

Industry is looking to government to be the initial customer to support the growth of the Australian space industry. Meanwhile, the Australian Government is looking to industry to identify and drive further commercial opportunities in international and domestic markets. Both of these factors are considered necessary to kick‑start public and private investment.

Leveraging existing strengths

Australian space manufacturing should leverage existing comparative advantages and competitive strengths. Australia has a number of competitive strengths in the sector arising from recent innovations in space, and our expertise across relevant and associated markets. These are outlined in the National Civil Space Priority Areas. In relation to space manufacturing, specific strengths and areas of competitive advantage and strategic interest include:

  • world class space‑related R&D
  • geographic location supporting advanced communications, space situational awareness activities, and space operations
  • existing advanced manufacturing expertise in adjacent sectors which can support space manufacturing
  • membership of the Five Eyes community and well-regarded cyber security standards
  • expertise in robotics and automation, especially in autonomous systems and remote asset management
  • expertise in remote medical capabilities, especially relevant to space medicine and life sciences.

Meeting future needs

The space industry is rapidly evolving and can power the development and commercialisation of advanced technologies with cross‑sector applications. It can connect Australia to the growing global space economy. The growth in the sector more broadly presents an opportunity to scale Australian space manufacturing from an emerging sector to a competitive, resilient and experienced one.

Excellence in domestic space manufacturing will allow Australia to maintain, deepen and broaden its competitive edge in key space activities. This can create platforms for new export opportunities, and grow Australia’s reputation as a reliable and high‑value space nation.

An uplift in Australia’s space manufacturing capability and capacity to the appropriate standards is crucial to support the design, development, manufacture, refurbishment and sustainment of relevant products. This will involve investment in Australian companies to develop their existing capabilities in additive and precision manufacturing, systems integration and avionics, and lift critical validation capabilities, including access to space, for space qualification.

The MMS, together with the Australian Civil Space Strategy, sends a clear signal to industry and government about the future of Australian manufacturing for space, and supports the achievement of the Australian Government’s ambitious space agenda.

Industry structure: understanding the current space industry

The sector’s potential is recognised in the Australian Civil Space Strategy. It sets an ambition to triple the Australian space industry market size from $3.9 billion to $12 billion and create an additional 20,000 jobs by 2030. Spill‑over effects will see further jobs and economic growth.[5]

The Australian Space Agency is currently tracking 481 space organisations in Australia. The Australian Space Agency estimates these organisations generated approximately $4.6 billion in revenue in the 2018–19 financial year, with manufacturing and core inputs representing approximately 20% of sector activity.[6]

There are a range of actors who have existing or future potential to undertake manufacturing activities in the Australian space sector as defined by the Australian Space Agency.[7] This includes primes and system integrators, subsystem manufacturers, component manufacturers, and Original Equipment Manufacturers (OEMs). Space manufacturers produce systems, technologies and components that enable space activities, such as exploration, observation, and communication.

The Australian Government established the Australian Space Agency to transform and grow a globally respected space industry. To be sustainable, the space industry itself needs to lead investment; however the Government has an important role as a partner, facilitator, and regulator and this road map will support the domestic space manufacturing sector to evolve into a globally renowned and specialist producer of space and ancillary products.

Through the MMS, the government will look at opportunities to not only collaborate with industry and to make strategic investments, but also for industry players and businesses to work together to invest in strategic projects that will boost Australia’s manufacturing capabilities and expertise in the space sector. This will build on Australian Government investment to expand national capability in space through the $15 million International Space Investment initiative, the $19.5 million Space Infrastructure Fund, and the $150 million Moon to Mars Initiative, as well as investment support in other areas, such as defence.

Footnotes

[1] Australian Space Agency (2021) Economic Snapshot of the Australian space sector: 2016-17 to 2018-19

[2] Morgan Stanley (2020) Space: Investing in the Final Frontier

[3] Advanced Manufacturing Growth Centre (2020) Ten Ways to Succeed in Australian Manufacturing

[4] ‘Primes’ are prime contract holders, responsible for the design and assembly of complete spacecraft systems, which are delivered to the governmental or commercial users (e.g. telecommunications, earth observation satellites, launchers, and robotics). This definition is adapted from “The space sector in 2014 and beyond” OECD (2014).

[5] Australian Space Agency (2019) Australian Civil Space Strategy 2019–2028

[6] Australian Space Agency (2021) Economic Snapshot of the Australian space sector: 2016-17 to 2018-19

[7] Australian Space Agency (2020) Definition of the Australian Space Sector

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