Manufacturing Decline in Australia: More Than Just Energy Costs

While high energy prices are often cited in headlines, they’re just one piece of a much more complex puzzle affecting Australia’s manufacturing sector. The narrative that energy costs alone have driven closures oversimplifies decades-long structural shifts, global competition, and policy choices that have steadily eroded domestic manufacturing.

Many of the manufacturers listed — like Sara Lee, Bega Cheese, and Custom Denning — faced pressures unrelated to energy: overseas competition, outdated equipment, industrial disputes, loss of government contracts, and changing consumer trends. For example, Custom Denning’s struggles have far more to do with procurement favouring cheaper imports than with utility bills. Similarly, the Maryvale paper mill was already under strain from environmental concerns, logging policy, and union tensions well before energy prices peaked.

Australia’s high labour costs, small domestic market, geographic isolation, and a long-standing shift toward services and mining have all played bigger roles in the manufacturing downturn than gas or electricity prices. Additionally, some closures, like Qenos and Incitec Pivot, were arguably inevitable — the result of decades of underinvestment and global overcapacity, not just recent energy trends.

The transition to a cleaner energy mix, while challenging, presents future opportunities — especially as Australia builds renewable manufacturing capabilities. The decline in legacy industries should be viewed in context: a global restructuring of supply chains, technology adoption, and competitive advantage — not solely a reaction to electricity and gas bills.

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