Manufacturing Stats, Are These Numbers Your Friend Or Foe?
After a couple of weeks off over the Christmas break, it’s time to take stock.
I find this a great time review & reflect on business & what it takes to stay ahead.
If I’m honest, I enjoy reading “the Experts” outlook for the for the coming year as they gaze into their Crystal Ball.
Drum roll All the economist Agree. (Only kidding) Wishful thinking
In Reality, If We line 100 Economist & Business Analyst, we have 100 different viewpoints.
As my dad would say “If you line up all the economist there be enough to go around the world, you would not be any wiser.”
Everybody has an Opinion, there doesn’t sees to be much of consensus how this impacts your business.
Some are based insights their historical knowledge & Latest Trends how they believe this impact the current events unfolding before us.
Some I’d say just guesses “let’s throw a dart & see where it lands.”
And thee are the people who have an agenda to push their cause.
In Business, There’re 2 Camps: The Big End Of Town & Small Businesses
So do you base your decision making on which opinions you believe are valid?
So who do you trust & rely on?
If you a big multinational company, then you probably relieved by OCED Findings.
Australia – Economic Forecast Summary (Nov 2018)
Robust economic growth is set to continue. New capacity coming on stream in the resource sector will support exports and business investment will pick up. Growthof wages and prices will rise gradually, while the unemployment rate will edge lower. Output growth will moderate slightly in 2020 as capacity constraints tighten, export-market growth slows and households become less willing to draw down savings to fuel consumption
Australia – Economic Forecast Summary (Nov 2018)
Depending on which economist you follow you likely get a different feel for the economy & how’s it’s going to affect your business.
Although Economist opinions are valid for big corporations and give a big picture of what’s going across our vast land.
I can bet money on it that most business owners don’t lay awake worrying about GDP or how the contrived Consumer Price Index will affect your business.
So if we look at comparing Manufacturing stats. Do we get a better understanding of what’s going on.
So What Is GDP Gross Domestic Product?
GDP, short for Gross Domestic Product, is defined as the total market value of all final goods and services produced within a country in a given period. It includes private and public consumption, private and public investment, and exports less imports.
What is GDP?
So you could say GDP is a significant metric to show, ‘How our country is performing against other countries.
If you feel you need to
In Australia, We Punch Above Our GDP Weight
Australia’s Gross Domestic product (GDP) ranks 13th, approximately 1.26 trillion U.S. dollars in 2016. So our GDP per capita amounts to approx 51,737 U.S. dollars.
It also shows how industry sectors are performing and contributing to our economy.
If you’re a BHP, then this could provide an important metric. But for most businesses, this is just an intangible figure that does not put any extra money on your bottom line. So for business, you could call it a vanity number.
So how does manufacturing compare with other industry Divisions?
These Industries Contributed to
Australia’s GDP In 2017-18
- Financial and Insurance Services 9.5% of GDP…
- Mining 8.8% of GDP…
- Construction 8.1% of GDP…
- Health Care and Social Assistance 6.3% of GDP…
- Manufacturing 6.05% of GDP
Source: ABS – 5204.0 – Australian System of National Accounts, 2017-18
These Industries contributed to the Gross Value to Australia In 2017-18
Australia GDP From Manufacturing
So Manufacturing comes in at 5th Place for GDP in Australia.
Australian manufacturing contributes to 6.05% of the Gross Domestic Product (GDP)
GDP From Manufacturing in Australia increased from $25344 Million in the 4th quarter of 2017 to $25955 Million in the 1st quarter of 2018.
GDP From Manufacturing in Australia averaged $22641.93 Million from 1974 until 2018. manufacturing,s GDP, hit an
But does GDP really help these manufacturing businesses?
So if you just settled for Manufacturing GDP, we could say they’re doing a good. Manufacturing adding value to Australia. So we can give them a Gold Star for being part of an Industry which added value to ecomony.
Now I know some people will be doing Cart Wheels every time the latest GDP numbers get released. (Govt Trade Ministers) Now the Rest of us who have skin in the game need more tangible Manufacturing Numbers which show if you’re money.
Manufacturing Gets a Bad Rap, But It’s only Half The Story
For years I keep reading of collapse of Manufacturing in Australia.
If you read, listen or watch the news, you would be lead to believe that Manufacturing is on its knees.
Over the last decade, since the GFC it has indeed gone through some major upheavals.
Australian manufacturing endured a devastating retrenchment in the years following the Global Financial Crisis and consequent worldwide recession. The industry’s output, employment, investment, and exports were damaged by the combined impacts of weak global demand conditions, a substantially overvalued Australian currency and an ambiguous and inconsistent domestic policy context. Since 2008, the sector’s real output has declined by 13% (compared to its pre-GFC peak), and employment by a similar proportion.
Despite this painful contraction, the industry subsequently stabilised and remains one of Australia’s most important industries. Accounting for close to 1 million jobs, $100 billion per year in value-added, and $100 billion per year in exports, the industry’s contribution to the national economy should not be taken for granted.
Jim Stanford and Tom Swann Centre for Future Work at the Australia Institute June 2017
BRIEFING PAPER FOR THE NATIONAL MANUFACTURING SUMMIT 2017 – MANUFACTURING: A MOMENT OF OPPORTUNITY
Manufacturing seems to be the poor cousin of mining
Mining could not exist without Manufacturing.
- Manufacturing plays a vital role in Australia’s economic prosperity…
- Australian manufacturing contributed 6.05% of the Gross Domestic Product (GDP…
- Australia’s economic growth was estimated at 2.52% in 2016…
- In 2016, Australia exported goods worth about 190 billion U.S. dollars, and imported goods worth approximately 196 billion U.S. dollars…
- Australian manufacturing exports A$96.1 billion of goods…
- In 2016-17 Mining employed 157,000 people, 1.7% of the workforce…
- While manufacturing employed 830,000 people which is 7.1% of the Workforce…
- 95% of manufacturing firms employ 20 people or less – and in the city and regional areas around the country…
- Manufacturing is regarded as Australia’s 3rd largest employer, providing direct jobs for almost 900,000 people (more than mining and agriculture combined) and hundreds of thousands more in related industries…
- Retail & Accommodation and food services employ more people but a large portion of the are causal &
Source: 8155.0 – Australian Industry, 2016-17 – abs.gov.au
The Number of People Employed as a Share of the Total Employment For Each Industry Division
|Employment at end June 2016-17 by Ranking|
|ANZSIC Division||Employed 2016-17||Change from |
as of Nov 17
|G Retail trade||1,300,000||0.0||10.4%|
|Q Health care and social assistance (private)||1,125,000||2.6||13.4%|
|M Professional, scientific and technical services||1’031,000||5.1||8.3%|
|H Accommodation and food services||1’031,000||3.0||7.2%|
|N Administrative and support services||881,000||3.5||3.2%|
|I Transport, postal and warehousing||586,000||1.4||5.2%|
|F Wholesale trade||547,000||3.4||3.0%|
|S Other services||484,000||0.2||4.2%|
|P Education and training (private)||418,000||2.0||8.2%|
|L Rental, hiring and real estate services||406,000||0.2||1.8%|
|R Arts and recreation services||206,000||1.0||2.0%|
|J Information media and telecommunications||171,000||0.6||1.7%|
|D Electricity, gas, water and waste services||104,000||0.0||1.1%|
|O Public administration and safety (private)||78,000||-1.3||6.0%|
Note: This table excludes Division K Financial and insurance services and businesses/organisations classified to the General Government sector. For more information about the scope of the Economic
Share of employment (per cent) ABS – provides the number of employed people as a share of total employment for each industry division. The calculations are based on Table 1 and reflect the same period, November 2016 to November 2017 – ABS
The Australian Manufacturing Industry Isn’t Dying, It’s evolving
Currently, Australian manufacturing contributes 6.05% of Gross Domestic Product (GDP), exports A$96.1 billion of goods and employs 856,000 people. This has fallen from a high in 1995, when it contributed to 14% of GDP and employed more than a million people” – The Australian manufacturing industry is not dying
The Australian manufacturing industry is not dying, it’s evolving: CSIRO study
So from these numbers we can see Manufacturing Employs over 1 million people direct & indirectly, so it’s vital it’s profitable.
So what Numbers Should Manufacturing Companies being Paying Attention?
- What are the 20% of your activities that account for 80% of your results?
- What’s your Customer Lifetime Value (CLV)?
- What’s your average transactional amount per sale?
- Do you know your average transactional amount per customer?
percentof total sales does each of your products and services represent?
- How much money are your customers worth to you?
- What’s your average Profit for each job/project?
- How much does it cost you to acquire a new customer?
- How much can you spend to get a new customer?
- What is your average sale worth?
- How many times a year does an average customer buy from you?
- What is your average Profit per sale?
- How many years does your average customer buy from you?
- What efforts do you make, if any to increase the dollar value of a customer transaction?
- How much Traffic do you get to your website?
- Do you know what your conversion rate is?
- ow long does your Sales Process Take?
- Do you know your rate of customer attrition?
- What sales efforts could you do to tap into 80% of the market that has never heard of you?
You may have noticed I did’t ask question about your cost of Goods, or how much it cost you to purchase your stock, or even how much Stock you have on hand.
These are all important question to manage your Cash Flow, but I’m guessing you got a handle on these numbers. If not you better speak to your accountant to advise you these.
So What’s The Next Step
As a Business Owner you expect to make a profit running your business…
Your goal for your business should be having a Positive Cash Flow…
If you get more sales, then you’ll grow your business…You will be able to increase revenue from each customer…
Each new customers will catapult your profits by compounding the Customers Lifetime Value Concept…
Repeat customers put heaps of money in your pocket…
The golden rule of business…Cash is King. No Cash No Business
Your Marketing Questions You Should Be Asking
- What are your biggest challenges facing you in running & growing your business?…
- What are
your biggestRoadblocks in your Business?…
- What’s your Opportunity Cost?… This is the cost, benefit, profit, or value of an alternatively that’s given up to acquire or achieve certain action…
- What’s the No 1 problem in your business?…
- How do you find your customers Pains, Frustrations & Desires?…
- Do you need more Profitable Customers?…
- Do you need more Traffic?…
- Do you need to improve your lead quality?…
- Do you need to boost your conversion?…
- Do you need to convert more visitors to Sales?…
- Are you looking to accomplish more with less time & money?…
- Are you suffering from Shiny Silver Bullet Syndrome?…
- How do your potential customers find you?…
- What’s the best method you have for generating clients?…
- If there was 1 thing you could change about your business, what would it be?
- What will happen if you don’t change this?
- What are the worst possible things that could happen to your business in the next year?
- What are your plans to deal with them, should they occur?
- What’s holding you back from doing more & better consistent marketing?
- Have you noticed gaps in the marketplace? How can you seize these Opportunities?
- If you grasp these Opportunities what would they be worth to you?
- How often do you communicate with your current customers?
- What sequential marketing steps (if any) do your prospective prospect go through to move them to become customers?
- How do you compete in the digital world?
Do you need Help with your Digital Marketing?
I’d be happy to have a chat with & show how we worked with other Manufacturing & Distributors.
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