Despite rising freight costs and infuriating supply chain setbacks, regional and farm sector manufacturing businesses are more focused on growth opportunities and investing in expansion than their city cousins.
Thanks largely to a bullish mood in agribusiness, fuelled by strong farm commodity prices and a two-year turnaround in seasonal conditions, regional engineering, processing and equipment manufacturing firms are "running at a much faster clip" than many of their peers elsewhere.
"We know the Australian economy has generally been one of the most resilient performers during the COVID pandemic, but within that success story regional business performance has often led the charge," said Commonwealth Bank of Australia's agribusiness boss, Paul Fowler.
"Although supply chain disruptions have limited the ability of many businesses to maximise manufacturing options and keep up with demand, we're seeing very strong financial results across our regional business banking portfolio," he said.
Mr Fowler, who recently took up CBA's agribusiness and regional banking executive general manager's post, said 72 per cent of the bank's non-metropolitan manufacturer customers had investment growth strategies and plans to expand their customer base during 2022.
That was well in front of the 64pc with a growth focus based in cities.
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In general, however, manufacturing was remarkably healthy Australia-wide and on the precipice of a new growth phase.
The bank found 58pc of respondents to a manufacturing insights study expected revenue to rise in the year ahead; 72pc would spend more on technology, and 42pc planned employing more staff relative to the past two years.
Machinery, automotive and transport sector players recorded the second best revenue results in the past year - just behind medical and healthcare sector manufacturers, while food and beverage processors had the third highest growth focus, behind medical and clean energy sector businesses.
While coronavirus pandemic-related supply costs and production hurdles had left their mark on manufacturing operations, 84pc of manufacturing businesses said they had adapted well to the challenges and opportunities emerging in the past two years.
Resilient small guys
Interestingly, smaller manufacturers with turnover between $5 million and $20m had proven to be the second most resilient category in the sector.
Notably, Mr Fowler said many regional workshops had invested in new equipment and technologies, expanding their product range.
They were working closely with suppliers and new partners to adapt their supply chains to the "new normal".
The pressure was on them to respond to strong demand from farmers who were also investing in new gear after being well rewarded by strong prices and much improved seasonal conditions since early 2020.
There is clearly a lot of fresh thinking going on, including a keen interest in investing in new technology to help productivity
- Paul Fowler, Commonwealth Bank of Australia
"We're also witnessing more on-shore manufacturing being taken on by local firms who have seen frequent disruption in component supplies from China, or elsewhere, so they're now looking at how they can fill the gaps themselves," he said.
"It is a multi-year story, but there is clearly a lot of fresh thinking going on, including a keen interest in investing in new technology to help productivity, energy efficiency and financial performance."
Energy efficiency loans
In the six months to February, CBA recorded a 12pc jump in energy efficient equipment finance lending, particularly by farmers and other big equipment operators buying new tractors.
CBA also recently launched a green agribusiness loan which rewards borrowers with lower interest rate incentives if they commit to setting certain environmental goals as part of their business efficiency strategies, and a carbon farming financial product for farmers agreeing to implement sustainable carbon emission reduction targets.
However, while many manufacturers had carbon emission reduction plans, only one in three had actually taken any action, according to the insights report.
The bank did find manufacturers progressing faster than expected across 14 of the 17 sustainability initiatives examined by the research, notably in areas of workplace safety, diversity and inclusion.
It also found businesses in the sector considered new technology to be one of the top three growth drivers, with 67pc having already increased their investment in technology during the pandemic.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
