Shrinking Skills and Rising Demand

There are two major forces reshaping Australia’s manufacturing sector right now: a decline in the number of people training for skilled work, and an ageing cohort of experienced workers nearing retirement. Those trends matter not just for trades like construction, automotive, electrical or plumbing, but also for factories, production lines, and advanced manufacturing businesses across the economy.

Apprenticeships and Traineeships: Completion and Decline

Apprenticeships were designed to pass on hands-on skills from experienced workers to new generations. But the data shows a clear struggle to keep apprentices engaged through to completion. According to research published by the National Centre for Vocational Education Research (NCVER), completion and attrition tracking shows that historically less than a majority of apprenticeship and traineeship contracts finish in the expected time frame, and completion rates remain a persistent challenge for the system.

Contemporary NCVER quarterly reports also record a notable fall in the number of active apprentice and trainee contracts nationally. As of 30 June 2025, there were 307,080 active contracts, down by more than 11 per cent compared with a year earlier. Trade occupation contracts alone accounted for 221,510 of those, showing a clear drop in the number of people currently training in trade skills.

This matters because trade skills underpin not just tradie jobs on worksites but also much of manufacturing itself. Many manufacturing roles such as machinists, welders, electricians, toolmakers, begin with an apprenticeship! Fewer apprentices in training means fewer skilled workers emerging to fill future roles.

Shrinking Skilled Workforce

At the same time, Australia’s labour force is ageing. While the Australian Bureau of Statistics (ABS) doesn’t publish occupation-specific retirement data, broader ABS employment surveys show the number of jobs classified under manufacturing has declined over decades. In the early 1990s, manufacturing was one of the largest employing industries in the country; by 2024 total filled jobs in manufacturing had fallen significantly even as the total national workforce grew.

Recent ABS trend data places manufacturing as around the eighth largest employing industry in Australia, accounting for roughly 6 per cent of the total workforce and employing roughly 880,000 to 930,000 people in 2025. This reflects a sector that continues to play a significant role, but one that employs far fewer people than it once did, even as the economy overall expands.

When you consider that many of those workers are in mid- to late-career stages, the implications for workforce replacement are stark. If retirement rates among skilled workers accelerate and fewer apprentices complete training, the gap between supply and demand for experienced manufacturing labour will widen.

Economic Impact of Manufacturing

Manufacturing’s contribution to the Australian economy remains substantial, even if its share has shifted. Recent estimates place manufacturing’s share of gross domestic product (GDP) at just over 5 per cent, a reflection of how the broader Australian economy is dominated by services industries. However, manufacturing continues to generate tens of billions of dollars in value-added output and plays a major role in exports and capital investment.

This means manufacturing workers are not just making things; they are an essential part of the nation’s economic fabric. A shrinking skilled workforce therefore has implications not only for individual businesses but for national productivity, competitiveness, and economic resilience.

The Twin Challenge: Ageing and Attrition

The broader picture is clear, even without precise ABS retirement figures by profession, it’s widely recognised in the labour market that many experienced tradespeople and highly trained manufacturing workers are approaching retirement age. This transition is occurring at the same time that fewer young people are entering and completing apprenticeships.

When you align these trends side by side, a declining pipeline of new apprentices and a large group of experienced workers exiting the workforce, it paints a worrying picture for the future of skills in manufacturing. It isn’t just about headcount; it’s about knowledge, experience, and craft. Skills don’t transfer automatically if there aren’t enough trained people to replace those leaving.

What This Means in Practice

For businesses and industries reliant on technical skills, the on-the-ground effects include:

• Longer recruitment cycles for specialised roles.

• Higher training costs as businesses try to up-skill workers from other backgrounds.

• Increased reliance on offshore labour or contractors when local talent is scarce.

• Pressure on wages and workforce planning, especially for highly specialised skill sets.

Manufacturing’s contribution to the economy is not simply defined by its GDP share but by its role in supply chains, innovation, and skilled employment. As apprenticeships slide and workforce turnover accelerates, those foundations are under threat.

Here are the source URLs referenced for the data points used in the blog, listed clearly for citation and reference:

NCVER (National Centre for Vocational Education Research)- https://www.ncver.edu.au/research-and-statistics/publications/all-publications/apprentice-and-trainee-completion-rates-2024

https://www.ncver.edu.au/research-and-statistics/publications/all-publications/apprentices-and-trainees-2025-june-quarter

Australian Bureau of Statistics (ABS) https://www.abs.gov.au/articles/spotlight-australian-labour-market-over-last-30-years

Australian Industry Group (Manufacturing employment and contribution) https://www.australianindustrygroup.com.au/resourcecentre/research-economics/manufacturing-in-australia-2025/

Reserve Bank of Australia (Economic composition and GDP context) https://www.rba.gov.au/snapshots/economy-composition-snapshot/