Australian small manufacturers are proving that when global trade gets turbulent, local ingenuity kicks into high gear.
With revenue hitting $640,000 per quarter, only the second time in seven years they’ve broken the $600,000 barrier, Australian SME manufacturers are writing a playbook on adaptability that spans continents and industries.
From craft brewers shipping their latest batches to Chinese consumers, to coffee roasters pivoting into canned products, and cosmetics brands establishing footholds in Korean markets, Australian manufacturers are demonstrating what industry experts are calling “Aussie resourcefulness” in its purest form. The numbers tell the story: 12 out of 13 manufacturing sectors posted year-on-year growth, with personal care leading the charge at a staggering 123% increase.
But this success story comes with a twist. While sales revenue soared in the first quarter of 2025, manufacturers simultaneously slashed purchase orders to their lowest levels since the pandemic, revealing a sector that’s simultaneously thriving and treading carefully in an era of unprecedented global uncertainty.
Record quarter amid global turmoil
The latest Unleashed Manufacturing Health Index revealed that Australian SME manufacturers averaged $640,000 in revenue for the first quarter of 2025, second only to Q3 2024’s high of $650,000. Despite this near-record performance, the achievement comes against a backdrop of what industry leaders describe as a “hugely unsettling” global environment.
“As much as it’s been a very positive start to the year from a sales perspective for Australian manufacturers, it’s also been hugely unsettling,” said Jarrod Adam, Head of Product at Unleashed. “Uncertainty is the enemy of good business, which is even more true of a goods maker who often looks at production on a 6–18 month timeline.”
The contradiction captures the current manufacturing moment perfectly, bold enough to chase new markets across the Pacific, cautious enough to keep inventory lean as trade storms brew on the horizon.
Personal care powers ahead
The standout performer was the personal care sector, which includes skincare and cosmetics, recording a remarkable 123% increase in annual revenue to reach a quarterly average of $250,000, its strongest result in four years. This explosive growth reflects Australian brands successfully expanding into international markets, with makeup companies notably establishing operations in Korea.
The success in personal care demonstrates how Australian manufacturers are leveraging global demand for locally-made, premium products, particularly in markets where “authentic Australian” branding carries significant value.
Beverages brew success through innovation
Beverage makers saw their average annual revenue climb 13%, from $1.89 million to $2.39 million, driven largely by innovative product formats and strategic market expansion. The sector’s growth story includes Australian beer brewers successfully penetrating Chinese markets and coffee roasters diversifying into canned products.
“From what we have experienced in the coffee market in Australia, there’s been enough of a domestic demand for businesses to build new verticals and expand their product’s reach,” said Connor Nestor, CEO at New Ground. “This year alone, we’ve had way more interest in new product formats like cans or instant coffee, which reflects companies being more strategic and long term with their thinking.”
Nestor noted the challenges facing international brands trying to enter Australian and New Zealand markets, highlighting “the value that consumers put on brands that are genuinely locally made.”
Fashion’s local revival
Australian fashion manufacturing showed encouraging signs of bucking the offshore trend, with full-year revenue for clothing makers jumping from $1.09 million to $1.53 million, a 40% increase. This growth comes as the Australian Fashion Council pushes to reinvest in local production, noting that 97% of Australia’s $28 billion fashion market is still made offshore.
“More than almost any other manufacturing subsector, clothing makers are facing huge downward pressure toward inexpensive offshore production,” Adam said. “Though our data does skew toward B2B clothing makers, as opposed to the wider Australian high-end fashion industry, the data is clear that local production is starting to pay dividends.”
The cautious contradiction
Despite the strong revenue performance, manufacturers are hedging their bets for the future. Purchase orders often a leading indicator of future sales, dropped sharply to 177 per business, the lowest figure since Q4 2020 during the height of the pandemic.
Warehouse managers also cut back significantly, with average overstock dropping from $35,000 at the end of 2024 to just $22,000. Food manufacturers led this reduction, cutting excess stock by 83% from $177,000 to $30,000.
The defensive posture reflects the impact of currency pressure and trade volatility. “The cheap Australian dollar in the first quarter certainly loomed large for local manufacturers, who often rely on US-dollar denominated imports to create their products,” Adam explained. “It’s likely some makers would have looked to eat into their extra inventory to try and wait out the trade storms and currency volatility, before committing to large ongoing purchases.”
Construction holds steady despite dip
Building and construction manufacturers posted a 12% dip in sales compared to Q1 2024, the only sector to see a decline. However, industry insiders remain optimistic about long-term prospects.
“In the past decade, construction and building has been experiencing a relatively stable growth with low volatility of the market,” said Dmitry Kuzmik, Business Manager at ACT Australia. “It is supported by such factors as stable and comparatively steady government expenditure on public infrastructure projects, that is backed by upcoming Olympic Games as well as continuous immigration to Australia.”
Resourcefulness in uncertain times
The story of Australian manufacturing’s recent success is ultimately one of adaptation and resourcefulness in the face of global uncertainty. While manufacturers navigate currency volatility, trade tensions, and supply chain disruptions, they’re simultaneously discovering new opportunities in unexpected markets and innovative product formats.
From craft beer finding success in China to cosmetics brands establishing Korean operations, Australian manufacturers are proving that when traditional markets become uncertain, the solution isn’t to retreat, it’s to diversify, innovate, and seek out new opportunities wherever they may exist.
As Adam noted, this “testament to Aussie resourcefulness” has seen businesses take the moment to “seek out new products and markets,” turning global uncertainty into a catalyst for creative expansion rather than defensive contraction.
The challenge now will be maintaining this growth trajectory while managing the inherent risks of operating in an increasingly volatile global trade environment. But if the first quarter of 2025 is any indication, Australian manufacturers are more than ready for that challenge.
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