How Deindustrialization Has Left Australia Exposed In A Riskier World

Australia is entering a period of intensified geopolitical competition just as its industrial foundations are at their weakest in decades. A long shift toward offshoring, coupled with faith in global supply chains, has left the country exposed at a time when the Indo-Pacific is becoming the world's most contested region. What was once framed as economic efficiency has evolved into a structural vulnerability, one that now intersects with national security.

As supply chains tighten and strategic rivalry grows, Australia's diminishing industrial depth is no longer just an economic issue; it has become a central question of resilience and sovereignty.

A Nation at a Strategic Crossroads

For decades, Australian policymakers operated on several core assumptions:
If global trade were to remain open, regional stability would be a constant, and domestic production mattered less in an interconnected economy. Those assumptions are deteriorating.

Key Vulnerabilities Emerging

• Heavy reliance on imported fuel
• Offshoring of essential manufacturing
• Defence production that does not match strategic needs
• Lack of a long-term, cohesive national industrial strategy

At the centre of these challenges lies a single structural issue: the legacy of deindustrialisation, which has hollowed out capabilities that once underpinned national strength.

The Cost of Deindustrialisation

Australia's transition toward a services-oriented, globalised economy in the late 20th century was heralded as modernisation. Instead, it gradually dismantled industries critical to long-term stability.

Erosion of Economic and Industrial Resilience

Several industries that once formed the backbone of the national economy have been scaled down or shuttered entirely:

• Automotive manufacturing
• Oil refining
• Steelmaking
• Shipbuilding
• Fertiliser production

The consequence is dependence on external suppliers for fuel, materials, and manufactured goods, an increasingly precarious position as global supply chains fracture.

Symbolic Turning Points

The closure of BHP's Newcastle steelworks in 1999, once employing around 11,000 people, was a defining moment in this decline. Similar events followed:

• Geelong after Ford's closure in 2016
• Elizabeth, South Australia, after Holden's shutdown in 2017

These closures represented more than industrial losses; they marked the unravelling of communities built around skilled labour and long-term economic identity.

The Social and Economic Impact

Deindustrialisation has reshaped Australia's social fabric and contributed to widening inequality.

1. Decline of Community Cohesion

Industrial hubs once provided:

• Stable employment
• Pathways for social mobility
• Shared civic identity
• Concentrated pools of skilled labour

Their decline has created pockets of unemployment, weakened local economies, and fractured community structures.

2. Stagnant Wage Growth

Real wage growth has barely moved in nearly two decades. This stagnation reflects:

• The breakdown of domestic supply chains
• Movement from high-wage manufacturing to lower-wage service jobs
• Limited regional opportunities for advancement

The gap between national economic indicators and public sentiment stems from these structural shifts.

A Strategic and Security Liability

The more profound implications extend beyond economics. As political theorist Samo Burja argues, post-industrial societies often lose "social technology", institutional memory, coordination capacity, and technical expertise. This loss is visible across Australia's industrial decline.

A Loss of Capability, Not Just Jobs

The outsourcing of complex industries has reduced Australia's ability to:

• Sustain sovereign defence capacity
• Respond to geopolitical disruption
• Protect critical infrastructure
• Maintain independent supply chains

The COVID-19 pandemic exposed this vulnerability when basic protective equipment became scarce due to reliance on overseas manufacturers.

Fuel Dependency: A Critical Weak Point

Australia imports most of its refined fuel and has limited emergency reserves. Any significant disruption to maritime trade routes, whether geopolitical or commercial, could affect:

• Defence readiness
• National logistics networks
• Food supply chains
• Broader economic stability

This dependence represents one of the country's most acute strategic risks.

The Case for Strategic Reindustrialisation

Reindustrialisation was once dismissed as inefficient or protectionist. Today, the strategic argument outweighs the economic orthodoxy. Other nations, including South Korea, show that industrial strength and global competitiveness can be mutually reinforcing.

Why Reindustrialisation Matters

• Resilience over efficiency: Recent crises reveal that resilient supply chains are essential for stability.
• National security: Defence preparedness requires a robust industrial base.
• Regional renewal: Industrial revival can support communities left behind by globalisation.

What Must Change

A credible national strategy would involve:

• Rebuilding, refining capacity, and diversifying fuel sources
• Expanding defence manufacturing, particularly shipbuilding
• Increasing strategic petroleum reserves
• Incentivising high-value, technologically advanced manufacturing
• Forming public–private partnerships to accelerate innovation
• Investing in vocational training and regional workforce development

Rebuilding Regional Australia

Reindustrialisation is a social project as much as an economic program. Regions such as Newcastle, Geelong, and Elizabeth require targeted intervention:

• Incentives for advanced manufacturing
• Stronger links between universities and industry
• Local training pipelines for emerging technical fields
• Infrastructure that attracts long-term private investment

Strengthening regional industrial clusters would help narrow the divide between metropolitan centres and industrial communities.

Toward a Coherent National Strategy

Australia's long-term security depends on linking its economic, industrial, defence, and energy policies into a unified strategic framework. The country must confront a complex reality: the assumptions that shaped its financial model for decades no longer hold in a world marked by rivalry and instability.

The Road Ahead

Australia's deindustrialisation has produced deep structural vulnerabilities at a moment when national resilience is more important than ever. The Indo-Pacific is becoming more contested, global supply chains are less reliable, and technological competition is more intense.

A deliberate, strategic reindustrialisation agenda, anchored in national security, economic stability, and regional revitalisation, offers a path forward. Rebuilding capacity is not simply about restoring lost industries; it is about ensuring sovereignty in a volatile world.

Australia now faces a choice: continue relying on fragile global systems or rebuild the industrial foundations essential for its future security and prosperity.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.