There are a lot of myths about manufacturing, and the recent success of National Manufacturing Week reminds us how important it is to dispel them.
Myth No. 1 is that Australian manufacturing is in terminal decline - that its ultimate disappearance is only a matter of time, and that attempting to strengthen the sector will only delay the inevitable.
Manufacturing isn't in decline. It is growing. In the 33 years from 1974-75 to 2006-07, industry value added in the sector increased 1.5% a year.
Manufacturing employment has also held up better than many people realise. It is now actually rising. The average number of manufacturing workers in the year to February was 1.12 million - 33,500 more than the average for the previous year.
Myth No. 2 is that we don't need manufacturing - that we are now primarily a service economy, that a near-total reliance on service industries is both desirable and inevitable.
That is not a view likely to be shared by those million-plus workers, their families, or the communities they help to sustain.
The truth is that manufacturing jobs, exports, innovation and input demand would be difficult, if not impossible, to replace.
This is not just about job numbers; it's also about the quality of those jobs. Manufacturing offers high-skill, high-wage employment. Labour productivity in manufacturing is above the national average and it has grown faster than the national average for the past five years.
Manufacturing exports have been growing at 5% a year for the past five years and hit a record $87.1 billion last year. What would stripping that $87.1 billion out of the current account - already $67.4 billion in the red last year - do to the Australian economy? It is fanciful to suggest we could make up the difference with a click of the fingers by exporting more services, many of which are in any case non-tradeable.
Manufacturing accounts for two-fifths of business spending on research and development in Australia - a record $3.9 billion in 2005-06, which was 12% more than the year before. It contributes hugely to our national innovation effort and is helping to drive our transformation into a knowledge-based economy.
Finally, manufacturing generates demand across the economy - including demand for services. Service workers, from bankers and lawyers to cleaners and couriers, all owe their living to manufacturing. In 2003-04, manufacturing used $52 billion worth of inputs from the service sector. If manufacturing disappeared, thousands of service jobs would disappear with it.
Manufacturing matters. How do we ensure Australia remains, in the Prime Minister's now legendary words, "a country that actually makes things"?
Let's break the past 33 years into periods of light and periods of darkness. During the Fraser era (1975-76 to 1982-83), manufacturing industry value added grew 0.6% a year. During the Howard era (1996-97 to 2006-07), it grew 1.4% a year.
So much for the periods of darkness. During the Hawke-Keating era (1983-84 to 1995-96), manufacturing industry value added grew 2.2% a year. That's more than three and a half times faster than under Fraser, and one and a half times faster than under Howard.
What distinguishes the period of light from the periods of darkness?
Two words - industry policy. More specifically, the brilliantly creative industry policy of the late John Button. His focus was on building strength, not cosseting weakness. He encouraged Australian manufacturers to innovate and export.
The Rudd Government has restarted that process and it began with the budget, which included $1.1 billion for innovation initiatives, including $251 million for Enterprise Connect and $240 million for Clean Business Australia.
The first will give small and medium enterprises access to new ideas and technologies through a national network of manufacturing and innovation centres. The second will help business save energy and water, modify buildings and production processes to reduce their environmental impact, and commercialise green technologies.
Other measures - including $209 million to double the number of PhD scholarships and the $326 million Future Fellowships scheme to get and keep 1000 of the world's best mid-career researchers working in Australia - will boost our research capacity and fuel innovation.
The $11 billion Education Investment Fund and the $20 billion Building Australia Fund also reflect our determination to meet the long-term skill and infrastructure needs of the community and Australian industry.
As far as the Government is concerned, manufacturing is here to stay. We want to create an environment in which people have the confidence to invest their money, their skills and their careers in this vital sector.
Prophecies of industry decline have a nasty way of becoming self-fulfilling. Manufacturing is alive and well. It has helped make us what we are and it is central to the Government's vision of Australia's future.
Senator Kim Carr is Minister for Innovation, Industry, Science and Research.
[First published in The Age Business, p. 14; Wednesday, 4 June 2008]