Survey finds that AI comes to the aid of Australia and New Zealand manufacturing ROI, but technology paralysis high by global standards
There is a renewed focus by governments to put Australian businesses at the front of the queue for procurement and contracts. Local industries are evaluating what is required to compete effectively and deliver on these opportunities – starting with productivity.
Australia's productivity has been trending downward, with the 2022–23 financial year marking the steepest annual decline on record. To reverse this, targeted investment in digital technologies and workforce upskilling is essential. The 2025 State of Smart Manufacturing (SoSM) Report from Rockwell Automation provides a global view of industry sentiment, drawn from the responses of 1,560 manufacturers across 17 countries – including 85 organisations in Australia and New Zealand.
The health and life sciences sector, employing over 264,000 people locally, is emerging as a leader in AI integration. The SoSM 2025 Report shows that this sector achieved the highest return on investment (ROI) from Generative AI and Causal AI, with ROI rising to 19% in 2025 from 9% in 2023. These results underscore AI's growing role in business strategy and the sector's digital maturity in the region.
Consumer Packaged Goods (CPG) companies have traditionally focused on brand building and lean manufacturing to build market share. Following the supply chain disruption caused by the pandemic and recent geopolitical events, organisations are changing their recruitment and investment strategies to better meet emerging trends. According to the SoSM 2025 Report, there is now an increased emphasis on hiring new or different types of talent, with 32% of organisations pursuing this strategy in 2025, up from 24% in 2023. To stay ahead of their competition, companies are now bringing in skills to help them analyse and activate their data and shape their marketing strategies. The ability to attract and retain employees with the necessary skill sets is now considered less of an internal risk compared to 2023 (19% in 2025 vs. 26% in 2023).
Building stronger vertical integration
In Australia and New Zealand, technology infrastructure readiness is the biggest barrier to a greater adoption of smart manufacturing with 38% of the respondents citing this as their number one issue. In New Zealand for instance, 97% of businesses are small to medium enterprises, with many of them needing to build stronger vertical integration to ensure traceability and standards compliance.
"Today's technology advancements are unlocking new opportunities where the combined potential of people and technology will shape our collective future," says Anthony Wong, regional director, South Pacific, Rockwell Automation.
"As this year's report shows, manufacturers around the world are using smart manufacturing to navigate disruption and create new opportunities for speed and agility. At Rockwell, we believe innovation and resilience go hand in hand. With the right technology and right people, we can simplify complexity and lead with confidence during times of dynamic change."
Efficiency is a key driver for sustainability
Although sustainability remains an important focus, it is no longer viewed as the key market differentiator. According to the SoSM 2025 Report, organisations are shifting their priorities, with operational efficiency now emerging as the primary area of emphasis. Over half state that improving efficiencies acts as a key driver to pursue sustainability – a 13% increase from 2023.
Key findings from Australia and New Zealand include:
- One of the biggest hurdles to growth mentioned by 27% of the companies in the region is technology paralysis which is in stark contrast to the global response which recorded a much lower of 18%.
- Cybersecurity ranks as the second biggest external risk globally, with 49% of manufacturers planning to use AI for cybersecurity in 2025 – up from 40% in 2024.
- The technologies that companies invested in and that delivered the biggest ROI over the last 12 months are cybersecurity platforms, energy management, and Generative AI/Causal AI. One of the survey respondents from the region noted that: "By 2027, AI-powered quality control systems will detect defects in real time. In my work, it will enable immediate rejection of faulty products."
- Companies in the region are actively pursuing business growth with survey respondents stating that the two primary drivers for technology investments are expansion and long-term business impact.
According to the Committee for Economic Development of Australia (CEDA), Australia fell from 20th to 41st in global workplace productivity rankings. This drop reflects a broader lag in digital maturity compared to international peers. CEDA emphasises that modest gains in productivity – just 0.5 percentage points annually – could yield significant long-term economic benefits, potentially increasing GDP per capita for today's newborns by sixfold over their lifetimes.
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