In manufacturing today, strong governance is the foundation of resilience, competitiveness and growth. Businesses that treat governance as a strategic weapon, not just a compliance exercise, will be the ones that survive disruption, protect value and lead the next era of Australian industry.
In 2023, the Australian Securities and Investments Commission (ASIC) reported that 41% of SME failures were linked to poor financial control. Manufacturing businesses made up 13% of all insolvencies — evidence that better financial governance is required.
The failures of Australian manufacturing businesses Qenos (2023), Tritium (2023) and Highline Caravans (2024) illustrate that operational strength alone is not enough. These businesses were crippled by high labor costs, volatile and increasing energy costs, under-capitalisation, the need for investment in new plants, excessive debt and weak financial controls.
Today, with new tariffs and rising protectionism reshaping global trade, Australian manufacturers face new pressures and opportunities. Businesses with resilient governance structures, clear escalation protocols, transparent financial reporting, diversified supply chains and proactive risk management are adapting faster and more successfully.
Governance must be flexible enough to adjust as business conditions evolve. Frameworks that anticipate change and enable responsive decision-making are a critical advantage.
Good governance is about implementing and monitoring practical systems:
- Internal control systems which minimise the potential for errors or fraud
- Accountability structures that support sound decisions
- Board oversight that challenges assumptions and
- Risk management analysis and decision making that addresses challenges beyond immediate threats.
For smaller manufacturers, the discipline of governance is equally essential. Even a modestly sized board can drive accountability, improve lender confidence and strengthen supplier and customer relationships. Appointing independent non-executive directors or external advisors can provide valuable complementary perspectives, sharpen oversight and encourage rigorous decision-making. Financial institutions also assess governance quality when reviewing credit applications, particularly in sectors exposed to cost volatility or offshore supply dependencies.
Governance practices directly strengthen operational resilience
Manufacturers with formal risk registers, escalation policies and contingency plans have navigated workforce disruptions, supply chain bottlenecks and shifting customer demands far more effectively since the COVID-19 pandemic.
Research by the Australian Institute of Company Directors (AICD) in 2023 found that businesses with structured governance frameworks were 25% more likely to survive over the long term. Similarly, a 2023 Australian Industry Group survey found that manufacturers with formal governance arrangements achieved higher productivity and faster recovery after economic disruptions.
Manufacturers working with the Advanced Manufacturing Growth Centre (AMGC) demonstrated stronger performance during supply chain crises, using governance frameworks to diversify markets, drive innovation and secure new investments. Formal governance structures provided the foundation for these businesses to expand into new export markets, negotiate better financing terms and strengthen customer loyalty.
Some practical steps manufacturers can implement immediately to enhance resilience and address opportunities are scenario planning, stress-testing financial assumptions, maintaining liquidity buffers and involving the board and management in risk discussions.
Good governance is essential for Australian manufacturers to successfully navigate solvency and grow operations. In an industry exposed to supply chain disruptions, rising costs and geopolitical tensions, good governance can be the difference between resilience and collapse.
If you are interested in good governance could help your manufacturing business, contact your local William Buck advisor.
