What If Adelaide Developed Different Manufacturing Strategies?

The Actual History

Adelaide, the capital city of South Australia, followed a manufacturing development trajectory that mirrored much of Australia's post-World War II industrial strategy, characterized by protectionist policies, selective foreign investment, and ultimately, deindustrialization as globalization intensified in the late 20th century.

The foundations of Adelaide's manufacturing sector were established during the immediate post-war period under Premier Thomas Playford's premiership (1938-1965). Playford implemented a strategic industrialization policy that sought to transform South Australia from an agriculture-dependent economy into a manufacturing hub. His government offered incentives to attract industries, including cheap electricity, tax concessions, and industrial land. This "Playford Plan" successfully attracted major manufacturers, most notably General Motors-Holden, which established its manufacturing operations in Elizabeth, a northern suburb of Adelaide, in 1958.

Throughout the 1950s-1970s, Adelaide developed a significant automotive manufacturing sector. Alongside Holden, British manufacturer Chrysler (later Mitsubishi) established operations at Tonsley Park in 1964. Adelaide's manufacturing sector expanded beyond automotive to include white goods, defense equipment, and other industrial products. By the 1970s, manufacturing accounted for approximately 25% of South Australia's employment.

However, this manufacturing base was developed behind high tariff barriers. Australia's protectionist approach to industry policy meant that domestic manufacturers were shielded from international competition through import quotas and tariffs as high as 57.5% on imported vehicles. While this protected jobs in the short term, it also meant that Australian manufacturing became increasingly uncompetitive in global markets.

The Whitlam government's 25% tariff cut in 1973 marked the beginning of Australia's gradual shift toward economic liberalization. This trend accelerated under the Hawke-Keating Labor governments (1983-1996), which floated the Australian dollar, deregulated the financial system, and systematically reduced tariff protection for manufacturing. The Button Car Plan of 1984 specifically aimed to make the automotive industry more competitive and export-oriented through reduced protection and industry rationalization.

By the 1990s, Adelaide's manufacturing sector was struggling to adapt to the new economic realities. Mitsubishi downsized significantly in the late 1990s before closing completely in 2008. The final blow came with the closure of Holden's manufacturing operations in Elizabeth in 2017, ending Australia's car manufacturing industry. Several factors contributed to this decline:

The high Australian dollar during the mining boom (2003-2013) made exports less competitive
Australian manufacturing wages were high compared to emerging economies
Australia's small domestic market limited economies of scale
Distance from major global markets increased logistics costs
Manufacturing generally shifted to emerging economies with lower labor costs

Adelaide's response to deindustrialization has been mixed. The city has attempted to pivot toward defense industries, particularly naval shipbuilding, advanced manufacturing, and technology sectors. The establishment of innovation precincts like Tonsley Innovation District (on the former Mitsubishi site) and Lot Fourteen (on the former Royal Adelaide Hospital site) represent attempts to foster new industries. However, these initiatives have not fully replaced the mass employment previously provided by traditional manufacturing.

By 2023, manufacturing accounted for only about 8% of South Australia's employment, down from its peak of 25%. Adelaide has increasingly shifted toward service sectors, education, healthcare, and defense industries, with mixed economic outcomes. The city continues to face challenges including higher unemployment than the national average, lower median incomes, and demographic challenges with young people moving interstate for opportunities.

The Point of Divergence

What if Adelaide had pursued a fundamentally different manufacturing strategy beginning in the 1970s? In this alternate timeline, we explore a scenario where South Australia recognized the limitations of traditional protectionist policies earlier and implemented a more sophisticated, forward-looking industrial strategy that prepared for globalization's challenges.

The divergence point occurs in 1976, during the global economic recession that followed the 1973 oil crisis. In our timeline, South Australia continued to rely primarily on traditional manufacturing behind gradually reducing tariff walls while making only incremental adaptations. In this alternate timeline, a combination of factors leads to a significant policy shift:

First, Don Dunstan's Labor government in South Australia (1970-1979) recognized the structural weaknesses in Adelaide's manufacturing base earlier and more comprehensively. Rather than simply continuing the Playford-era approach of attracting foreign manufacturers with subsidies and protections, Dunstan's government commissioned a comprehensive industrial strategy review. The resulting "South Australian Manufacturing Strategic Plan" (SAMSP) outlined a 25-year vision to transform Adelaide's industrial base.

This divergence might have occurred through several plausible mechanisms:

Different economic advisors: Dunstan could have been influenced by different economic advisors who had studied the emerging Asian manufacturing powerhouses like Japan and recognized the need for a more export-oriented, specialized approach.
Earlier recognition of globalization's trajectory: South Australian policymakers might have more accurately forecast the inevitable reduction in tariff protection and prepared accordingly with a transition strategy rather than resistance.
Greater policy autonomy: South Australia might have negotiated greater economic policy independence from the federal government, allowing it to implement state-specific industrial policies even as national policies changed.
Industrial democracy experiment: Dunstan's interest in industrial democracy and worker participation might have evolved into a different ownership model for manufacturing, creating more resilient, locally-controlled enterprises that could adapt to changing conditions.
Strategic foreign partnerships: Instead of simply hosting branch operations of American and British manufacturers, Adelaide might have developed deeper technological partnerships with emerging industrial leaders, particularly in Europe and Asia.

The alternate SAMSP, adopted in 1976, set Adelaide on a fundamentally different industrial trajectory—one that acknowledged protectionism's eventual end but sought to develop sustainable competitive advantages rather than simply ride the protectionist wave until it inevitably crashed.

Immediate Aftermath

Transformation of Existing Industries (1976-1985)

The implementation of the South Australian Manufacturing Strategic Plan (SAMSP) began with the transformation of existing industries rather than their abandonment. Unlike our timeline, where manufacturers largely continued traditional operations until crisis forced change, this alternate Adelaide pursued proactive transformation:

Automotive Industry Specialization: Rather than attempting to maintain full-scale mass production of complete vehicles, Adelaide's automotive sector pivoted toward specialized components and niche vehicle manufacturing. Holden's Elizabeth plant was restructured as a joint venture between General Motors, the South Australian government, and workers' cooperatives to focus on high-value components that could be exported to GM's global operations. By 1980, Adelaide was producing specialized transmission systems, electronic components, and lightweight body panels for export to GM facilities worldwide.
Research & Development Prioritization: The SAMSP mandated that foreign manufacturers maintain minimum R&D operations in Adelaide as a condition for continued government support. By 1982, Mitsubishi had established an Advanced Materials Research Center at Tonsley Park, developing lightweight composite materials for automotive applications. This center eventually evolved into a globally significant research hub for materials science, attracting researchers from Japan, Europe, and the United States.
Industrial Democracy Implementation: Don Dunstan's interest in industrial democracy found expression in new ownership models. When Chrysler sought to divest its Australian operations in 1978, instead of a straightforward sale to Mitsubishi (as occurred in our timeline), the South Australian government facilitated a hybrid ownership structure where workers owned 25% of the operation, Mitsubishi 51%, and the government retained 24%. This structure provided greater decision-making input from workers and helped retain more strategic functions in Adelaide.

New Industrial Directions (1979-1988)

While transforming existing industries, Adelaide simultaneously developed new industrial capabilities better aligned with global trends and South Australia's comparative advantages:

Renewable Energy Manufacturing: Recognizing South Australia's abundant solar resources, the SAMSP designated renewable energy equipment manufacturing as a priority sector. The South Australian Solar Industries Corporation was established in 1979 as a public-private partnership to manufacture solar panels and components. By 1985, Adelaide had become Australia's leading producer of photovoltaic panels, with emerging export markets in Southeast Asia.
Water Technology Cluster: Building on South Australia's long experience with water scarcity, Adelaide developed specialized manufacturing capabilities in water management technologies. The Waite Institute expanded its research into agricultural water efficiency, while new manufacturing facilities produced advanced irrigation systems, water purification equipment, and later, desalination technologies. This cluster capitalized on agricultural challenges that South Australia understood intimately.
Advanced Agricultural Equipment: Rather than abandoning its agricultural roots entirely, Adelaide evolved toward specialized agricultural equipment manufacturing. By 1986, the Elizabeth industrial zone included manufacturers producing advanced harvesting equipment, precision agriculture technologies, and specialized machinery for wine production—leveraging South Australia's strong agricultural and wine sectors.

Education and Training Revolution (1977-1986)

The SAMSP recognized that workforce transformation was essential to industrial transformation:

Technical Education Expansion: The South Australian Institute of Technology (now University of South Australia) received substantially increased funding to develop specialized technical programs aligned with the new industrial strategy. New departments for materials science, automation systems, and computer-integrated manufacturing were established by 1980.
Industry-Education Integration: Unlike our timeline's more traditional separation between education and industry, Adelaide pioneered a more integrated approach. Manufacturing companies established "teaching factories" where students divided their time between classroom learning and hands-on application. The Mitsubishi-SAIT Advanced Manufacturing Center, opened in 1983, became a model for this approach.
International Skills Acquisition: The "Adelaide Technical Exchange Program" brought in experts from industrial leaders like Germany, Japan, and Sweden to train local workers and educators in advanced manufacturing techniques. Simultaneously, hundreds of South Australian engineers and technicians were sent for extended training at leading international manufacturers.

Economic and Political Response (1980-1986)

The implementation of this alternative strategy was not without controversy and challenges:

Federal-State Tensions: The Fraser federal government (1975-1983) initially opposed South Australia's interventionist approach, leading to conflicts over industrial policy authority. However, the visible early successes of the strategy—particularly during the global recession of the early 1980s—reduced this opposition. By 1982, elements of the South Australian approach were being considered for national application.
Corporate Resistance and Adaptation: Some multinational manufacturers initially resisted the new requirements for local R&D, worker participation, and export targets. International Harvester chose to exit the South Australian market in 1981 rather than comply. However, most adapted, finding unexpected benefits from the closer integration with the local knowledge base and workforce.
Early Economic Indicators: By 1985, South Australia's manufacturing sector was showing markedly different performance indicators compared to our timeline. While manufacturing employment had decreased by approximately 15% from its peak (compared to nearly 30% in our timeline), manufacturing productivity had increased by 45%, and manufacturing exports had more than doubled as a percentage of output.
Political Continuity: The perceived success of the industrial strategy created greater political continuity in South Australia. When Dunstan retired in 1979, his successor John Bannon maintained the core elements of the SAMSP, ensuring policy stability that enhanced business confidence and long-term planning.

By the mid-1980s, Adelaide's industrial landscape had begun a transformation that distinguished it significantly from other Australian cities. While Sydney and Melbourne increasingly focused on financial services and real estate development, Adelaide was developing a more resilient, specialized manufacturing base with growing export capabilities and emerging global niches.

Long-term Impact

Industrial Evolution (1990-2005)

As globalization accelerated through the 1990s, Adelaide's alternative manufacturing strategy yielded increasingly divergent outcomes compared to our timeline:

Automotive Sector Transformation

Component Specialization Success: While Australia's complete vehicle manufacturing still declined (though more gradually than in our timeline), Adelaide's focus on specialized components proved more sustainable. By 1995, the restructured Elizabeth operations were producing advanced electronic systems, lightweight materials, and specialized drivetrains for GM's global supply chain. These operations employed fewer workers than traditional assembly (approximately 3,800 versus 6,500 in our timeline) but offered higher wages and greater stability.
Niche Vehicle Production: Rather than mass-market vehicles, Adelaide developed expertise in specialized vehicle manufacturing. The Adelaide Vehicle Consortium (formed from parts of Mitsubishi's operations and local suppliers) secured contracts for producing low-volume specialized vehicles, including electric buses, mining equipment, and agricultural machinery. These operations weren't massive employers but maintained valuable manufacturing capabilities.
Autonomous Vehicle Systems Hub: Building on electronic systems expertise, by 2003 Adelaide had established the Southern Hemisphere's leading research and manufacturing center for autonomous vehicle systems. This cluster combined university research, startup innovation, and established manufacturers, producing sensors, software, and integration systems exported globally.

New Industrial Strengths

Renewable Energy Manufacturing Leadership: The early investment in solar manufacturing evolved into a comprehensive renewable energy equipment sector. By 2000, Adelaide-based manufacturers were producing not only solar panels but also components for wind turbines, energy storage systems, and grid management equipment. This sector employed approximately 7,500 people directly by 2005 and supported a robust export industry to Asia and the Middle East.
Water Technology Dominance: Adelaide's water technology cluster expanded significantly as global water scarcity concerns grew. By 2002, Adelaide-manufactured water treatment systems, precision irrigation equipment, and desalination technologies were being exported to over 40 countries. The industry benefited from early demonstration projects in South Australia that proved technology effectiveness under harsh conditions.
Medical Device Manufacturing: Building on precision manufacturing capabilities originally developed for automotive components, Adelaide developed a significant medical device manufacturing sector. By 2005, the "Adelaide Medical Technology Precinct" housed manufacturers producing diagnostic equipment, specialized surgical tools, and prosthetics, with particular strengths in mining health applications and remote healthcare solutions.

Economic and Social Outcomes (1995-2015)

The alternative manufacturing strategy produced markedly different economic and social outcomes for Adelaide:

Economic Metrics

Employment Patterns: By 2005, manufacturing still represented approximately 15% of South Australia's employment (compared to 10% in our timeline). More significantly, these jobs offered higher median wages—approximately 22% above the state average versus 8% in our timeline. The nature of manufacturing employment shifted toward more technical roles, with nearly 40% of manufacturing workers holding post-secondary qualifications.
Economic Resilience: Adelaide's economy demonstrated greater resilience to external shocks. During the 2008 Global Financial Crisis, South Australia's unemployment peaked at 6.2% (compared to 8.2% in our timeline) and recovered more quickly. The more diverse industrial base, stronger export orientation, and less dependence on construction and retail provided important buffers.
Innovation Metrics: By 2010, South Australia's patent applications per capita were 40% higher than in our timeline, and R&D expenditure as a percentage of Gross State Product was nearly double. The combination of industry-linked research institutions, advanced manufacturing requirements, and specialized industrial clusters created a more innovation-intensive economy.

Demographic and Urban Patterns

Population Retention: Adelaide's population growth followed a significantly different trajectory. The "brain drain" of young professionals to eastern states was reduced, with net interstate migration losses approximately 40% lower than in our timeline between 1995-2015. This resulted in a younger demographic profile and greater retention of skilled graduates.
Urban Development: The different industrial trajectory influenced Adelaide's urban development. Industrial zones did not experience the same degree of abandonment and decay seen in our timeline. The Elizabeth-Salisbury corridor maintained its industrial character but evolved toward more modern, campus-style industrial facilities rather than declining into concentrated disadvantage.
Education System Evolution: South Australia's education system evolved to support the alternative industrial strategy, with greater emphasis on STEM education, industry-linked curricula, and technical training. By 2010, South Australia had the highest proportion of students pursuing technical and engineering qualifications in Australia.

National and Global Impacts (2000-2025)

Adelaide's alternative path generated wider implications for Australia and beyond:

National Policy Influence

Industrial Policy Reappraisal: The relative success of South Australia's approach led to a national reappraisal of industrial policy. By the early 2000s, elements of the South Australian model were being selectively applied in other states, particularly Victoria and Queensland. The national debate around manufacturing policy shifted from binary choices between protection and free market approaches toward more sophisticated discussions about strategic specialization and competitive advantage.
Energy Transition Leadership: South Australia's early development of renewable energy manufacturing positioned it to lead Australia's energy transition. By 2015, South Australia was generating over 60% of its electricity from renewable sources (compared to approximately 40% in our timeline) and had become the national center for renewable energy expertise. This influenced national energy policy, accelerating Australia's overall transition timeline.
Economic Structure Diversification: Adelaide's example influenced Australia's broader economic development strategy, encouraging greater focus on specialized manufacturing and technology exports rather than an overwhelming dependence on resource extraction and services. By 2020, Australia's manufacturing exports as a percentage of total exports were approximately 35% higher than in our timeline.

Global Position and Relationships

Regional Integration: Adelaide's manufacturing strategy fostered deeper economic integration with Asia that went beyond raw material exports. By establishing specialized manufacturing niches complementary to Asian industrial strengths, Adelaide developed more balanced trading relationships, particularly with Japan, South Korea, and later China. This created a model for how higher-wage economies could find sustainable manufacturing positions within Asian production networks.
Climate Solutions Exporter: Building on its renewable energy and water technology strengths, by 2020 Adelaide had positioned itself as a significant exporter of climate adaptation and mitigation technologies. This created new diplomatic and economic opportunities, particularly in the developing world and water-stressed regions, enhancing Australia's soft power in international climate negotiations.
Specialized Industrial Education Hub: Adelaide's unique approach to industrial education and workforce development became an educational export. By 2015, the "Adelaide Model" of integrated industry-education development was being studied and selectively implemented in regions from Southeast Asia to Latin America and the Middle East.

Present Day Status (2025)

In this alternate timeline, Adelaide in 2025 presents a markedly different economic and social profile compared to our reality:

Manufacturing Composition: Manufacturing represents approximately 14% of South Australia's economy (versus approximately 6% in our timeline) but is concentrated in high-value specialized sectors including renewable energy equipment, medical devices, specialized electronic systems, advanced materials, water technologies, and specialized vehicles.
Innovation Ecosystem: Adelaide supports a more robust innovation ecosystem, with R&D expenditure at 3.2% of GSP (compared to 1.8% in our timeline). The city hosts over 820 technology startups, many spun out from manufacturing expertise or university research.
International Positioning: Rather than being primarily known as a lifestyle and wine tourism destination, Adelaide has an international reputation as Australia's "precision city"—known for specialized manufacturing, technical education excellence, and sustainability solutions. The city attracts significant numbers of technical professionals from throughout Asia and beyond.
Economic Indicators: South Australia's unemployment rate stands at 4.1% (versus 6.0% in our timeline), with median household income approximately 18% higher. Income inequality measures are lower, with a Gini coefficient of 0.31 compared to 0.36 in our timeline.

While this alternate Adelaide still faces challenges—including the ongoing pressure of global competition, transition costs as technologies evolve, and the need for continuous workforce adaptation—it demonstrates how different strategic choices in industrial policy could have produced substantially different economic and social outcomes for a mid-sized city in a developed economy.

Expert Opinions

Dr. Melissa Chen, Professor of Economic Geography at the Australian National University, offers this perspective: "The Adelaide manufacturing divergence represents a fascinating counterfactual in industrial policy. What's particularly interesting is how this alternative approach rejected both the protectionist model that dominated Australian thinking until the 1980s and the laissez-faire approach that followed. Instead, it suggests how strategic industrial specialization—rather than trying to preserve traditional manufacturing or abandoning it entirely—might have created a different development pathway. The key insight is that manufacturing decline wasn't inevitable; rather, manufacturing transformation was necessary. In our actual history, most Australian policymakers treated manufacturing as a binary choice between protection and abandonment, missing the middle path of strategic evolution that some European and Asian economies managed to navigate."

Professor James O'Connor, Industrial Historian and former policy advisor to the South Australian government, provides a contrasting view: "While this alternative timeline presents an appealing scenario, we should be cautious about overestimating what was politically and economically possible in the 1970s and 1980s. The federal-state dynamics, Australia's position in global trade networks, and the power of multinational corporations would have presented enormous obstacles to this alternate strategy. Even if South Australia had attempted this path, powerful counterforces would have emerged. The minerals and energy export orientation that dominated Australian economic thinking created financial and currency dynamics that would have challenged even the most sophisticated manufacturing strategy. That said, the scenario rightly identifies missed opportunities for greater industrial specialization and technological development that might have moderated manufacturing decline, even if not preventing it entirely."

Dr. Yoon-Ji Park, Comparative Industrial Policy Researcher at Seoul National University, adds an international perspective: "The alternative Adelaide scenario bears interesting similarities to the development path of certain second-tier industrial regions in East Asia, particularly Taiwan's Hsinchu region and Korea's Changwon. These areas successfully carved out specialized industrial niches through coordinated government-industry-education strategies rather than competing directly with larger-scale manufacturers. What makes the Adelaide counterfactual particularly instructive is that it suggests how regions in high-wage economies might maintain manufacturing vitality through specialization, innovation, and strategic workforce development. The actual history of Australian manufacturing represents a lost opportunity not just for Australia but for developing a model of how established industrial regions might adapt to globalization without wholesale deindustrialization."