IN a further blow for struggling Australian manufacturers, countries including Indonesia, Vietnam and Turkey all overtook the Land Down Under as an efficient place to make things in the last year. 
Just as the Turnbull Government this week is set to release its innovation strategy which intends to forge a new path for the nation, figures from consultancy Deloitte shows Australia's competitiveness as a manufacturer has slipped from 16 to 21 in only 24 months.
This comes as the Victorian economy has this year seen the closure of Alcoa's coal mine and power station at Anglesea and braces for the shutting of Ford's Broadmeadows car factory and Geelong engine plant next year.
In a sign things could worsen quickly, the 2016 Global Manufacturing Competitive Index report from Deloitte Global and the US Council on Competitiveness says Australia risks slipping to 22 by 2020.
In worrying signs, other countries which also have had dying manufacturing sectors leapt ahead - with the UK jumping from 15 to number 6, Switzerland from 22 to 12 and Sweden from 21 to 13.
But Australia's peak industry body yesterday said if the Turnbull Government's long anticipated innovation statement succeeds in boosting entrepreneurialism it could bring "substantial and sustainable" improvements in living standards to the nation.
"A faster pace of innovation can help create a more diversified and resilient economy as we restructure in the wake of the mining investment boom," Australian Industry Group chief executive Innes Willox said.
The Government statement will target 30 goals across 11 portfolios in a bid to bring jobs and wealth by linking with big industrial economies and their supply chains. It is expected to include tax breaks for venture capital funds and start-ups plus collaborations with hi-tech producers.
A battle to be the party of innovation is increasing with Labor also pushing its credentials saying it would offer innovation tax incentives.
In signs Western nations that have had stagnating manufacturing bases are rebounding, Deloitte predicts that over the next half decade the US will overtake China and become the most competitive manufacturer in the world.
Deloitte Australia Partner and Manufacturing Group leader, Damon Cantwell, said Australia could learn from the US rise which is based on investment in research, technology and innovation.
"Given these global trends, the uptake of advanced manufacturing techniques in the Australian sector is the key to future consolidation and growth," Mr Cantwell said.
"These innovations change the basis of competition for Australian manufacturing away from cost only, which suits the structure of the local manufacturing sector."In a hit-list of policies wanted by industry, Ai Group's Mr Willox said it "will require action across a wide cross-section of policy areas" including tax, bankruptcy, business financing plus university and research institution funding.