The release of the NSW Fashion Sector Strategy 2025–2028 is a significant moment for Australian fashion manufacturing. For the first time, a state government has formally committed, in writing, to establishing an Australian‑first Fashion and Clothing Smart Factory as a named strategic priority: not a discussion paper or a roundtable, but a funded objective with actions, KPIs and a mandate to secure Federal Government investment (NSW Government, 2025). For those of us who have been working at the intersection of fashion, advanced manufacturing and innovation policy, this is meaningful progress.
The Strategy is clear‑eyed about what the industry is up against. It identifies defining pressures including: declining local manufacturing capacity;, critical skills gaps; escalating offshore competition; and the rapid integration of technology into prototyping, logistics and e‑commerce (NSW Government, 2025). These are not new observations but having them explicitly named in a state government strategy (alongside a commitment to invest in smart manufacturing as the response) creates a policy platform that industry can actually build on.
In advance of this strategy, the Australian Fashion Council released an Expression of Interest (EOI) in Smart Factories in 2025. Together with my colleagues, Dr Nathan James Crane, Pamela Stecker, Dr Kate Sansome, and Dr Kathryn Anderson, we submitted and EOI, were shortlisted and interviewed. I want to offer some reflections on where the Strategy’s ambitions connect with what we were able to identify while researching that Expression of Interest.
The Technology Question Is More Specific Than It Appears
The Strategy calls for “leading‑edge smart manufacturing technology” including digital printing, automated cutting, AI‑powered design software, and high‑speed cloud‑connected systems (NSW Government, 2025). This seems to be the right list, however the critical insight from the AFC’s own research into the Victorian textile, clothing and footwear (TCF) sector is that the value of these technologies lies not in any single piece of equipment but in how they integrate and in how that integration changes the fundamental economics of Australian manufacturing (Australian Fashion Council, 2024).
The Copenhagen micro‑factory case study cited in the Strategy illustrates this well. Rodinia Generation’s model works not because of its digital printer or its laser cutter in isolation, but because AI‑powered production management connects them into a workflow that eliminates overproduction (NSW Government, 2025). Saving approximately 200 litres of water and 4 kilograms of CO₂ per piece of clothing is a consequence of systems design, not equipment selection (NSW Government, 2025). A feasibility study that approaches technology as a procurement decision rather than a workflow‑design challenge will miss this distinction entirely.
This is why the AFC’s Victorian research is so useful as a foundation. It demonstrates that targeted strategic intervention can shift the sector from an 8% decline trajectory to 15% growth by 2030, and that government co‑investment of 40–50 million AUD in procurement and technology could generate 225 million AUD in additional economic value (Australian Fashion Council, 2024). Those figures depend on getting the operating model right, on designing the factory around demand‑driven, on‑demand, short‑run production rather than trying to replicate offshore volume manufacturing on Australian soil (Australian Fashion Council, 2024).
The NRF Connection Is the Funding Breakthrough
The Strategy calls on the AFC to “secure Federal Government investment partnership that aligns with Australian advanced manufacturing objectives” (NSW Government, 2025). The most significant vehicle for that is the National Reconstruction Fund (NRF), a 15 billion AUD investment program whose Enabling Capabilities priority area specifically targets projects advancing Australia’s industrial capability through engineering and data science (National Reconstruction Fund Corporation, n.d.).
The fashion industry’s alignment with NRF objectives is stronger than it might first appear. The industry’s 77% female workforce (compared to a 47% national average across all industries) maps directly to the NRF’s economic participation goals (Australian Fashion Council & EY, 2021). The AFC’s Victorian research found that strategic intervention could create 1,500 additional jobs, with 6,200 positions filled by women (Australian Fashion Council, 2024). These are precisely the social‑impact metrics the NRF prioritises alongside industrial transformation. Making this case compellingly to the Federal Government requires more than sectoral advocacy, it requires a structured alignment strategy that speaks the language of industrial policy, investment criteria and measurable outcomes.
Workforce Development Is Not a Footnote
The Strategy’s KPIs for the Smart Factory include factory utilisation, national and international visitation and commercial investment. All of these are downstream of a workforce question that deserves more attention than strategies of this kind typically give it: who will operate a smart clothing factory, and where will they be trained?
This is not a gap in the NSW Strategy so much as a challenge faced by the entire sector. The AFC’s feasibility brief is explicit that critical skills gaps and an outdated apprenticeship framework are among the most significant structural constraints on local manufacturing growth (Australian Fashion Council, 2025). The Strategy’s Skills and Training Review (Strategic Priority 1) and the Smart Factory (Strategic Priority 3) need to be developed in close dialogue with each other, so that training pathways, curriculum development and qualification frameworks are validated against the needs of an actual factory, not an abstract one. A factory built ahead of a workforce pipeline is a facility, not a sector transformation.
The most promising model I have seen for addressing this in practice is the co‑location of advanced manufacturing infrastructure with technical education; environments where training is not designed for an imagined factory but validated against a real‑world one. The Tonsley Innovation District in South Australia, which co‑locates Flinders University’s Factory of the Future with Tonsley Technical College, offers one working example of what this integration can look like (Flinders University, 2023). The NSW Strategy’s proposal to co‑locate the Smart Factory with the Australian Fashion Hub near UTS Tech Central follows a similar logic. (NSW Government, 2025)
What a Good Feasibility Study Actually Needs to Answer
The Strategy correctly identifies the feasibility study as the first action for Strategic Priority 3. On the basis of our work in this space, a feasibility study that will genuinely serve implementation needs to do three things well:
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Test technology in a live workflow, not just evaluate it in isolation;
The difference between a technology that works in a supplier’s showroom and one that works in an integrated production workflow is significant. Access to a live advanced manufacturing testbed where digital sampling workflows, digital printing integration and laser‑cutting automation can be validated before capital is committed, fundamentally changes the reliability of the feasibility conclusions. -
Model the operation as a digital twin, stress‑testing flexibility and capacity before capital is committed;
Developing a digital twin of the proposed operation and simulating production scenarios across varying volumes, product types and customisation levels, is the only way to validate flexibility and capacity claims without building the factory first. This is standard practice in advanced manufacturing feasibility work and should be standard here. -
Secure early brand commitments, so projected demand is grounded in real commercial partnerships.
The factory’s commercial viability depends on committed, not simply projected, demand. A feasibility study that delivers a market analysis without founding partner commitments leaves the implementation phase exposed to the same adoption barriers that have limited previous Australian manufacturing initiatives (Australian Fashion Council, 2024).
In Australia, there are very few environments where this kind of live testbed and digital‑twin capability already exists at scale. Our work through Innovation Central Adelaide and Flinders University’s Factory of the Future, combined with SAFIA’s brand networks and TCF industry expertise, shows that this integration of technology testbed, design research and industry engagement is not hypothetical, it is operating and can be adapted for fashion manufacturing and a national smart manufacturing network approach.
The Consumer Equation Is More Complicated Than It Looks
The Strategy’s vision for the Smart Factory including short‑run collections, made‑to‑order designs and minimal waste is compelling as a manufacturing proposition. But its commercial viability rests on a consumer‑demand assumption that deserves more scrutiny.
The AFC’s feasibility brief identifies “increased consumer interest in local manufacturing and Australian‑made provenance” and “consumer awareness of spending and quality vs. cost” as genuine market opportunities (Australian Fashion Council, 2025). These are real signals. But they sit alongside an equally real constraint: cost‑of‑living pressures continue to compress discretionary spending and; the gap between what consumers say they value and what they actually pay for remains stubbornly wide. Research suggests that while around 60% of consumers express interest in sustainable fashion, only approximately 15% translate that interest into purchasing behaviour (Russo, 2024). A factory built around on‑demand, locally produced, premium clothing needs to be designed for the market that exists, not the one that surveys suggest might.
This is not an argument against the Smart Factory. It is an argument for treating consumer research as a first‑order input into the feasibility study rather than a secondary validation exercise. Understanding not just willingness to pay for Australian‑made product in the abstract, but the specific triggers, barriers and price thresholds that govern actual purchasing decisions, together with the role that traceability tools, digital product passports and provenance storytelling play in closing the intention–behaviour gap, should shape the factory’s service offering and pricing model from the ground up (Russo, 2024; Sansome, 2024). This is where partnerships between factories, brands and retailers on pricing, communication and product design become critical, so that on‑demand, locally produced garments are presented not just as a moral choice but as a compelling value proposition.
The NSW Strategy’s own investment priorities note that smart factories and “data‑driven business tools” will help manufacturers “reduce waste and increase environmental and economic sustainability” (NSW Government, 2025, p. 13). Consumer data is part of that picture. A factory with high‑speed, cloud‑connected systems tracking market insights in close to real time (as the Strategy envisions) is only as valuable as the consumer intelligence those systems are built to capture and respond to.
The Opportunity Is Real
None of these observations are intended as criticism of the NSW Strategy, which is genuinely ambitious and well‑grounded in the industry’s realities. They are offered in the spirit of the kind of rigorous, practically oriented thinking that will be needed to move from strategy to implementation.
The Australian fashion industry contributes 27.2 billion AUD to the national economy annually, employs more than 489,000 people, and generates 7.2 billion AUD in export value (Australian Fashion Council & EY, 2021). A functioning smart factory that demonstrates on‑demand, low‑waste, domestically produced fashion at commercial scale would be transformative, not just for NSW, but for the national industry (Australian Fashion Council, 2024; NSW Government, 2025). While the Smart Factory has been scoped as a NSW initiative, its success will depend on connecting into a national network of advanced manufacturing and education partners, rather than operating as an isolated facility. Getting the feasibility work right is the foundation everything else rests on.
We look forward to contributing to that conversation.
Professor Angelina Russo, PHD, MBAHEM
I am the Designer and Founder of Fleurieu Made. I was an academic for many years and a designer for more. I now help brands prepare for the Digital Product Passport. Contact me at angelina@fleurieumade.com
References
Anderson, A., Crane, N., Russo, A., Sansome, K., Stecker, P., (2025). Australian Fashion and Clothing Smart Factory feasibility: Consortium capability and testbed architecture [Expression of Interest]. (shortlisted and interviewed)
Australian Fashion Council. (2024). Victorian textile, clothing and footwear sector: Smart manufacturing feasibility and investment case [Report].
Australian Fashion Council. (2025). Australian Fashion and Clothing Smart Factory feasibility study brief [Unpublished briefing paper].
Australian Fashion Council, & EY. (2021). The economic contribution of the Australian fashion and textile industry [Industry report]. EY.
Flinders University. (2023). Factory of the Future and Tonsley Innovation District: Integrating education and advanced manufacturing [Brochure]. Flinders University.
National Reconstruction Fund Corporation. (n.d.). National Reconstruction Fund: Investment mandate and priority areas [Policy document]. Australian Government.
NSW Government. (2025). NSW fashion sector strategy 2025–2028. NSW Government.
NRFC main site (governance & reporting): https://www.nrf.gov.au/who-we-are/our-governance/reporting
NRFC corporate plan (2025–26 PDF): https://www.nrf.gov.au/sites/default/files/documents/2025-08/nrfc_corporate_plan_2025-2026.pdf
NRF _ Department of Finance overview page: https://www.finance.gov.au/government/specialist-investment-vehicles/national-reconstruction-fund-corporation
Russo, A. (2024). From social networks to circular realities: Thirteen years of research, making and community building [Blog post].
Sansome, K. (2024). Consumers demand transparency… but do they actually engage? Exploring motives and interactions with brand transparency information. Journal of Business Research 194 (2025) pp