A group of 20 Labor backbenchers is adding to the pressure on the Federal Government to do something to support Australia's struggling manufacturing sector.

On top of the Qantas announcement that it will cut 1,000 jobs yesterday, OneSteel announced it is retrenching 400 workers.

The 20 MPs says their own Government is failing to support the manufacturing sector, and they are calling on it to preference Australian companies when awarding contracts and to require the mining sector to do the same.

The Australian manufacturing sector's long decline has been hastened by the stubbornly high currency and flagging international demand.

This week alone it has been revealed that steelmaker OneSteel is cutting 400 jobs and that Australia's only solar cell factory is closing.

Silex Solar's chief executive Michael Goldsworthy says that means the loss of 30 jobs.

"It's based on financial reasons. We can't compete with the flood of cheap Asian imports and it just means that we have to make hard decisions in order to survive the current market conditions," he said.

Now the Federal Government is under pressure from within its own ranks.

Federal Labor MP Stephen Jones is leading a group of 20 MPs from manufacturing electorates who want more industry support.

He represents the New South Wales seat of Throsby, an electorate near Wollongong where steelworks and heavy manufacturing are vital parts of the economy.

Stephen Jones says the wealthy mining sector should be prioritising Australian manufacturers when awarding contracts and so should the Federal Government.

"When I talk to a lot of the manufacturers in my electorate and elsewhere they feel like they aren't getting a fair shake, they feel like they aren't having access to some of those projects and that could make the difference between them keeping their doors open and running another 12 to 18 months," he said.

However, the federal Industry Minister Kim Carr says the Commonwealth Government already has procurement policies in place to support local industry.

"Well they are getting a fair shake from the Government," he responded.

"We have a buy Australia approach the Government's undertaken through the Australian Industry Participation Plans, and what we've seen in the last 18 months that an additional $1 billion worth of contracts have been available through the Government to Australians. That wouldn't have occurred under the Liberals."

However, preferencing Australian manufacturers rings alarm bells for economists.

"At the end of the day policies that force Australian consumers or other businesses to pay higher prices for goods simply because they're made in Australia or compete with goods that are made in Australia is protectionism and there's no other word for that, said Saul Eslake who leads the Grattan Institute's productivity growth program.

"At the end of the day the result is lower productivity, lower national income for Australians, and fewer jobs for Australian workers."

The Government cannot afford dissent at the moment, but the Opposition is happy to encourage it.

It is using the Group of 20's message to bolster its fight against the carbon tax.

"I notice that we've got a ginger group inside the caucus today that wants to assist manufacturing industry," said Opposition Leader Tony Abbott.

"Well I say to caucus members, if you are fair dinkum about protecting Australian jobs and Australian industry you work on your Prime Minister to drop this toxic tax."

Labor's Stephen Jones says the carbon tax is not the group's main concern as the Government has put together industry assistance packages.

"Look I'm not putting up demands - what I'm saying is that we need good policy to assist local manufacturing, and there's enormous sympathy within the caucus and within the Government around these issues," he added.

For those areas with manufacturing as their life blood it is an uncertain future.

OneSteel is a major employer in the South Australian town of Whyalla

"Whenever there's job losses mentioned in any community there's always caution, there's always anxiety, there's always fear. I mean one job loss in Whyalla is one job too many," said the town's Mayor Jim Pollock.

"We've been a battling community for many years and we're very resilient and have always fought back and we'll do the same again here.

"But, you know, the job losses, what I'm hearing on the ground, and I have done some street walks and more walks and spoke to the people, and the confidence is still there and I guess that the main thing is that we don't know."

Unions have told him the town will not be hit, he hopes OneSteel will confirm that is the case when he meets the company this afternoon.