Mr Turnbull said The Melt, which received $500,000 from the federal Department of Industry, Innovation and Science's incubator support grant scheme, was the country's first integrated industrial prototyping lab and innovation accelerator.

"It is accelerators like The Melt that will create the modern, dynamic economy that Australia needs," Mr Turnbull said. "The Melt is a welcome addition to the Hunter and embodies the key elements of the innovation agenda I put in place as prime minister."

The Melt founder Trent Bagnall said the "game-changing" lab, located in the Dashworks Makespace on Hillsborough Road, would play a critical role in reinvigorating the manufacturing sector in the Hunter region and Australia-wide.

Mr Bagnall said the The Melt, located at Dashworks Makespace in Warners Bay, would be a "stepping stone" to larger sites across Australia and, potentially, the world.

The Melt is a collaboration between the brains behind Hunter-founded national business accelerator Slingshot, Lake Macquarie City Council's economic development company Dantia and Hunter-based, national engineering force Ampcontrol.

Its founders forecast the lab will inject $50 million into the economy over two years and unleash innovation in startups and corporate across the country.

Housing state-of-the-art manufacturing equipment and a design studio with computer-aided engineering tools, The Melt's aims to transform ideas with a hardware component into products.

Mr Bagnall said the incubator facility was sorely needed in the Hunter and nationwide to assist both startups and corporates to develop and build prototypes for products to take to market at home and abroad.

While most startups suffered high failure rates, he said those that were building hardware products were even more at risk.

"There is huge support in Australia for tech-based software companies to help grow the next Atlassian or Canva, however there is very little support for engineering startups building the next Cochlear implant, Catapult Sports performance technology or black box flight recorder," he said.

Mr Bagnall said the The Melt had been designed to overcome this problem, helping both startups and corporates access funding, expertise, equipment and pathways to rapidly realise product development success.

The Melt operates on two levels: its "hardware accelerator" program helps startups with funding, tools and services to help them build their products; while its Melt Labs is a tailored research and development service for companies finding it tough to develop products while running a business.

In its first year, it is aiming to produce 10 new products and help the same number of startups.

Ampcontrol chief executive officer Rod Henderson said The Melt was a critical lifeline for the "waning" manufacturing and engineering industries in Australia.

He said it was imperative Australia capitalised on its engineers and manufacturers: "We will lose that brainpower to other parts of the world - if they can't do it here, they will go elsewhere."

The Melt forecasts its total economic impact over its establishment years (FY2018-2019) at $4 million plus eight jobs, with a further $46m and 58 jobs during its operational phase (2019-2020).

Dantia CEO said The Melt was a first "in that it brings together a location for co-working and collaboration, the equipment, but most importantly the resources and personnel with the engineering capability to develop prototypes and products."

The Morrison government's latest round of incubator support grants included The Melt and two other projects. Industry, Science and Technology minister Karen Andrews said supporting these ideas was vital to growing the economy.

"These start-ups will be able to prototype and produce products, which can strengthen our traditional industry and be sold globally," she said.

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