Unions pushed Toyota too far

Unions pushed Toyota too far

In 2008 there were six companies manufacturing cars in Australia but by 2017 there will be none.

The motor industry in Australia has been struggling for years and now with the demise of Toyota, there is urgent need for the future of manufacturing there to realign itself – especially to the plight of the component manufacturers who by 2017 will be struggling to exist, unless they start now to find some new markets for some new products.

It has basically become unsustainable for companies to continue producing cars in Australia. Ford, Holden and Toyota have each blamed multiple factors rather than a single issue.

The common factors have been a high Australian dollar that has hurt export opportunities – mostly for Toyota and Holden – and sweetened deals for those brands importing, Australia’s high production/wage costs, and a car market that has become too small and fragmented – 50-odd automotive brands compete for a slice of a million-vehicle market.

Despite government industry assistance that has been estimated at between $500 million and $1 billion annually, the local car makers have struggled financially. Ford has lost about $600m since 2008, Holden was profitable only twice between 2005 and 2012, and while Toyota posted a $149m profit in 2012 it lost $150m over the three previous years.

Once Ford declared in May 2013 it was planning to abandon local production of the Falcon large car and Territory SUV in October 2016, there were immediate fears for Holden and Toyota due to the implications for the critical automotive parts supplier base in Australia that served the trio.

The closure of the five Victorian and South Australian production facilities operated by Ford, Holden and Toyota will directly result in the loss of approximately 6600 manufacturing jobs by 2017: 2500 from Toyota’s Altona plant, 2900 from Holden’s Elizabeth vehicle plant (1600) and Port Melbourne engine plant (1300), and roughly 1200 from Ford’s Broadmeadows vehicle plant (at least 650) and Geelong engine plant (510).

At least 300 of those will disappear from June this year; however, as Ford scales back its vehicle output in the face of record low Falcon and Territory sales.

Additionally, the company says it cannot guarantee its local production operations will survive until 2016, meaning hundreds more jobs may go sooner than originally planned.

A wider view of the industry reveals a more significant impact. Government data shows more than 45,000 Australians are employed in the local motor vehicle and parts manufacturing industry, and industry experts believe as many as 30,000 jobs – many of those in component manufacturing – could disappear with the three car makers by 2017.

According to the same Australian government data, almost a quarter of a million Australians are employed in automotive repair and maintenance, and motor vehicle and motor vehicle parts retailing and wholesaling industries. Encouragingly, a Productivity Commission report concluded that those workers were not likely to be seriously influenced by the presence of a local vehicle manufacturing industry.

There was no overall plan for the Automotive industry, no general strategic plan, no plans for manufacturers exiting when it was obvious from the 1990’s to the present they might. Australian cars will still come into the country, except that they will be made in America and Asia.

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