Manufacturing of motor cars in Australia is set to cease entirely by 2017, with Toyota today making up the trifecta of Australian car manufacturers to announce the closure of their manufacturing facilities.
As feared, Toyota has declared Australian manufacturing to no longer be viable for them as a consequence of a multitude of factors, including the high Australian dollar, high labour and operating costs, and low economies of scale not only for themselves, but also for their local supply chain, who are already reeling from the announcements by Ford and Holden respectively that they will be closing their manufacturing. The closure of Toyota’s Altona plant will result in a further 2500 direct job losses.
Whilst the writing has been on the wall for some time, the refusal by the Australian Federal Government to prop up the industry any longer was perhaps the final straw which sealed the fate of Australian car manufacturing. Since 1948, when Holden started manufacturing the first Australian-made car, Australia has earned a well-deserved respect for our automotive design and manufacturing capabilities. However, as Asian manufacturing has thrived and improved in quality, we have struggled to remain viable against the much lower production costs of Japan, China, Korea, India, and others.
Australian car manufacturers have also had to compete against increasingly affordable imports, and consumers’ preferences have shifted to SUV’s, 4×4’s, utes, and 4-cylinder cars, resulting in dwindling demand for traditional rear wheel drive Australian sedans and station wagons.
Just as Kodak failed to predict the death of camera film, Adler almost collapsed when they were slow to acknowledge that computers were replacing typewriters, and Nokia didn’t stay at the forefront of mobile technology, so many companies involved in the Australian automotive industry are likely to go broke as a consequence of the announcements by the major players. There are at least 180 component manufacturers in Australia who will no longer have their main customer base, and 37,000 workers employed by ancillary companies are at very real risk of landing in the dole queue.
The ripple effects of Toyota’s announcement are going to be felt throughout the Victorian, and in fact Australian, economy most strongly in 2018. Any business owner would do well to consider whether there will be a flow-on effect to them and, if not from the automotive industry, whether similar changes in other industries may also be about to catch them unawares.