TOTAL END TO OUR CAR INDUSTRY DOESN’T HAVE TO HAPPEN

 

Today the last Australian-built Camry will roll off the production line at Toyota’s assembly plant in Altona.

Some Australians who might not instinctively describe General Motors Holden as an American firm still think of Toyota as a Japanese car maker.

Yet the company has been making cars here for more than half a century, since 1963, and has shaped Australia’s automotive industry and its culture as much as Holden and Ford have.
 

Australia was the first country outside Japan where Toyota built vehicles, and for the past decade it has been our biggest motor vehicle producer.

Toyota has also become Australia’s most successful exporter of cars. The Altona production line turns out two Camrys a minute, over two shifts a day, and 70 per cent of them are built for export markets.

This highly efficient rate of output has steadily built up since 1963. Over that time Toyota Australia has built a total of 3.4 million vehicles, 1.3 million of which were exported.

In the peak year of production, 2007, when the company employed a total of 4700 people, it produced 148,931 cars. The peak export year was 2008, when 101,668 cars were shipped overseas.

Toyota Australia has a valued reputation in its export markets: if you’ve ever caught a cab in a city in the Middle East, you were probably travelling in an Australian-made Camry.

But revenue from those sales will no longer flow into the Australian economy, and as of tomorrow 2500 workers at the assembly plant will be out of work.

Tens of thousands of other jobs are in the balance in the automotive component sector, which provides much of the automotive industry’s skills base and many of its jobs.

The number of component makers has been growing steadily fewer because of the combined effect of the closures at Ford, Toyota, and, in a few weeks’ time, at Holden too.

Modelling by the University of Adelaide estimates that the shutdown will put up to 200,000 jobs at risk across the nation, and rip a $29 billion annual hole in GDP.

The welfare bill and tax revenues foregone are expected to add $20 billion to the budget’s bottom line, which vastly exceeds the relatively small amount the taxpayer spent on assistance to the industry.

There can be no glossing over the impact that the closures will have on the Australian economy.

Nor can there be any denial of the fact that this is a politically contrived disaster. It did not have to happen.

Ford made its own decision to go, but Holden was goaded to leave by the Abbott Government. And when it reluctantly announced its departure Toyota had little choice but to follow suit.

The company faced the prospect that without at least two car makers in the country there would not be enough demand to sustain component makers in the supply chain.

The automotive industry is reeling. But it is not over, and I believe it will have a future that includes manufacturing in some form.

The good news is that Toyota, Holden and Ford all continue to recognise the excellence of Australian auto designers and engineers.

It is to be hoped that they will retain research and development facilities in Australia beyond the shutdown.

The AutoCRC’s 2020 Technology Roadmap identified a range of capabilities that exist in the local industry, in the supply chain as well as the motor vehicle producers.

Those capabilities allow Australian firms to participate in the development of emerging technologies such as electrification, autonomous vehicles, telematics, light-weighting, gaseous fuels and fuel-cell technology.

The key to attracting new investment in the industry lies in preserving these capabilities in advanced manufacturing.

That in turn will depend in large part on what happens to the main form of government assistance to the industry, the Automotive Transformation Scheme (ATS), which is scheduled to end in 2020.

The Senate inquiry into the future of Australia’s automotive industry recommended that the ATS be extended beyond that date, and restructured to become a broader, engineering and design program for automotive-related advanced manufacturing.

Thus far, the inquiry’s recommendations have fallen on deaf ears in the Turnbull Government, which has declined to accept them.

Australia has a brief window of opportunity in which to act on the recommendations.

This is partly because of keen competition in our region – Singapore and Dubai are both offering investors substantial inducements to establish their own automotive design centres.

And it is partly because around the world automotive manufacturers are restructuring, which sometimes means withdrawing from operations outside their home countries.

Every country that has a car industry supports it in some form. Governments recognise that expertise in automotive manufacturing flows to other sectors of the economy.

Only Australia is poised to walk away from its automotive industry, when the ATS runs out in 2020.

If we really are the clever country we like to think we are, we won’t let that happen.

This Opinion Piece was first published in The Age and The Canberra Times on Tuesday, 3 October 2017.


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