Car manufacturing in Australia update
We take a look at what is happening as the Australian automotive industry prepares to roll the last locally-made car off the production line.
After 90 years Australian car manufacturing is coming to an end. Ford, Holden and Toyota are all stopping local production. According to the Australian Government's Department of Industry, Innovation and Science: "Each of the motor vehicle producers have cited the high cost of manufacturing, a highly competitive and fragmented domestic market and changing consumer preferences as reasons for why they will no longer manufacture vehicles in Australia."i
A 2014 Productivity Commission estimates that 40,000 workers will lose their jobs as manufacturing ends. That estimate includes 9000 jobs at the vehicle manufacturers, as well as jobs in automotive industry support companies including component, tooling, design and engineering firmsii,iii.
A 2014 report by the National Institute of Economic and Industry Research (NIEIR) estimated a fall in national employment of 200,000 between now and 2017 from the end of car manufacturingiv. NIER's report compared a control projection of car manufacturing continuing against a straight line decline in manufacturing to the end of 2017. The control assumed increases in market share and consequently manufactured vehicle volumes due to better competiveness driven by an Australian dollar value of 80c to the US dollar.
The job loss numbers mean that focus is being placed on assistance for workersv.
The car industry has relied on government financial programs since it began here in the 1920svi. There are calls from some sectors for assistance to keep coming in until around 2020-2021v - as originally planned under the Automotive Transformation Scheme but changed to 2018 under Budget 2014-15vii - to help the automotive supply chain diversify and find new customersv.
Professor Goran Roos, adviser to both State and Federal Governments on manufacturing, estimates about 75 per cent of automotive industry support companies will close if they can't find new businessv. He says it takes companies seven years, on average, to build alternative income streams and a new customer base.
This leaves employees of support companies particularly vulnerable, as the Productivity Commission's report on the Automotive Industry notes. Support company employees "may not receive the same advance notice, redundancy payments, or necessarily the same level of support from their employers as those working [directly] for the motor vehicle producers"viii.
Which models are still being made here?
Local production hit a 61-year low point in 2014 when consumers bought fewer new cars, and when they did, they chose imports, luxury cars and SUVsix. In 2005, locally-manufactured cars made up 25 per cent of all cars sold in Australia. This had declined to fewer than one in 10 cars (9 per cent)x in 2014.
Ford released the final Australian Ford Falcon model in November 2014xi. When Ford closes its factories, it will import all its vehiclesxii.
Holden's last Commodore model to be built here was released in September 2015xiii. Once Holden's manufacturing in Australia stops, the company will continue to sell imported carsxiv.
Toyota's next generation Camry model was unveiled in New York in 2014xv. The Camry has been the best-selling medium-sized sedan in this country for the past 22 yearsxvi. Seventy per cent of locally-made Camrys have been exported to the Middle Eastxvii. The new model's production began in Altona, Victoria, early in 2015, and the Federal Government gave $24 million in funding towards the car that has over 800 new parts . When the factory closes, it's likely the Camry will be imported from Thailand, under the Free Trade Agreement with Australia.
All three manufacturers will close their factories by the end of 2017iii. Ford will close its Geelong engine and stamping plant and Broadmeadows car factory by the end of 2016xix. Holden and Toyota will cease manufacturing in 2017xx,xxi.