Toyota Australia’s announcement on Monday afternoon that it will join Ford and Holden in closing down its entire Australian manufacturing operation by the end of 2017 was a dark day for Australia’s entire manufacturing industry and spells the end of the road for car manufacturing in Australia. This announcement will have a devastating impact on some AAAA member businesses and will decimate the entire OE supply chain. Having spent the greater part of my working life in various roles delivering initiatives aimed at supporting and growing our automotive component producers across the supply chain, I have many friends that will be directly impacted by these developments and my thoughts go out to them and the many thousands of Australian families in our industry that now face an uncertain future. The forces that combined to seal the fate of the car industry in Australia were so strong that in the end there is really nothing that anyone could have done to change the outcome. Even taking all this into account – it is still hard to accept that we will no longer be building cars in Australia.
The question that everyone wants answered now is what will happen to the tens of thousands of employees that will lose their jobs and what will be left after the exit of the car industry. While the aftermarket manufacturing industry will clearly be impacted by the car industry shutdown I do not subscribe to the view that this will spell the end of aftermarket manufacturing in Australia.
If the full growth potential of the automotive aftermarket segment is realised, it can absorb some of the excess capacity, skills and knowledge that becomes available as the shutdown of the Australian domestic passenger vehicle sector plays out. The aftermarket has achieved international success while under intense import pressure. Aftermarket manufacturers have been forced to move up the value chain, from service parts to high value specialty products with a technological advantage such as 4WD parts and accessories, high performance and motorsport components. This competition has created an Australian aftermarket manufacturing industry that has the right pre-conditions to be a globally competitive sector. Our businesses have been successful because they have made significant investments in R&D and capital equipment, and have a strong export focus.
The AAAA is working hard to ensure that the scale and future opportunities in our manufacturing sector are well understood by Federal and State politicians, public servants and the Productivity Commission. Yesterday I wrote to the Federal Industry Minister Ian Macfarlane seeking an urgent meeting to discuss the role the aftermarket can play in offsetting some of the damage caused by the withdrawal of the car industry and tomorrow afternoon I will attend a roundtable meeting Chaired by the Victorian Premier on the same subject. We will also continue our representations to the Productivity Commission Inquiry into the automotive industry which will now be “reorientated” to focus solely on component suppliers and their potential to access new markets both domestically and internationally.
We are calling on the Federal Government to accept its leadership role in facilitating urgent structural adjustment in the automotive industry. We believe that Australian manufacturing industry as a whole desperately needs visionary policy settings from this Government. We don’t need more inquiries or lectures about ‘entitlement’. We need consistent and long term policies to stimulate R&D and target new markets. These policies must be based on independent research and advice designed to foster economic growth across a range of industries. We also need trade agreements that deliver fair outcomes for consumers as well as Australian manufacturers. Such policy will enhance Australian manufacturing competitiveness and innovation, and will facilitate access to new export markets with real and sustainable growth prospects.
The automotive aftermarket manufacturing segment has never been subsidised by Government, is not heavily unionised, does not have inefficient EBAs in place and is heavily trade exposed. All the right pre-conditions are in place for further growth. Whether this occurs is really up to Government……and what they do next.
I will keep you updated on developments.
Executive Director- AAAA