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Toyota to pull out of Australia by 2017, ending country's auto industry

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"....incoming free trade agreements.....contributed to a decision he characterised as extremely difficult "

I can appreciate that. When NAFTA came to my hometown region, the traditional industries went into steep decline, only to be taken over by tourism and other low-paid service industry work, not to mention narcotics production.

The ambitious young people like myself simply left.

1 ( +2 / -1 )

On the 6 December 2012 Toyota announced the opening of its new engine plant that is located at Toyota Australia's centralised manufacturing operations in Altona, a western suburb of Melbourne.

This is a little more than a year ago. Although times were tough then with a historically high Australian dollar, a fragmented market, almost no trade protection and only moderate government co-investment (to partially compensate for relatively high Australian wages) Toyota must still have seen a future for the Australian automotive manufacturing industry.

http://www.toyota.com.au/news/toyota-unveils-new-engine-plant

These external negative factors have not really changed from one year ago till today. If anything the Australian dollar has fallen so conditions should in reality be better.

What is different is the attitude of the current Federal Government with Kevin Rudd’s Labor Government being replaced by Tony Abbott’s Liberal National Coalition Government in September 2013 and the hardened attitude of the governments primary economic advisory body the Productivity Commission. The Productivity Commission recently recommended that all government support for the Australian automotive industry cease by 2020. This is effectively a decision that an Australian automotive manufacturing industry is not welcome past 2020 and that the governments key advisors want the industry to close down.

The Tony Abbott Government has politically moved to the right much more than any previous national government. Philosophically they could be described as neo-liberals who promote small government, minimal government intervention in the economy, free trade, globalisation and free flow of capital to the most profitable sectors of the economy. This philosophy currently has wide support in the community especially from people who work hard, face a high cost of living and resent governments taxing them excessively and wasting that money on unnecessary social services or corporate welfare.

As the inevitable consequences of this ‘dry’ economic philosophy become better known public support will fall and in fact it is already unlikely the LNP Coalition will win the next federal election in late 2016 even with most of the Australian commercial media being heavily biased toward the conservative side of politics.

The neo-liberal philosophy is however an overly simplistic and failed economic philosophy. No one, not even China or India follow this philosophy, nor does the United States even though its business leaders often claim to be free traders but the world is well aware of the local, state and national government support US industry receives.

In a country like Australia with a relatively high living standard, the concept of total free trade will inevitable mean a race to the bottom. Firstly most of the manufacturing industry will disappear but it will not stop there and eventually much of the service sector will also be transferred to lower cost foreign providers. The internet provides easy trade for information based occupations such as accountancy, education, engineering, architecture, IT support and so on.

Even work that must be performed in Australia such as construction, food harvesting, plant operators and maintenance services are now performed by non-resident workers allowed into the country with temporary visas such as the 457 visa.

The only sectors of the Australian economy likely to prosper in such an environment are the bulk minerals/resources industry and the bulk agricultural commodity export industry. Neither of these sectors employ many Australians. The inevitable end result of neo-liberalism is unemployment for most and fabulous wealth for a few. The classic third world banana republic.

With China switching to renewable and nuclear power as fast as it possibly can at the moment and also transforming its economy across the board to an advanced sustainable economy, it is inevitable that the demand and price for mineral resources will fall substantially. Australia will suffer badly in such a downturn with such a narrowly focused economy.

The global atmospheric CO2 limit that has been set to avoid catastrophic climate change will also lead to a collapse of the coal industry and possibly much of the gas industry in the near future. This is another factor our current conservative government fails to acknowledge. Much of the associated unserviceable loans will fall onto the major Australian banks, the government and the Australian taxpayer.

The alternative economic approach to neo-liberalism of balanced trade protection which allows a larger and more equitable mixed economy with a healthy manufacturing, service and resource export economy is essential for Australia’s future prosperity. This approach provides a ‘level playing field’ for Australian businesses but does not remove national or international competition.

So with a Labor Government likely to be returned in late 2016 that is most likely to support a balanced trade protection philosophy, why did Toyota announce yesterday the closure of its Australian manufacturing operations for late 2017? Will Toyota change its mind about closure of its Australian manufacturing after the Labor victory? I certainly hope so.

2 ( +4 / -2 )

Maybe Hyundai or KIA will step in...

-4 ( +0 / -4 )

Maybe Hyundai or KIA will step in...

They already have! Along with the Indian made cars.

-3 ( +0 / -3 )

Have koreans and Indians already stepped in? the headline says that no more cars are being made in Oz. doesn't say Toyota will stop selling cars there. more evidence of the commodities boom harming other aspects of the Oz economy (tourism also down)...

2 ( +2 / -0 )

Maybe Hyundai or KIA will step in...

They'd be nuts to in a manufacturing sense, it's waaaay too expensive now to manufacture in Australia, just as Toyota, GM, Mitsubishi and Ford have all declared. I feel very sorry for the line workers (I know what its like being retrenched) but no-one can say it's a shock. In the long-run, hopefully the taxpayer will be better off - $1.2 Billion had been given to Toyota by them in the past decade or so. Even more to GM and Ford.

Interesting fact was that Australia was the very first country in the world to manufacture Toyotas - and the very first market for them (outside Japan of course).

5 ( +6 / -1 )

Andreas bimba,

Are you kidding me, this pullout started under labour not LNP, this has been on the cards for years and is really no great shock. What is amusing is the fact that the current government is getting the blame for this. It's also amusing that in this article the other cause of this decision is not mentioned and that being the high labour costs. Union driven labour costs have been the downfall of much of Australia's manufacturing and the labour leader as a former high ranking union official that actually lead some wage claims at companies now facing ruin needs to shoulder much blame.... As for labour being returned next election wow that hilarious

3 ( +4 / -1 )

death of the Australian car industry

No...when the 1973 Ford XB Falcon GT351 ceased product, that was when the death of the Australian car industry occurred.

4 ( +4 / -0 )

The Australian car industry has been propped up by the govt for years and now its time for it to either stand up on its own or fold and guess what, its folding because it has been a false hood to the detriment of the tax payer.

Maybe now the Australians will be able to get decent cars instead of those dreadful holdens and falcons.

You have to admit that the aussie car industry has just been holden on for years.

0 ( +1 / -1 )

Oh noes! Maybe devalue and print a lot of money too, like the U.S and Japan? But if everyone is printing money to save their economy...

-2 ( +1 / -3 )

Methinks the real reasons are hidden in the TPP negotiations.

2 ( +2 / -0 )

I guess the subsidies ran out. This doesn't provide enough information to detail what the Australian car market is, who the players are. Of course as happens everywhere, subsidies to the automakers are welcomed, meaning taxes spent on car makers ok. Just not ever taxes against. If everyone is chasing low taxes then no country wins and it becomes a sham industry. You have to have buyers that value the product like Japan and other countries which have high taxes and yet have automakers.

If there was a regional car maker in Australia that would accurately show the real labour and production costs. It would come down to the population accepting value not subsidies.

2 ( +2 / -0 )

titaniumdioxide Maybe devalue and print a lot of money too, like the U.S and Japan? unfortunatley Australia would be coming to a gun fight with a knife. and with inflation over the years being the cause of exccessive prices in the Australian economy, hyperinflation is the last thing theyd want. the Australiancar industry has been slowly dying for the last 15 years. why should the Australian tax payer keep throwing good money after bad. biggest problem for Holden & Ford is they stopped making cars that Australians wanted to buy.

1 ( +1 / -0 )

Toyoda-san's address in Japanese included about difficulty of Industry relationship. A few months ago, Toyota Australia management team has tried negotiating for to change 2011 work place agreement with Altona Toyota employees but Australian Manufacturing Worker Union become involve and they went to court.

Federal Justice Mordy Bromberg ruled that Toyota's plan to alter the 2011 workplace agreement with its Altona employees breached that agreement and the Fair Work Act. Justice upheld an injunction sought by the Australian Manufacturing Workers Union (AMWU) on behalf of staff preventing the vote from going ahead. However, it said both parties must agree to make changes to the agreement.

What I understanding was majority of Toyota employees wanted to direct talk to Toyota management team and go ahead for vote but Union didn’t allow it. Now Toyota employees will be lost job in 2017. AMWU leaders will continue enjoy meaty salary and using Union issue credit card. AMW Union leaders and Labor Party are blaming Coalition Government for not given more money to Toyota and Holden.

Holden receiving an average of $180 million a year compared to Toyota taking $95.8 million a year and Ford getting $87.8 million a year as Australia Government subsidy. It’s showing Tax payers are paying $ 95.8 millions to Toyota for employing 2500 peoples. Tax payers are paying $ 38,329 - $ 40,000 per employee a year. Tax payers are paying Holden employees $ 60,000 - $ 65,000 per employee. Holden has 1300 employees in Victoria and 1600 employees in SA. Is it fair for Australian tax payers?

Holden says it invested $32.7 billion and paid $1.4 billion in income tax for its workforce over the same 12-year period it received $2.17 billion in taxpayer assistance. Holden paid tax $ 1.4 billions and get back $ 2.7 billions from Tax payers. Labor though it's good business for Australia. That's why Australia was left with $ 300 billions debt by Labor Government.

Also producing car in Australia is about $ 2900 more expensive than Japan and US. Only thing Car Company continue produce in Australia is reducing cost of producing car and AMWU leaders must not stand between employees and employer engaging in work place relationship between them but too late now.

By the way, Toyota Altona employees can not be strike against Toyota after 2017. In 2011, Toyota had lost $ 200 million as result of workers strike. AMW Union leaders are blamed for losing job at Toyota Altona plant and other manufactures in Australia. I don’t blame Tony Abbott Government for losing Car manufactures but Labor and Union are solely responsible for losing job in manufacturing sector. My brother will lose job too.

0 ( +1 / -1 )

Well, UAW bossing Detroit was bankrupted. toyota, etc avoiding Union in Aussie, too?

0 ( +1 / -1 )

The real problem for Toyota is a lack of private buyers and governments are simply buying fewer cars of any kind. Toyota made the decision two years ago to expand its U.S.production rather than throw Australia a lifeline. So with declining demand and economic conditions against it, Toyota Australia was left with no choice but to cut costs.

0 ( +0 / -0 )

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