Australia must reconsider its position on tariff protection for the car industry or face possible ruin, Ford Australia president Geoff Polites said today, according to Australian Associated Press.

AAP added that import tariffs have been reduced from 57.5 percent in 1985 to 15 percent and are projected to drop to 10 per cent by the year 2005. Constant reviews are undertaken by a Federal government committee.

"As time rolls on, I think, we have to adopt a far more realistic approach to what we're going to do with our tariffs," Polites said in a speech to industry groups reported by AAP.

"It is an undeniable fact that as the protection has been progressively dismantled over the last 15 years, the share of the industry held by the domestically produced vehicles has declined," he said. "That really means a potential risk for the continuation of manufacturing in Australia."

These views echoed those of Mitsubishi Australia managing director Mr Tom Phillips last week, who called for a full review of tariffs for the automotive industry to be conducted in 2003.

According to AAP, Polites said the concept of the level playing field was at times unrealistic, with some economies more influential than others, and many governments making minimal efforts to reduce trade barriers.

He added that there had been a major improvement in the efficiency of the car companies. Employee numbers were now only a third of what they were in 1985, and this trend was likely to continue.

"Two things have occurred, and will continue to occur to drive this change," Polites said. "We will continue to automate jobs that are repetitive, and often dangerous. And we'll continue to outsource components, and indeed whole sub-systems to suppliers."

The Ford company's vision for the future revolved around what Polites referred to as "supplier parks", where the traditional role of suppliers to provide individual components is replaced by companies creating whole systems on site, thus running separate company production lines on the same overall facility at the same time.

Import tariffs on built-up vehicles were steadily reduced in neighbouring New Zealand over a decade in the 1980s and '90s. Before they had reached their intended final mid-1990s levels, local assembly from CKD kits ceased as it no longer made economic sense for the handful of Japanese manufacturers still involved.

CKD assembly was replaced by fully-built imports from Japan, Australia and Thailand with the loss of several thousand jobs.


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