Australian car companies and suppliers will have to “work smarter” in the future and concentrate on niche products that appeal to global markets.

That was the message to come out of the Change by Design conference held by the Victorian Government during Automotive Week in Melbourne as a prelude to last weekend’s Australian Grand Prix.

With an annual new car domestic market of just over 800,000 vehicles, only around 30% are built in Australia – despite government-imposed import tariffs.

With the distances involved, exports to other countries are small.
All this makes economies of scale difficult to achieve for car makers and suppliers alike. What the country does have however is an abundance of engineering brainpower and that’s what it needs to harness, the conference was told.

Laurie Sparke, Chief Engineer for Advanced Engineering at Holden GM’s unit in Australia said, ”Increasing access to world markets presented an opportunity, it allows Australian manufacturers to create specialised businesses providing supplementary or niche products that are needed in the larger markets. The opportunity is to be innovative and creative and to be first into niche market opportunities.”

Holden has already grasped the nettle. Its Monaro sports car launched last year to great acclaim is now going to be sold in the United States as the Pontiac GTO. European markets are also looking at the car.

Even so Holden had to virtually put the car together in a ‘skunk works’ as there was never any formal approval for the project from GM.

Sparke added: “Australian engineers seem to have an enhanced mechanical affinity compared to engineers from other regions and cultures. Australians have a long history of innovation, solving problems in isolation from the rest of the world and using the resources at hand.”

“This innovative culture means that Australian engineers have the potential to develop innovative products and manufacturing solutions to compete in the global market place. Australian industries cannot attempt to be at the forefront of all of the emerging technologies. We must carefully select those technologies that will enable future success.”

The conference was told that industry, government and academia need to work more closely together to ensure future generations of engineers are adequately trained. There are still too many gaps due to the lack of education is using computer tools, poor integration into mainstream engineering and a mistrust of new technology.

Steve Darcy, global automotive leader at PriceWaterhouseCoopers, said, “With local car manufactures Holden, Ford, Toyota and Mitsubishi increasing exports, particularly to the Middle East and North America, Australia will soon be one of the most highly utilised production centres in the world”.

He added, “The country is still only ranked 24th in the list of world vehicle producers. In the Asia Pacific region Japan continues to struggle to come to grips with economic problems and has seen plant closures while in Korea the domestic market is growing rapidly with new demand for SUVs”.

“The biggest threat to Australia is likely to come from developing production centres such as China and Thailand. China has the potential to be the largest car market in the world and who is to say there will not be an indigenous Chinese car manufacturer rising up to enter the top 10 vehicle makers in the next few years. It will then not be too long before China starts exporting,” said Darcy.

This was a fear echoed by Max Gillard, Associate Director for Toyota Australia. He said: “Right now we have the most flexible and cheapest Camry manufacturing operation in the world but we can’t always rely on having this competitive edge with countries like Thailand and Malaysia raising their game.”

“The need for change has never been greater. We must change the way we operate to stay competitive because we just do not have the economies of scale that other countries enjoy in terms of the domestic market and exports. As we become more integrated into global strategies we have to move from an isolated industry to one that is globally competitive reducing our development and tooling costs and time.”

Ford Australia is hoping its new SUV, due for launch next year, can fill a niche in other markets round the world. Design Director Simon Butterworth said: “All cars in Australia are niche by North American or European standards, but we have always been good at small volumes. Suppliers have had to survive on volumes that the European or North American businesses would not even look at.”

There was also a plea from the suppliers at the conference. Michael Coates, Managing Director INC Corporation said: “We need to get some help from the manufacturers. They are part of big multi nationals with operations all over the world and what we would like to be able to do is use our contact with them in Australia as an entry into their global supply chain. We do not have the resources to set up around the world on our own.”