Australia’s automotive supplier association (FAPM) says it has requested help from both Federal and State governments as it reels from this week’s announcement Toyota is to exit manufacturing in the country in 2017.
News of the Japanese production withdrawal comes hot on the heels of General Motors’ Holden division and Ford announcements they will also quit manufacturing in Australia, a situation the FAPM believes could put 33,000 component jobs at risk.
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“We have asked for some support from the State and Federal government,” FAPM chief executive, Richard Reilly, told just-auto from Melbourne. “The number of people employed in the [automotive supply] sector is 33,000 – some are going to be re-employed we appreciate that – we are hopeful.
“We would argue automotive is the peak sector in the manufacturing area and once you lose that manufacturing capability, that will [have] an impact on skills. Engineers will go where the jobs are.”
The FAPM chief executive highlights as precedent the recent package agreed following Holden’s announcement it was to end manufacturing in Australia, noting A$100m (US$90m) had been made available for retraining in a A$60m grant from Canberra and the remaining A$40m split between two State governments and the US automaker.
The supplier body cites automotive specialities such as engineering, design, prototyping and R&D as well as assembly, where jobs could be at risk but nonetheless has some sympathy with a set of unfavourable circumstances in Australia including a strong dollar, low volume and “unfair” Free Trade Agreements.
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By GlobalData“I am not blaming anyone at all,” said Reilly. “We have absolute sympathy. With the high Australian dollar, it is [an] extremely competitive environment, which is making imports much cheaper…as well as the fact it is an environment that is probably the most open in the world with the tariff regime.”
Despite his conciliatory tone, Reilly also recognises the stark reality of a challenging economy, with reports emerging today (13 February) of unemployment in the country reaching a ten-year high of 6%.
Equally, the election of a new, Conservative government, led by Prime Minister, Tony Abbott, has driven policies appearing to make it starkly clear the books have to be balanced.
“The new Abbott government had a policy to remove A$500m out of the Automotive Transformation Scheme [ten-year, A$3bn framework],” said Reilly.
“They would argue the Federal budget needs some work and they want to save money.
“The key issue is the government had made a decision they were going to remove some money. It is a brave new world now – it is a different dynamic.”
