Australian auto industry website GoAuto says that the Aussie auto industry trade association, FCAI, is denying a report in a local newspaper that the future of carmaking in Australia is seriously endangered.

However, GoAuto said that The Australian newspaper stands by its story, claiming on Saturday that the concerns were relayed verbally by senior car company executives, who warned that "union trouble or higher wages would be a poison arrow" for local car manufacturing.

The Weekend Australian said an October 3 submission from the Department of Prime Minister and Cabinet (PM&C) to John Howard warned of the possible 2008 closure of Mitsubishi's Adelaide assembly plant, and "question marks" over Ford's two Victorian operations.

"It is important to note that as the industry is very keen to maintain its relationships, and appears fearful of union retribution, that concerns noted above will not be expressed publicly by the car companies," the submission is reported to have said.

According to The Weekend Australian, the PM&C submission says it is "widely recognised that Australian car manufacturers are facing serious pressure, raising real questions about the long-term viability of at least two, and possibly three, of the companies.

"In essence, the question that the industry is raising is why would a Toyota, Ford or a General Motors in Tokyo or Detroit respectively want to invest millions in upgrading an Australian operation when they are facing higher labour costs, greater union militancy and the threat of more strike action when they can put their money into low-cost and highly efficient Chinese operations?"

Federal Chamber of Automotive Industries chief executive Andrew McKellar issued a press release on Friday, the same day the article first appeared in The Australian, refuting claims made in the report.

Mr McKellar said the article - which also claimed that Toyota, Ford, Mitsubishi and GM Holden last month warned the Government that future investment in the industry was in doubt and that they had recently written to the Government on the issue - was without foundation.

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