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Old 8th October 2016, 21:44   #1
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Default Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Australia

Australia the tiniest continent, a not-so-tiny country or the largest island, whichever way you choose to see it as, has fallen out of favour in the eyes of major automobile manufacturers. According to them its no longer wise to do the manufacturing in the country and the official quotes of the brands choosing to leave the place are as follows :

Ford :

Quote:
Today is an emotional day for the entire team of Ford Australia," division CEO Graeme Whickman told reporters outside the factory, the Detroit News reports. "We are saying goodbye to some wonderful manufacturing colleagues who have done a great deal for Ford in Australia
Ford has bowed out today, with a Blue Ford Falcon being their swansong.

Toyota :

Quote:
We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia
Toyota plans a 2017 farewell.

GM/Holden :

Quote:
The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world
GM shall exit in 2017.

Ford Australia CEO Robert Graziano has noted that the cost of production in Australia is double that of Europe and a massive three times the cost as compared to Asia. There is a speculated loss of 2000 jobs as far as Ford is concerned in Australia.

With a population just a shade under 2.5 crore for such a big nation, and with the local production not dependent on exports, it may have been a much needed move to cut on costs. All three brands will import their cars to the land based on demand, much like Hyundai has been doing shipping the models either from the Indian plant or the Czech plant to Australia. 2016 has also seen a sharp fall in demand for Ford and Holden which round off the bottom of the top 10 while Mazda, Hyundai & Toyota and round off the top 4.

In all I think its a sound business decision keeping in mind the skyrocketing expenditure and no real reason to keep manufacturing in Australia since exports aren't part of the volumes. Lesser manufacturing facilities mean more efficient manufacturing without inventory pile-ups as distribution is spread across multiple locations, it also means lesser pollution.

Sources :

http://www.autoblog.com/2016/10/07/f...con-australia/

http://www.autoblog.com/2014/02/10/t...oduction-2017/

http://www.autoblog.com/2013/12/11/g...rmed-official/

http://www.whichcar.com.au/car-news/...lia-march-2016
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Old 8th October 2016, 21:50   #2
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Default re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Australia

Australia is a first-world nation, but is quite close in shipping terms to both India and China. The quality of life that is so admirable in a first-world nation is a liability when it comes to employers, due to higher pay mandated by unions, healthcare and insurance, etc. It was inevitable that manufacturing would shift away from the first-world nations towards the BRICS economies.

That said, it is surprising and interesting to see that manufacturing costs in Australia are costlier than Europe:
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Originally Posted by dark.knight View Post
Ford Australia CEO ... has noted that the cost of production in Australia is double that of Europe and a massive three times the cost as compared to Asia.
I'd be curious about which part of Europe he's referring to, and I suspect it would be the nations of the former USSR.
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Old 8th October 2016, 22:13   #3
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Default re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Australia

I had been to Australia last year and my ship was docked at Geelong (Near Melbourne). Just outside the docks was the Ford Casting Plant. The taxi driver had told me that it was due to shut down soon. In fact most refineries are also shutting down in Australia. Geelong was one of the remaining 2 still operating in Australia. Soon Australia will be importing all it's automobiles as well as the Petrol and Diesel to power them.
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Old 8th October 2016, 22:14   #4
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Default re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Australia

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Originally Posted by arunphilip View Post
I'd be curious about which part of Europe he's referring to, and I suspect it would be the nations of the former USSR.
I thought about it, and I feel its the overall cost of making one car in Australia vs. just importing it into Australia that is twice as expensive. Their European plants (Germany, Spain, Romania etc) all cover various points of Europe for easy assembly and distribution, then they have Mexico and Argentina for South America and of course their key manufacturing region always will be North America and for their *Indianised* products if I may call them that, there is Chennai in India.. none of these can be replaced.

Australia has about 24 million in population and then some, too low for manufacturing for the local market and thus it may not be suitable given the rising value of the AUD, lowering demand and other side-effects of inflation. They've done the right thing as the Asian brands are fast taking over sales in the country. Better to take a step back and sell by importing based on demand.
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Old 9th October 2016, 07:08   #5
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Default re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Australia

Very easily understandable.
Good call I would say.

The largest number of vehicles one sees there nowadays are the Asian ones, Japanese and Korean vehicles are absolutely all over the place in Australia.
Then come the Europeans which are quite visible for sure.
Occasionally one may come across the local Holden Pickups and so on - of course everyone knows GM owns Holden and the brand is merely being kept alive in OZ/NZ and nowhere else.

Saying this, it is a First World country and has a wage policy to support the high standards of living, public services and healthcare etc. Add to this the fact that it is severely under populated and massively huge in terms of geographical spread.

It is absolutely eminently sensible for such a country to buy what it needs from outside instead of trying to produce some of these things, because it simply does not make sense, given the costs of production.
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Old 10th October 2016, 12:02   #6
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Default Re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Austra

Feel sad for Australia. From being a car manufacturing country, it'll now simply become a 'car importing' country (like Singapore).

I remember Ford saying their Australian-made cars weren't profitable; it was the Ford imports that were making $$$!

Australia doesn't discourage the import of cars; club that with the labour costs and it becomes a no-brainer. If the government doesn't encourage a local industry, what's the point?
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Old 10th October 2016, 17:12   #7
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Default Re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Austra

Australia, like India and Japan, is a right-hand-drive country.

One would imagine, then, that in the future Indian-manufactured cars and/or suvs would have Australia, in the future, as a major export market. Unfortunately, it appears that those numbers will be limited (perhaps some Maruti Suzuki-s and Renault-Nissan 'suv'-s?) since the sorts of models and brands popular there (some Japanese, the Koreans and say Ford pickups etc) would be imported from Thailand (also rhd, i think??), Japan, Korea and China, instead, given the different genres of and the lower price/'quality'/spec cars that sell and are made in india, a market completely unlike Australia's in its structure, pricing and 'culture'.

What will be interesting to watch, then, as far as Indian auto exports to fellow-rhd Australia are concerned, will be FCA-Jeep's reported/rumoured export plans for their Ranjangaon-made c-suv (new Compass) and the smaller Renegade-like b-suv supposed to follow it in 2017 and beyond. In fact, FCA could also re-export ckd-assembled (say) Wranglers and/or Cherokees and/or Grand Cherokees to Australia (and Japan, also rhd) given the currency depreciation of the aussie$ against the us$ and the euro since the commodity-price bust of a few years ago? Or so rumours and reports in the aussie automotive press go.

The caveat is that JEEP and its local-management+dealers there are in some disrepute there recently, a legacy issue from before the FCA days, aggravated and occassioned it seems by the steep price increases on usa-made Jeeps occassioned by the strong us$-Much-weakened-aussie$?

At any rate, a large and high-value-added manufacturing export opportunity 'made in India', a rare-enough thing hitherto and foreseeably. Let's see.
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Old 16th October 2016, 10:04   #8
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Default Re: Car manufacturing climbing out from Down Under : Ford, Toyota & GM to stop making cars in Austra

The blame for the tragic demise of car manufacturing in Australia and consequent job losses running into hundreds of thousands (once all the support jobs are taken into account) can be attributed solely to moronic, short-sighted policies followed by successive federal governments.

Even though the population of Australia is a tiny 24 million, it is still a massive new car market with 1.1 million sales every year. It is certainly large enough to sustain a domestic industry. The argument that it is a RHD market does not hold as 1/3 rd of the world is RHD, including two of the largest developed markets - Japan & UK.

Yes, Australia is a very high cost country, but then so is Germany & Japan, who manufacture a lot of cars. The Ford exec was disingenuous saying European prodn costs are half Australia's - I am sure his "Europe" is not Germany or UK, but Romania, Poland or Turkey!

The basic reason is that the government pulled out all support to the car industry. Every single car manufacturing country supports the domestic industry. Many of you may hate the 100%+ duties on imported cars in India, but that is exactly what has helped to create an Indian industry that manufactures millions of cars & employs tens of millions.

Australia used to have a 25% import duty, which has been progressively reduced to nothing - all in the name of "level playing fields". Australia has signed a number of Free Trade Agreements and basically, the government sold manufacturing down the river hoping to sell meat, dairy & minerals!!!

No, I am not joking, they reduced the import duties on manufactured items to zero while promoting the export of the dairy, meat & mineral industries. Obviously, those industries have massive clout & lobbying power. The country's mineral worth has been taken over a handful of mining billionaires (like in Russia!) who scuttle every attempt by governments to get mining to pay proper tax. They mounted a huge campaign a few years back to defeat the mining resource rent tax & effectively pulled down the federal Labor government!

For the FTAs to work and countries like China to accept Australian iron ore, milk, meat etc, the government traded away any protection for the local manufacturing industry.This was ok while the mineral boom was going on and the Aus$ was higher then the US$, but now that it is a mining bust & the country is effectively in recession, the real impact of the loss of manufacturing is seen.

Ironically, now, with the Aus$ 1.00 = US$ 0.75, the business decision taken by Holden to pull out would not have happened.

Ford never had a global product - their US masters never allowed the development of the Falcon for LHD markets. Holden exported its Commodore & Statesman to the Middle East & for a while, to USA. Toyota were exporting a majority of locally made Camrys.

Holden & Toyota could definitely have survived. It can even be said that one absolute moron called Joe Hockey (the previous Federal Treasurer (equivalent to Indian Central Finance Minister)) single-handedly put hundreds of thousands on the dole by literally challenging GM Holden (in a fit of arrogance & hubris) to "stay or go" - they decided to go! Once Holden went, Toyota had to go too as the critical mass for local mfg was not there. Joe lost the election, but is now swanning around as our US Ambassador! It is now calculated that the few hundred million dollars in support provided by the federal government will now become billions of dollars in dole!

Until a few years back all three tiers of government (federal, state & local council) bought only Aussie cars, but with green-washing becoming a big thing, they all switched to fuel-efficient, little imports. That govt business alone could have saved the local car industry! Holden & Ford had a LPG Commodore / Falcon, but missed the boat on fuel-efficient diesel engines.

So, in a nutshell, short-sighted, stupid government policies killed the Australian car industry. The politician scum get fat lifelong pensions, but hundreds of thousands of ordinary people are left without a hope and facing poverty.

Last edited by LTAutoMad : 16th October 2016 at 10:30. Reason: Update
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