ATAR Notes: Forum
General Discussion => General Discussion Boards => News and Politics => Topic started by: slothpomba on February 11, 2014, 10:47:49 am
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Toyota to close: Thousands of jobs to go as carmaker closes Australian plants by 2017
Toyota has made the "heart-breaking" announcement that it will stop making cars in Australia in 2017, bringing an end to the nation's car manufacturing sector.
Around 2,500 Toyota workers will lose their jobs, while the loss of the wider automotive industry will put tens of thousands more jobs at risk.
Toyota Australia president and chief executive officer Max Yasuda and Toyota Motor Corporation president and chief executive officer Akio Toyoda broke the news to employees at the company's Altona plant, in western Melbourne, this afternoon.
"To now have to break the news... to the many people who have supported our production for many years is most regretful for Toyota and for me personally, simply heartbreaking," the Tokyo-based Mr Toyoda told a media conference.
Mr Yasuda added in a statement: "This is devastating news for all of our employees who have dedicated their lives to the company during the past 50 years."
He blamed the "unfavourable Australian dollar", high costs of manufacturing and low economies of scale.
Mr Yasuda also cited increased competitiveness due to current and future free trade agreements as factors that have made it "not viable" to continue making cars.
"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," Mr Yasuda said.
"Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts." SOURCE
Union warns of recession across east coast as job losses sink in
The Australian Manufacturing Workers Union says the decision is devastating and could cause an economic recession.
"This decision will see thousands of jobs exit Australia - not only at Toyota directly but all the way down the supply chain," national AMWU vehicle secretary Dave Smith said in a statement.
"The magnitude of this decision in the community cannot be underestimated.
"We are looking at a potential recession all along the south-eastern seaboard."
The Australian Council of Trade Unions has warned the decision could cost as many as 50,000 jobs and wipe $21 billion from the economy as the impact rolls through the associated components sector.
Opposition Leader Bill Shorten says the closure is an "unmitigated disaster". SOURCE
Macfarlane says Government could have helped 'if we were given the time'
Industry Minister Ian Macfarlane says he is disappointed but recognises Toyota had a business decision to make.
"The announcement today by Toyota Australia is an extraordinarily significant day for Australian industry, Australian industry will never be the same," he said.
"I always felt that if we were given the time we could put in place a plan to ensure that Toyota did continue.
"Its situation was entirely different to that of Holden and Ford - Toyota was exporting more than half its production." SOURCE
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Toyota names 2017 end, Australian car making to cease: experts react
Phillip Toner, Honorary Senior Research Fellow Department of Political Economy at University of Sydney:
The decision by Toyota to withdraw from local production, following the imminent closure of Ford and GM, was inevitable. The departure of GM and Ford, with the resulting loss of scale in the auto parts sector, simply meant that there was no way Toyota alone could sustain the complex chain of parts suppliers. What was Toyota to do, import all the components and simply assemble them here?
As I have argued consistently there is no sound economic argument to withdraw the modest government support from what was a high productivity industry that was at the centre of Australia’s (ever diminishing) engineering and applied science base.
The historic significance of the death of local car making is not lost on the neoliberals in the federal economic bureaucracy, the Liberal Party and even amongst some members of the Labor Party. It marks the burial of the key element of Chifley’s post-war reconstruction, the renunciation of an assertive role for the state in national economic development and a repudiation of industrial policy to shape the industrial structure and technological progress.
Sinclair Davidson, Professor of Institutional Economics at RMIT University:
Immediately after the Toyota announcement that it will be ceasing its Australian manufacturing in 2017 isn’t the time to be saying, “I told you so”. Rather we should consider the hurt and confusion of the employees. To a large extent the investment they have made in their careers, their human capital, has just depreciated. This is a cost that we don’t fully consider when advocating industry policy.
The fact of the matter is that government spending simply cannot sustain an industry. The best way to buy Australian jobs is to buy their product, not throw taxpayer dollars at the industry, or create artificial shortages, or tariffs and what-not. By propping up unsustainable industries we don’t only over-charge consumers and waste taxpayer dollars; we attract workers into the industry in the knowledge that down the track we will see them lose their jobs.
Some Toyota employees will get jobs elsewhere, others may never work again. Government should be looking at those policies that would ensure more than fewer work again. At the federal level that means liberalising the labour market, making it easier to hire people. At the state level that means governments need to be looking at the payroll tax and stamp duty - the former adds to the cost of employment, while the latter reduces labour mobility.
Government cannot create jobs; what government can do is make it easier for the private sector to create those jobs and make it easier for worker to move so they can take those jobs.
Remy Davison, Jean Monnet Chair in Politics and Economics at Monash University
Toyota’s announcement today represents the end of automotive manufacturing in Australia.
In less than 10 months, Ford, Holden and Toyota have decided to close down their car manufacturing operations, affecting thousands of jobs in Victoria and South Australia.
If Toyota, the largest and the most efficient automotive producer in the world, cannot survive without industry assistance packages, it demonstrates how vulnerable car producers are if governments fail to support them.
Whereas Ford had no real export market, and plummeting Falcon sales, Toyota was exporting 70,000 locally-made vehicles per annum to the Middle East and other markets, with a target of 100,000 each year.
This is the snowball effect of the rapid shutdown of Australian car industry. Toyota, Ford and Holden are tightly integrated with the Australian automotive parts industry. In the wake of Ford’s and Holden’s announced departures, some components manufacturers have already decided to close their doors.
Toyota’s decision reflects that reality: if Toyota cannot source components in volume close to its plant in Altona, then it makes no economic sense to continue manufacturing locally. Like Nissan and Mitsubishi before it, Toyota has made a strategic decision to become a mere importer.
Victoria is the most affected by the decisions of Toyota, Holden and Ford, but South Australia, NSW, Queensland and Western Australia will also suffer job losses in the components sector, as a consequence of the car makers’ withdrawal.
The industry was not helped by a Productivity Commission (PC) position paper which viewed the sector’s future in pessimistic terms. The PC employed no modelling data to support its claims, although its final report – long after the horse has bolted – is not due until March.
Prime Minister Abbott stated in response to Toyota’s closure that, “while some jobs end, other jobs start”.
As Australia de-industrialises – terminally – in which industries are the secure jobs of the future to be found?
Andrew Beer, Director of Housing, Urban and Regional Planning, University of Adelaide
The announcement that Toyota will cease the production of cars in Australia by the end of 2017 comes as no surprise, with many commentators anticipating this announcement given the earlier decisions made by Ford and General Motors.
The decision, however, still comes as a shock for the affected workers, their families, the communities they live in and the Australian economy. In many ways it is one of the most significant events in the economic history of Australia over the last 60 years. It represents the end of an automotive industry that supported thousands of jobs, provided a proving ground for emerging entrepreneurs and underpinned much of the national effort in research and development.
While much of the debate over the next few days and weeks will focus on what governments should, or should not have done, it is important not to lose sight of more fundamental questions. Put simply, the failure of the car industry must force all Australians to question what future we want and what future are we likely to achieve?
How are we going to pay our way in the world, especially given the inevitably cyclical nature of commodity markets? We cannot expect to rely on mineral exports to pay our balance of payments indefinitely, and if the automotive industry cannot flourish with substantial government assistance how can any industry of any scale flourish? Yes the service sector is now the most significant part of the economy, but we cannot pay our way in the world by selling each other lattes!
Some of the fundamental questions we must answer relate to our system of industrial relations and the political attitudes that support them. Should we go down the path followed by Texas – a booming, high wage economy with a strong manufacturing sector – and introduce right-to-work legislation that undercuts organised unions? Or is there a better option available to Australia, perhaps more akin to Scandanavian or Baltic models of labour market organisation, with unions working in partnership with management to embrace a productivity agenda ahead of wage claims?
How also can we better support the development of innovation and new technologies? Australia has long punched above its weight in the commissioning and publication of fundamental research, but struggled to commercialise that innovative spirit. As a nation we have strong R but relatively little D.
Many of these changes need to come from outside the world of macro-economic policy, industry development or industrial relations. We need to reshape politics, universities, the primary and secondary education systems, the nature of our innovation system and our attitudes to growth.
American universities often do a better job than their Australian counterparts at encouraging economic growth and the transfer of new technologies into the marketplace because some have specific mandates to engage with their communities and help their regions prosper while most use a form of employment contract – the system of nine month salaries for academic staff – that encourages researchers to engage with wider society and industry.
Now is a time for a radical re-examination of Australian society and its economic future. A “good” crisis should never be wasted, and the demise of the Australian automotive industry – and its supporting industries – should tell us all that it is time for change.
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The triggers to this event is especially important:
https://theconversation.com/no-sacred-cows-productivity-commission-targets-toyota-22647
Exerpts from the above article:
Although the final report is not due until March, the future painted by the PC is stark: Toyota should receive no additional funding; the industry’s future is in doubt, given the high costs of manufacturing in Australia, compared with China and Southeast Asia; the Automotive Transformation Scheme (ATS) should not be extended beyond 2020; state and federal governments should kill the Automotive New Markets initiative after it is ramped down in 2015-16; and the Green Car Innovation Fund should be aborted following its closure, scheduled for 2014-15.
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The PC estimates that around $30 billion (in 2011/12 dollars) in assistance has been provided to the auto industry between 1997 and 2012. That equates to around $1.875 billion per annum on average.
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By contrast, as a 2013 Grattan Institute report found, property investment generates A$6 billion in rental losses annually and A$7 billion in tax breaks per annum, comprising $2.4 billion in negative gearing and A$4.5 billion in capital gains tax (CGT) exemptions. The bottom line cost to the federal budget is estimated at A$4.4 billion to 5 billion per annum.
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The PC argued in 2004-05 in response to the inquiry into first home ownership that negative gearing, and associated tax relief, should be reformed. The Howard government demurred. In 2011, the Gillard government dipped a cautious toe into the negative gearing reform waters, but found the temperature unbearable.
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Miners, property investors, the car industry, unions, the banks and the construction industry have been major recipients of this taxpayer funded largesse. The Abbott government has demonstrated it is committed to removing manufacturing industry assistance.
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The car industry is a politically easy target. But Canberra is not likely to find the vested interests of the property investment class such a pushover.