The high dollar and the substantially higher labour costs of automotive manufacturing in Australian compared to other countries such as China and Thailand have led to it not being viable for Toyota to continue to manufacture in Australia. Toyota’s decision to cease manufacturing in Australia will have consequences for numerous groups. However, according to Shareholder theory, as advocated by Milton Friedman, a narrow focus of profit maximisation is taken, in that the responsibility of Toyota is to generate profits for its shareholders (within the constraint of the law). The relentless pressure on vehicle producers worldwide to reduce manufacturing costs (“Pro...
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... in Australia, the automotive component sector will lose 30000 workers (Wallace &Ferguson, 2014). Automotive component manufacturers that are highly geared towards Toyota will be significantly affected if they don’t take immediate action.
The government should increase the Automotive New Markets Initiative’s funding in response to Toyota’s announcement that it would cease manufacturing in Australia by 2017. This program provides “grants of up to $1 million for firms in the automotive supply chain” (“Productivity Commission”, 2014). These grants will encourage component manufacturers to diversify into other industries or into export markets, if they remain reliant on passenger vehicle production in Australia for their business they will be heavily affected by the closures of the assembly and engine manufacturing plants in Australia (“Productivity Commission”, 2014).
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