(Evolving Employment relations, Waring ,Bray page number 119 para. 1) The automotive sector accounts for approximately 6% of the total “value added” for manufacturing which is one of the largest source of employment and among Australia’s most significant export industries which comprises several hundred component suppliers and four foreign-owned vehicle assemblers: Ford, GM Holden, Toyota and Mitsubishi (Put reference). Australia’s automotive industry is at a cross roads because of the declining vehicle volumes which have reduced benefits, forcing production levels below a critical fi... ... middle of paper ... ...d which automatically declined Australia’s car manufacturing industries business. On the other hand, the unions demanded high wages and conditions for their workers. This affected the economic status of the companies as they have to spend more on wages and facilities of workers.
Operations in Australia 2.1. The factors that changed the competition landscape in the automobile industry First, the automobile industry is in the decline period of its life cycle (Whytcross, March 2014) w... ... middle of paper ... ... have to pay depreciation and rent like plant ownership. Hence, the automobile industry has been influenced on the decrease of sales volume. Next, there are some impacts on the competitiveness due to the high Australian dollar such as the significant increase import penetration, because vehicles are imported Australia will have a lower price in comparison with vehicles are manufactured locally and making exports more expensive on the global market. In other words, far cheaper imports have flooded the Australian market.
With the increased supply and availability of imported cars, the demand for Australia made vehicles dropped dramatically. This decline is illustrated in the change of top selling cars in Australia. In 2002 the top three selling vehicles were produced in Australia, where as now, only the Holden Commodore ranks in the list (Biddle 2013)... ... middle of paper ... ...r the major automotive manufacturers in Australia to cease production was the consequence of a changing economic structure in Australia, which is seeing the demise of an entire manufacturing industry. Although an unfortunate outcome the role of these companies is to remain competitive and generate profit. Despite government support and constant restructuring the major manufacturers could not change consumer demand, which left the plants performing inefficiently.
The strong presence of unions meant that they had a much higher labour cost than their competitors. Also General Motors, Ford and Chrysler, known as the “Big Three” primarily focused on manufacturing pickup trucks and SUVs because of their high profit margin. Sales plummeted when the fuel prices drastically increased and consumers could not or would not get a loan to pay for a new car. Analysis In 2006, prior to the “Sub-Prime Mortgage Crisis”, General Motors Corporation (GM) was focusing on implementing a turnaround plan for North America, which focused on the company increasing production of SUVs and trucks while emphasizing size, strength, and value. When the crisis became apparent and consumers started spending less, GM’s sizeable book leverage of 0.259 (See Appendix A) multiplied the impact of the crisis on GM.
For the macro-environment level, the political, legal and environmental aspects are not involved in this case. For the economic aspect, the leaving of Toyota would reduce the tax income of Australia government and also reduce the government support expense, so there would not be much influence in economic aspect. For the socio-cultural aspect, there are 4200 direct employees in Toyota. If Toyota exit Australia, considering the indirect employees and other jobs related to Toyota cars, it would bring severe unemployment. According to Andrew, Yannis and Peter (2001), both current unemployment and past unemployment would decrease the life satisfaction and bring other psychological impact.
Threat of New Entrants – Low Entering into the business of car manufacturing is very expensive and precarious. The opening capital investment is tremendously high, whereas the competition within the companies is very strong and under control of the well established businesses. The distinguished brand, steadfast market presence in a range of segments, and the huge size makes Toyota to be in a competitive advantage above new entrants in the car manufacturing industry. Threat of Substitutes – Medium As the industry styles indicate, the clientele still have a concrete reliance on the second-hand car market. Bearing in mind the fact that the economy still suffers a blow, the second hand auto industry takes a vital part of the vehicle demand.
7-29. Thurlow, R. & Glynn, J. 2013, Imports Pummel Australian Car Makers --- Strong Currency, Shift to Sport-Utility Vehicles Cause Local GM, Toyota Operations to Lean on Government Aid, Hong Kong. Glynn, J. 2013, Australian Manufacturers Yet to Solve Strong Dollar, New York, N.Y. Thurlow, R. 2013, Auto Makers Struggle in Australia; Industry Battles Cheaper Imports, Rise in Australian Dollar, New York, N.Y. Ford's Exit Down Under; Australians have paid again and again for car tariffs 2013, , New York, N.Y. http://www.goodcarbadcar.net201403usa-auto-sales-brand-rankings-february-2014-ytd.html
However, considering the professional roles of the Australian government and workers union, they are also responsible for the decision. This essay evaluates the positive and negative consequences in regard to the decision made by Toyota to end their Australian car-making and also examines the shareholder and stakeholders theories to identify the role of social responsibility that is borne by these three sections; Toyota, Australian Government and Australian manufacturing workers union. The story begins with the media statement from Toyota earlier this year to stop its vehicles manufacturing, as well as the production of its cylinder engines, in Australia by the end of 2017, and operate in the country only as a national sales and distribution company (T... ... middle of paper ... ...Australian government and Australian manufacturing workers union are easily identified. These three sections are obviously responsible for the decision relying on both their professional and ethical perspectives. From the discussion, Toyota and Australian government has behaved socially responsible in assisting the employees and suppliers with the job opportunities throughout the ongoing support services.
However, considering the professional roles of the Australian government and workers union, they are also responsible for the decision. This essay evaluates the positive and negative consequences in regard to the decision made by Toyota to end their Australian car-making and also examines the shareholder and stakeholders theories to identify the role of social responsibility that is borne by these three sections; Toyota, Australian Government and Australian manufacturing workers union. The story begins with the media statement from Toyota earlier this year to stop its vehicles manufacturing, as well as the production of its cylinder engines, in Australia by the end of 2017, and operate in Australia only as a national sales and distribution co... ... middle of paper ... ...ve the company profits, and under a legal framework established by the federal government to control the acceptable business behavior that somewhat affects the society. On the other hand, the second model, suggested by Edward Freeman, is the stakeholder theory or the wide view that generates the opposite idea of socially responsible behavior of a corporation. The theory argues that the shareholders-centered idea is incomplete, since there are stakeholders, who are affected by a business decision and also can affect a corporation involved (Fassin, 2012).
Many sectors of production has been affected tremendously because of the strict regulations implemented by the government to import and export, in addition to the bureaucracy required to obtain dollars in order to fulfil international trading. One of the most affected and damaged markets is the automotive market because it has lost production capacity as a result of difficulties such as obtaining dollars to buy auto´s parts, shipping the parts to Venezuela and then assembling the vehicles within the country. In addition to these problems, a law called “Luxury Law” approved in 2010, closed the Venezuelan market to imported cars, presenting the excuse that trading cars with other countries would destroy the internal production; consequently, Ford Motors Company, General Motors of Venezuela, Toyota de Venezuela, Mazda de Venezuela, Hyundai Motors Corp, Mitsubishi Venezuela, Chrysler Venezuela, Venirauto Industry, Chery Venezuela, Renault de Venezuela,... ... middle of paper ... ...3 Bs. /$ valid at that time). Today, a new Toyota 4Runner is Bs.1, 550,000.00 ($246,031.75 at the current fixed rate of 6.3 Bs.