Automobile Industry In Australia

But in the last few years, Holden suffered losses due to strong Australian dollar which directed declining sales of large cars in Australia. Also government fund being reduced this has led the company to look to international markets to increase profitability. Holden announced on 11 December 2013 that production in Australia would cease by the end of 2017 (Put Reference). The car manufacturing industry in Australia provides a useful example of the way in which employment relations are shaped by a combination of global market pressures and local responses by governments, employers and unions. (Evolving Employment relations, Waring ,Bray page number 119 para.

For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.

The decision was influenced by many different factors as well as having knowledge that the car manufacturing industry is economically taxing. The fact that the production of cars in Australia was already in decline made a transformation possible as well as Australia’s high cost and low productivity. This can be viewed, said by Paul Bloxham who is HSBC’s Chief economist, as “globalisation” stating that Australia could obtain the same low-cost manufacturing in relation to the rest of the worlds manufacturing regions. Toyota felt that the Australian dollar was extremely high, and in this case was hindering the company’s exports from functioning sustainably, making the trades unsuccessful. As the engine and car producing company became part of the global manufacturing market, many inexpensive production expanses were located which shrank the size of the Australian industry.

The purpose of this report is to analyse and evaluate this decision by Toyota according to Shareholder and Stakeholder theories of corporate social responsibility and to identify the consequences of this decision along with responsibilities borne by Toyota, the Australian Government and the Australian Manufacturing Workers Union for these consequences. TOYOTA SHAREHOLDERS 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... ... middle of paper ... ... in Australia, the automotive component sector will lose 30000 workers (Wallace &Ferguson, 2014).

The car industry receives AUD$4.27billion from only three government Initiatives (Productivity Commission, 2014, p9). Many support these funding decisions of the government however many also disagree that one industry should receive such large amounts of funding. This essay will demonstrate that the Coalition government’s decision not to provide monetary support to Australian car manufacturers which resulted in their decision to move manufacturing overseas was justified. Australia is a capitalist society which private businesses, such as the car industry, aim to make a profit. However, the Australian car industry has endured a combined loss of AUD$1.5billion over a decade (Dowling, 2014, p1).

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.

Through minimal competition, the conduct of the industry has slightly diminished with an increase in fees, and inquiries into possible collusion. The structure, performance and conduct paradigm of the Australian banking industry threatens the competition evident in the market. Within an industry that has a highly concentrated structure, the conduct of the involved parties tends to initiate anti-competitive behaviours, which improves the firm performance. Competition can be measured within an industry by using various methods, the first is the concentration ratio which is the percentage of the market share owned by the biggest companies within an industry (Young, P 2014). The second measurement tool is the Herfindahl-Hirschman Index (HHI), which calculates the percentage of market shares held by all firms within an industry by square rooting the market share (Bikker, J & Haaf, K 2002).

With the intense competition in the global market, the comparative advantage of a country’s exports is the primary influence on that country’s export volume (Chunming & Wei, 2012). Australia does not have a co... ... middle of paper ... ...nfluencing investment decisions such as broad R&D support, education and training support (Allen Consulting Group [ACG], 2013). However, it is noticed that the government support for the automotive industry has reduced in Australia this recent years and the level of government support and policy certainty is not on the similar scale in Australia as compared in other countries (ACG, 2013). If globally competitive incentives are not provided, there is a more serious risk that the manufacturers will halt production. For example, the recent case whereby Abbott declaring that he will no longer be providing extra government assistance which led to the major manufacturers ceasing production one after another.

With regard this, having explained an overview of this topic, the question is whether the government should provide money to the car manufacturers or not. This essay will mainly focus on economic, social and environmental issues facing Australian community as a whole. The local market competition, the economy became weak, As a result of money fluctuation in the market. In regardless of Spill over benefit to the manufacturers industries, the expenses may exceed cost of the subsidies .therefore; it will be difficult for the company to pay back the public funds. As a consequence, some areas will experience difficulty in employment and economic activities.

These industries have a fixed low tariff level between 2000 - 2005, to allow them to restructure and become more internationally competitive. Australia's tariff reduction levels have gone way below those required by international trade agreement such as WTO agreement and the APEC. Australia in the last ... ... middle of paper ... ...d this would affect the voting ratios for the government as benefits of tariff reductions and free trade promotion would take a much longer period to arrive. Through the significant change of Australia's protection levels and the promotion of free trade, it is obvious that Australia's major trading partners is shifting from European countries to the high trading potential Asian countries. This is due the enormous demand in many developing countries, which results in a greater market for export.