Manufacturing in Australia is a Deteriorating Industry

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.

The Australian automotive manufacturing industry has experienced substantial structural change (“Productivity Commission”, 2014). This has been in response to changing market and competitive conditions overseas and in Australia, and reduced levels of assistance from governments (“Productivity Commission”, 2014). Following similar decisions by Holden and Ford, these factors have led to Toyota’s decision to abandon manufacturing in Australia by 2017. AMWU National Vehicles Secretary Dave Smith said “the decision would cost thousands of jobs, not only at Toyota but all the way down the supply chain” (“Devastating day”, 2014) and represents the “collapse of the automotive industry in Australia” (Novak, 2014). 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.

Each played their unique role in providing setbacks and reinforcement. Unfortunately the collapse of Toyota and Australian car manufacturing was a result of factors that are out of the control of these three parties. The responsibility falls on the dramatic surge of the Australian dollar making exports less profitable as the demand decreases. Similarly the competition from regions of low labor cost and high demand growth were difficult to match. With recent years Globalisation and the fragmented and in turn competitive domestic market has led to the downturn and eventual collapse of the Australian car manufacturing Industry.

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.

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.

The “Australian Sickie”, defined as consistent failure to appear, especially for work or other regular duties, is costing employers a fortune due to the abuse of leave entitlements by employees. It has been estimated by Direct Health Solutions, a firm that specialises in workplace absenteeism, that “sickies” are costing the Australian economy up to $30 billion a year, causing a loss of productivity in organisations. In Toyota’s case, one distinct problem is absenteeism around public holidays for instance Australia Day where up to 30% of employees called in sick in 2012, giving themselves an official long weekend following the Thursday public holiday. Employees are not quizzed over or asked to provide a doctor’s certificate for prove of sickness. This report will argue that the core culture in Australian businesses are weaker compared to eastern firms.

What can Toyota Australia do as an industry leader when the whole industry is facing challenge? The whole automobile industry is facing a problem that the market is declining, especially to the main automobile manufacturers. As it was shown in exhibit 3, the market share of main automobile manufacturers, such as Toyota, Holden, Ford and Mitsubishi were all decreasing in last 14 years. Meanwhile, the market share of other brand increased from 19% to 32%. The threat of other brand, new entrants and other reasons are forcing Toyota to an unimaginable situation.

The impact of the Global Financial Crisis on unemployment levels As a consequence of the global downturn, jobs in Australia held the most devastating impact with employment contracting over 2009-10 and labour markets deteriorating rapidly with millions joining the jobless trend globally. The unemployment rate is expected to peak at 8.5% in 2010-11 before falling as the economy recovers. This is because as the demand for labour is a derived demand, when economic growth declines, so too will the demand for labour as consumer spending will deteriorate and businesses defer investment plans. As well as unemployment, there was also a shift towards the casualisation of labour. As the economic outlook became uncertain and demand and output delayed, employers seek casual and part-time workers to manage risk, leaving many of those who remained employed working fewer hours over the short term increasing levels of underemployment.

Introduction This report is going to discuss why the car manufacturing industry in Australia is closing by using five forces analysis which are the barriers of entry, competitors, purchasing power of buyers, supplies and subsidies segments, and a life cycle analysis. Five forces analysis  Barriers of entry To being with the barriers of entry which including strong currency and higher labor have the most significant impacts on auto making industry. In 2013, Holden would cut 12% of its workforce and has announced a three-year pay freeze agreement to the reminding workers to keep operates the manufacturing plant in South Australia (Thurlow, R. 2013). Moreover, a strong currency not only lead to less competitive on nation exportation but also increases the amount of cheaper imports from emerging market like China and Thailand caused by globalization. For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013).

Due to the weak imports caused by soft domestic demand and the reduction in the investment in mining industry, mining companies began to reduce the staff. For example, more than 1300 mining workers at the Forge Group were laid off (Kenny, 2014). In addition, lacking confidence in the future economy, some large companies of non-mining industry, such as Qantas, Toyota and Holden, began to lay off their workers, which aggravated the situation. The high unemployment rate can have negative influence on social stability and ec... ... middle of paper ... ...(Cecioni, Ferrero and Secchi, 2011). Conclusion Employment situation and economic fluctuation can affect the stability of the country.