preview

Manufacturing in Australia is a Deteriorating Industry

Powerful Essays
Manufacturing in Australia is a deteriorating industry, which has seen over 125,000 jobs dry up since the global financial crisis (Biddle 2013). With the decline in demand for Australian made vehicles (Biddle 2013) and a rapidly evolving global economy, car manufacturers have taken to decision to cease the production of vehicles in Australia. With the demise of an entire industry, a large percentage of skilled workers will be out of work forcing unemployment up and a loss of skills no longer required in Australia. The decision has the potential to have drastic effects on the economy, as the flow-on effects will have consequences for other industries, which heavily rely on automotive manufacturing. The state of manufacturing in Australia can be analysed using international trade theory to better determine factors, which influence this change. The product life cycle theory is a process in which a product is developed in a country and over time neighboring countries began to develop similar products and look to import (Hill 2013). Although not an accurate way to justify the fall in demand for Australian made vehicles, the process can be seen in the automobile industry. As countries with different factor endowments began to manufacturer cars, they are able to more efficiently produce vehicles in their countries and then import the final product to Australia putting pressure on the domestic 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. Without a positive outlook to the future and negative forecasts the companies could not remain in Australia without operating at a loss (Economist 2014). The chain of events, which led to the demise of the Australian automotive industry were the strong currency rate, constant tariff reductions and high labour costs which significantly affected the future prospects of manufacturing vehicles in Australia.
Get Access