The Australian Automotive Manufacturing 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 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.

To what extent does the macro-environment affect Toyota Australia? The adverse macro-environment including the fiercer competition in local market due to Australia’s low-tariff barriers, the demanded vehicles of emerging markets in developing countries was counter to the types of Toyota manufactured, the small scale of operations limited by Australian market and population, the unbalanced free trade agreements and the adverse currency development. This would have significant effect on Toyota Australia’s decision of whether leave Australia or not. 2. What can Toyota Australia do as an industry leader when the whole industry is facing challenge?

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.

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.

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).

Similarly, the pollution reduction law also has negative influences. Because of it, businesses that produce pollution are required to pay emission credits, in order to lawfully deliver a specific measure of pollution, also causing a profit loss for firms. Furthermore, Laws on Interest and the minimum wages policies are changing too. In Australia the minimum wage has increased to 2.4% which is $17.70 per hour and in addition interest rates are also raising. Consequently, if government laws affecting organisations continues to deteriorate the success rate of businesses will

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.

These frequent recalls have a negative impact the confidence consumers have in Ford’s products. In summary, the breakdown of Ford Motor Company’s weaknesses is: • Product recalls are frequent, with “TGW” averaging 1,388 per 1,000 vehicles. • Decline in sales of vehicles in India and Russia impact Ford’s international growth and competitiveness.

Also they assert that by the end of 2015, 3.32 million jobs will be outsourced abroad. Companies outsource for many reasons but the most important reasons are: • To reduce and control operating • To improve company focus • To gain access to world-class capabilities • Free internal resources for other purposes • Resources are not available internally Furthe... ... middle of paper ... ...ssue of public relations rather than an issue of human rights ” (Boggan Para. 21). Measures to provide good working conditions at the Nike plants in Asian countries face challenges that come from managers and employees. This case evidences that outsourcing in Asia has a goal to cut production costs by any price and it is often accompanied by bad reputation and violated human rights.