Australia is best known for the production of large vehicles and is one of the most open automotive markets in the world. The industry plays a vital role in employment, exports, and innovation in the economy of Australia. It is a self-contained ‘full-service’ industry that operates the full range of activities from design to manufacture of vehicles even though the industry is small by global standards (Singh, Smith, & Sohal, 2004). The three major companies that dominate the industry in Australia are the Toyota Motor Corporation Australia, Ford Motor Company of Australia, and GM Holden. However, over the recent years, the industry has undergone major structural reforms and these reforms have mainly focused on the removal of quotas and the lowering of protection which led to some rationalisation of the industry, made imports more accessible to consumers, and thus made the industry more internationally competitive (Review of Australia’s, 2008). As a result, Australian automotive industry suffered as a wave of manufacturers comprising Ford, Holden, and most recently Toyota have ceased their operations in the country.
Comparative advantage is defined as the ability of a business entity, in this case, a country to specialise in those products that it can produce relatively more efficiently than other countries (Krugman & Obstfeld, 2003, as cited in Smit, 2010). Hence, it is the comparative advantage which will conclude whether it is beneficial to produce a product or rather just import it (Jaravaza, Mzumara, & Nyengerai, 2013). 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...
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...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. The government proclaimed that “better governance is not the same as more government” in light of the government pressure to intervene in the industry (Baker, 2014).
Picciotto, Dan and Nishit K Madlani. "The Global Auto Industry Shifts Its Focus To OVerseas And Emerging Markets." Credit Week (2013): 26. Online. 21 May 2014. .
Over the past 150 years, Canada’s relationships with other nations has led to the development of many trade sanctions. The nations involved in these trade sanctions haven’t always had the greatest relationship, allowing Canada to become the tie between the nations, advancing the development of countless Canadian industries. Due to Canada’s relatively small population, its automotive industry, hasn’t been able to grow as a self-sustained industry, leading the industry’s development to occur solely through economic sanctions. The two dominant forces these automotive sanctions face are the United States and Europe, each having a large stake in the development of the industry.
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
The automotive industry is without a doubt an industry that has massive implications relating to the United States economy as well as affecting every American household. Shifts in the supply and demand of automobiles influence the current and future household purchases. Households must determine what amount of their hard-earned income to allocate to certain necessities. Because most households have a budget, the amount spent on transportation it limited. While most industries have an effect on the economy, the automotive industry has far-reaching implications for most Americans. Not only are the workers affected but the many spin-off jobs created as well as the consumers that must purchase the automobiles manufactured.
Holden has not focused on export as a component of its strategy, unlike Toyota, and the high Australian dollar did not make the Holden grow. Mitsubishi and Ford had demonstrated that auto manufacturing in Australia was not productive, which created pressure on Holden and Toyota and others in the supply chain.
One of the main factors that caused globalisation in Australia was a reduction in protection, the act of National trade barriers being removed. A reduction in protection of international trade is done by governments who work together to develop agreements with each other to reduce trade barriers and allow tariffs on imported goods to be reduced. Australian governments have been involved with countries such as Singapore and Malaysia in an effort to help reduce the tariffs and quotas on imported goods, resulting in free trade agreements between other countries. For example, when National trade barriers are removed, opportunities are opened up to Australian business to import goods at a cheaper price and then export other goods to new markets in other countries. Evidence of this was recently reported on the ABC news program, the reporter quoted that ‘our government should not sign any free trade agreements with Japan, until the tariffs on Australian beef and dairy products are reduced.’ This news report showed local Australian farmers who are trying to convince our Prime Minist...
...horough looks at the 3 perspectives of Toyota, The Australian government or The Australian manufacturing workers union, it cannot be said that the closure of the manufacturing plant in Australia was the sole responsibility of any of the groups. 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.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
Spatz, J., & Nennenkamp, P. (2002, January). Globalization of the automotive industry-traditional locations under pressure. Retrieved January 14, 2012, from http://www.uni-kiel.de/ifw/pub/kap/2002/kap1093.pdf
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
The automotive sector is a key industry in the Malaysian economy. The economic contribution of this sector is immense, with significant linkages to the manufacturing and services sectors. The automotive sector began with importation of vehicles which then progressed to assembly operations and the establishment of a wide network of automotive components and parts manufacturers. (Malaysia Automotive Association, 2005)
With an average growth of 2% annually, car industry has been one of the fastest growing industries in the world. The industry has been keeps on changing and it had been become one of the most competitive markets and it has been globalize radically due to its growth. But now there are only a few major players that dominate the global market as mergers and union has been occurring regularly between them. Previously, the car industry has been dominated by the Europe and American car industry but it has been facing heavy competition from the emerging Latin America and East Asia car manufacturers in the global market recently.
Abandoning the manufacturing part for Toyota Australia is worth trying because this could avoid suffering losses and concentrate on importing and selling cars, enhancing its characteristic as importer and dealer. Staying in Australia for some time needs Toyota cope with the relation between supply and demand appropriately, and vertical integration could cut the cost by absorbing supplier into its own system, (Lee 2013) which could realizing the self-sufficiency. The structural change could increase the competitive power, helping Toyota get through the hard period and seek chance to
Last 5 years were unexpected for vehicle manufacturing companies. Increasing fuel costs and growing environmental concerns have moved the customer’s choices from fuel consuming cars to smaller and more efficient vehicles. Throughout the past 5 years, growth in the countries Brazil, Russia, India and China has supported Toyota’s production. Demand for Toyota cars increased in these countries because of their rise of incomes. And, Western automobile companies transferred their production facilities to these countries to get advantage from their markets and benefit from low-cost production. In the coming 5 years, the economies will continue to grow, and the automobile industry revenue is expected to grow about 2.5% (annual) i.e. $2.6
The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto