It is believed that the Australian car manufacturing industry has come to an end. The following essay will argue that the government should not provide finances to save the automotive manufacturing industry. There is a continuous debate between the shareholders of the automotive businesses and the Australian citizens on what should be done with this issue. In order to determine the strength of the argument, the following essay will completely analyze relevant information; examine the affects of moving production to overseas, why production is being moved? Take a look at who is to blame and what the media says should be done?
The car manufacturing industry is a large ...view middle of the document...
There are several contributing factors towards the companies’ decision however Toyota said in a statement:
“The decision was not based on any single factor. The market and economic factors contributing to the decision include the unfavourable Australian dollar that makes exports unviable, high costs of manufacturing and low economies of scale for our vehicle production and local supplier base” (Toyota, 2013).
Thus Australia can’t compete with the larger automotive manufacturing countries such as Germany or Japan, these countries have contributing factors to maximise the businesses profit margin. Factors such as lower taxes, lower running costs and most importantly lower wages. A recent study by ford Australia indicates, that an Australian manufactured car (unit) is four times more expensive then the production of a unit in Asia, and is twice the expense of a European produced car. (Coorey, 2013)
Who is to blame?
From the information that was gathered from the media, mostly if not all of newspapers blame the abbot government who decided to cut the $400 million co-investment payments to 200 million a year (Cassin 2013). However it is believed that the main factor in this is the production costs in Australia vs the rest of the world. It is too expensive to manufacture cars in our modern day economy; Australia’s tax costs, high running costs and even high wages make it extremely hard for the company to receive a satisfactory profit. Along with that as stated above only 10% of Australians were purchasing Australian made cars.
What can be done to save the industry?
In recent newspaper write up it is believed that, if the government donates millions of dollars in assistance, that will save the car manufacturing industry and that the industry will be able to go ahead in this country. However the statistics of ford show us that Australia isn’t a country that will succeed in manufacturing cars.
Ford was the first motor company to announce the end of Australian made cars. Ford recorded a tax loss of almost $600 million dollar within five years, the last year being 2012 in which they suffered a tax loss of $141 million dollars. (Coorey 2013) Ford motors told reporters that one car built in Australia would total the costs of four cars in Asia and two cars in Europe. This for ford or any other car company cannot be beneficial to revenue. Thus the result of the shut down of car manufacturing plants in Australia.
In conclusion while there are still those who argue that the government should save the car manufacturing industry. It is evident in the research presented, that the car manufacturing industry in Australia cannot and will not be able to compete...