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Car Industry Economy Essay

781 words - 3 pages

Should the Australian Government provide money to car manufacturers to prevent them from moving their operations overseas? Discuss, drawing on contemporary debates about this issue in the news media.IntroductionCar manufacturing in Australia was one of the strongest sector in the Australian economy. Within the past few months and ongoing weeks, there are several news being published that the Australian car manufacturing sector has become so small that that each car company is relying on the survival of the other.In relation to the debates and media news, this essay demonstrates, as to whether the Government should provide funds to car manufactures to prevent them operating overseas.The news has been all over the place that the three main car manufacturers, Toyota, Holden and Ford are expected to shut down their operations in Australia in the coming Years. The local content of the Australian made cars is in decline. According to figures supplied by the car makers, 30% of the parts to make Holden Cruise was sourced locally and 50% was Commodore. To survive beyond current models, car manufactures were going to be forced to rely more on foreign parts to keep the costs down.Due to low sales and low cost sales, the three manufactures are shutting down to recover from the massive financial losses and start making a profit. The data illustrates that the three factories have lost more than 1.5 billion dollars on their local manufacturing operations over the past decade, despite receiving more than twice that in the taxpayer over the same period.Therefore, who's to blame for this deteriorating times for the car manufactures?The government is the major association with the car manufacturing industry. The creation of low import tariffs and signed Free Trade Agreements gave cheap foreign cars upper hand. Nevertheless, the unions demanded better wages and conditions for their workers, which the car manufacturing industry is unable to provide. All of these factors share at least some responsibility for the industry's demise. Successive governments from both sides of politics created the economics environment that Australia now finds itself: a nation with high wages, low import tariffs and a strong currency.These factors make it impossible to profitability export cars, especially when Australia is surrounded by Asia Pacific countries that don't need Australian made vehicles because they are making their own with a lower...

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