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The Production Of Large Vehicles In Australia

2296 words - 10 pages

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 ...view middle of the document...

Furthermore, Japan emphasis strongly on exporting improvement, and performance in head-to-head competition (Gamble & Thompson, 1995, as cited in Kamery, 2004). On the other hand, the Australian industry have been facing a strong and rising Australian dollar and rising input costs, particularly for raw materials which led to Australian vehicles becoming relatively more costly as compared to their import competition. Thus, it reduces sales and these conditions cause the industry to be severely affected. Even if the industry drives to improve, it would resort to a huge amount of investment in research and development (R&D) and it takes real time. As Australia have been a significant international agricultural exporter of grain crops, such as wheat (third largest exporter) and livestock products (second largest exporter of sheep and beef meat) as well as, mining which comprises of iron-ore and gold, Australia should focus on maintaining the comparative advantage of those in hand and think of initiatives to further sustain and improve (Ahmadi-Esfahani & Sanderson, 2011).
Porter’s theory of national competitive advantage is based upon an analysis of the attributes of the national environment which identifies four sets of variables that provide the underlying conditions for which influence firms’ ability to establish and sustain competitive advantage within national markets (Grant, 1991). Those variables are factor endowments, demand conditions, related and supporting industries, and firm strategy, structure and rivalry. He also proposed additional two variables, namely chance and government, which support and complement the system of national competitiveness but do not produce lasting competitive advantages (Smit, 2010). For factor endowments, Porter exemplifies that factor conditions are further subdivided into basic and advanced factors that can be either general or specialised. As regards to the automobile industry, advanced factors are the key in supporting as to whether there is competitive advantage, such as skilled labour and research. Due to competitive pressures, combined with the introduction of new technologies and production processes, it requires the renewal and upgrading of workforce skills (Review of Australia’s, 2008). It is revealed that 38.1 percent of the Australian automotive workforce are aged 45 years or above and this would exacerbate difficulties in refreshing skills and attracting new staffs as the industry itself is facing great turmoil (Review of Australia’s 2008). Thus, it shows that the industry faces skills shortages and retraining and redeploy would be required. However, these would take real time and require high expenditure on training costs. Moreover, in terms of research, the Cooperative Research Centre for Advanced Automotive Technology (AutoCRC) has been set up to deliver improved manufacturing and vehicle technology for Australia’s benefits and strategic industry-led research collaborations (Review of...

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