Industryweek 6120 Toyota

Toyota Exiting Drives Death of the Australian Car Industry

Feb. 10, 2014
"The magnitude of this decision in the community cannot be underestimated. We are looking at a potential recession all along the southeastern seaboard," said Australian union secretary Dave Smith.

SYDNEY - Toyota (IW 1000/8) on Monday said it will stop making cars in Australia in less than four years, bringing the country's auto industry shuddering to a halt, despite appeals by Prime Minister Tony Abbott.

The Japanese auto giant said production of vehicles and engines would finish at the end of 2017, throwing into doubt 3,900 jobs at its Altona plant in a Melbourne suburb and another 150 jobs at a separate design center.

The move will close the book on Australia's 66-year-old auto sector, with some 50,000 jobs across the sector in componentry and other areas expected to go.

Labor opposition leader Bill Shorten described it as the "death of the Australian car industry."

Announcing the news, Toyota blamed a combination of factors including the strength of the Australian dollar and an increasingly tough market.

The company's future in Australia had been in serious doubt since General Motors (IW 500/5) said in December that its Holden offshoot, which employs about 2,900 people, would cease local manufacturing by 2017, after more than six decades.

Abbott had spoken directly with Toyota Australia president Max Yasuda following Holden's closure to appeal to him to continue making cars and prevent the collapse of the country's car industry.

With Mitsubishi (IW 1000/219) closing its Adelaide plant five years ago and Ford (IW 500/8) halting vehicle production at its unprofitable Australian operations in 2016 -- at a cost of 1,200 jobs -- Toyota was until Monday the only company with a commitment to making cars in the country.

The Australian Manufacturing Workers' Union said the move could trigger a regional recession in Australia, where the economy is struggling with a bumpy transition away from a decade of reliance on mining.

"The magnitude of this decision in the community cannot be underestimated. We are looking at a potential recession all along the southeastern seaboard," said union secretary Dave Smith.

'Simply Heartbreaking'

Yasuda told a press conference the strong Australian dollar, high cost of production, incoming free trade agreements and fragmented automotive markets had all contributed to a decision he characterized as "extremely difficult."

"In fact, it is one of the saddest days in Toyota's history."

Speaking through a translator to Australian reporters, Toyota Motor Corporation president and CEO Akio Toyoda said it was "simply heartbreaking" to shutter local operations that first began in 1963.

"I can assure you that Toyota will work hard to continue our contribution to Australia," Toyoda said.

"We are grateful for the support that the government has provided to us," he added.

Separately, Abbott said it was a dark day for many.

"Nothing we say or do can limit the devastation that so many people will feel at this point," he said.

"The important thing to remember is, while some businesses close, other businesses open, while some jobs end, other jobs start. There will be better days in the future."

He said that, as prime minister, it was his duty to try to ensure the environment was right for industry and emphasized the need for low taxes and light-touch regulation.

"Because under those circumstances you maximise the conditions for new businesses to start and for existing businesses to expand."

Toyota started manufacturing cars in Australia in the early sixties and still produces its top-selling Camry sedan and other models in the country.

But it immediately announced a review of its own position in Australia following GM's decision to pull out.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota Australia said at the time.

"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia."

Holden had cited a "perfect storm of negative influences" for its decision to exit Australia including "the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world."

At the time Abbott refused to prop up Toyota, describing such a move as "corporate welfare."

Amy Coopes, AFP

Copyright Agence France-Presse, 2014

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