Australian auto suppliers prepare for the end, look to diversify

By Kate Tilley
Correspondent

Published: February 25, 2014 2:40 pm ET
Updated: February 25, 2014 2:45 pm ET

Image By: General Motors Co. GM's Holden unit will stop making cars in Australia in 2017. So will Toyota. Ford will halt production in 2016.

Related to this story

Topics Automotive, Oceania
Companies & Associations Ford Motor Co., General Motors Co., Toyota Motor Corp.

MELBOURNE, AUSTRALIA — After 2017, the auto industry will come to a halt in Australia.

Toyota Australia's announcement that it will stop manufacturing in Australia by 2017 is the death knell for all mainstream auto manufacturing in the country, resulting in widespread job losses and potential closures for plastic parts manufacturers.

Toyota's decision follows a similar announcement from General-Motors Holden Ltd. last December — the Australian arm of Detroit-based General Motors Co. — and from Dearborn, Mich.-based Ford Motor Co.'s Australian unit in June.

All three manufacturers are headquartered in Melbourne.

Toyota Australia, a subsidiary of Toyota Motor Corp. in Toyota City, Japan, said the decision is due to "the unfavorable Australian dollar that makes exports unviable; high costs of manufacturing; and low economies of scale for vehicle production and [the domestic] supplier base."

Melbourne-based Federation of Automotive Products Manufacturers (FAPM) CEO Richard Reilly told Plastics News the latest announcement will have an "enormous impact" on the automotive supply chain.

"Companies are trying to diversify out of auto manufacturing but not all of them can. It will be a real shakeout," he said. "All FAPM's members (about 12 of which are plastics companies) will be affected. The auto manufacturing industry in Australia is losing its only three domestic customers. This will result in real changes for businesses in their employment and sustainability."

Reilly said there are 30,000 to 33,000 jobs in the automotive supply chain, but it is too early to tell how many will be lost. He said some but not all workers can be retrained and reemployed.

FAPM is leading a trade mission to Malaysia and Indonesia as part of its effort to help suppliers find new business.

Melbourne-based Plastics and Chemicals Industries Association (PACIA) CEO Samantha Read told Plastics News the vehicle manufacturers' announcements are "very disappointing, with many implications through a range of supply chains and communities.

"Some companies will need to significantly shift, especially those more heavily weighted in auto manufacturing. Several have already diversified their portfolios and have special techniques in other industries. There is enough talent in Australia to be able to innovate, but the question is whether we will have the markets."

Read said the value of Australian auto manufacturing companies was $A2.4 billion ($2.1 billion U.S.) in 2012, down from $A5 billion in 2004.

"That is a significant adjustment in the Australian supply chain, and plastics make up about 20 percent to 25 percent of it."

Whether companies can diversify depends on their individual business models on how much they now rely on auto manufacturing.

"I'm certain companies have the capacity to innovate and look at ways to diversify. It seems a short time frame, but they may be able to see fundamental changes. The announcements came sooner than expected, but there have already been significant changes in the component sector between 2004 and 2012. If the market allows, companies will work out how to get there."


Comments

Australian auto suppliers prepare for the end, look to diversify

By Kate Tilley
Correspondent

Published: February 25, 2014 2:40 pm ET
Updated: February 25, 2014 2:45 pm ET

Post Your Comments


Back to story


More stories

Image

Metals and plastics company NN to buy Autocam in $300 million deal

July 25, 2014 10:07 am ET

A Tennessee metals and plastics company said it has agreed to acquire auto parts supplier Autocam Corp. in a deal valued at $300 million.    More

Image

Chinese auto suppliers growing in US

July 24, 2014 4:17 pm ET

Two China-based automotive suppliers are expanding in the U.S., according to information released by the Michigan Economic Development Corp.    More

OSHA probes alleged asthma link to Lear's Selma, Ala., plant

July 23, 2014 11:58 am ET

U.S. foam manufacturer Renosol Seating LLC is being investigated following allegations its workers are at risk of asthma from TDI exposure at its...    More

Image

Illinois injection molder expands

July 21, 2014 1:23 pm ET

Automotive supplier All-Rite Industries Inc. has added two new injection molding machines to its operations.    More

Image

More head-up displays going into cars, with improved information, graphics

July 21, 2014 10:48 am ET

Head-up displays with "augmented reality," the technology that employs much of the windshield as a display area for data and images, is poised to sign...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events