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

Visteon in talks to sell its stake in Halla Visteon Climate Control JV

November 26, 2014 9:07 am ET

Visteon Corp. confirmed this morning that it is in discussions with a private equity firm to sell its stake in South Korean joint venture Halla...    More

Image

Onex buying packaging group SIG Combibloc

November 24, 2014 9:05 am ET

ex Corp. will buy SIG Combibloc Group, the Switzerland-based manufacturer of aseptic carton packaging and plastics closures from New Zealand's Rank...    More

Image

Canada's Papp Plastics is eyeing big opportunities with JV in Mexico

November 24, 2014 4:11 pm ET

Canadian injection molder and turnkey solution provider Papp Plastics & Distributing Ltd. will open an $11 million to $12 million joint venture...    More

Image

Indiana injection molder PRD expands

November 24, 2014 1:56 pm ET

Automotive supplier PRD Inc. is expanding its manufacturing facility in Springville, Ind.    More

Image

Can plastics return to the driver's seat?

November 24, 2014 6:00 am ET

When the June 1989 issue of Popular Science introduced three cutting-edge automotive technologies, including the latest Corvette and a powerful engine...    More

Market Reports

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

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

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events