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 Oceania, Automotive
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

Polycarbonate training device help swimmers go for the gold

August 26, 2014 12:17 pm ET

A strange-looking Australian-designed polycarbonate swimming training device has helped an Aussie swimmer win gold at this year's Commonwealth Games...    More

Image

New contract for JCI workers heads off potential strike in Ontario

August 25, 2014 3:17 pm ET

About 300 unionized workers at a Johnson Controls Inc. interiors plant in Ontario ratified a new three-year contract, heading off a potential strike...    More

Image

A123 Systems re-energizes its future

August 25, 2014 10:40 am ET

Battery maker A123 Systems LLC has new leadership and a new strategy expected to help the company generate just above a net zero cash flow on revenue ...    More

Image

Automakers look under the hood for the next lightweighting opportunities

August 20, 2014 1:06 pm ET

The automotive industry's current favorite target for lightweighting efforts is the powertrain, according to a recent survey.    More

Image

Cooper-Standard JV to focus on Asia

August 20, 2014 10:17 am ET

Cooper Standard Automotive Inc. is forming Cooper Standard Inoac Pte. Ltd. — a joint venture with Inoac Corp. of Japan — to expand the rea...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

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

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