Threats by Australian automakers to stop making cars in Australia are being taken seriously by Australia's plastics industry, which fears a massive reduction in downstream business.
Automakers are angry that the federal government may adopt recommendations to reduce tariff protection. Currently tariffs on cars imported into Australia are 22.5 percent.
But a draft report by Australia's Productivity Commission in Melbourne has recommended auto tariffs be cut to 15 percent by 2000 and 5 percent by 2004, to make the Australian industry more competitive internationally.
The independent, government-funded commission is due to submit a final report by June, though the government is not bound by its recommendations.
Australia's four major automakers — Toyota Motor Corp. Australia Ltd., Ford Motor Co. of Australia Ltd, General Motors-Holden's Automotive Ltd., all of Melbourne; and Mitsubishi Australia Ltd. of Sydney — have threatened to move their Australian operations offshore, or scale them back significantly, if tariff cuts are implemented.
The threats have worried the local plastics industry, which supplies more than 88 million pounds of product to automakers annually, said Robert Bryce, commercial manager of Australia's Plastics & Chemicals Industries Association.
``The use of plastics in the automotive industry has increased markedly and any scaling back of production would have a major impact,'' he said.
If tariffs shrink, automakers are likely to move to Asian countries that offer high tariff barriers and attractive manufacturing incentives, Bryce said.
``Australia has led the way in tariff reductions and we want no further reductions until our trading partners get down to our levels,'' he said.
Lindsay Hogg, who heads plastic compounder and auto part supplier Poly Pacific Pty. Ltd. of Melbourne, agrees that the carmakers' threats are serious.
``They operate in a global economy and are quite mobile [in relation to] where they set up.''
``If we lose the Australian car manufacturing base we will also lose the infrastructure, research and investment for plastics suppliers,'' he said. ``The industry would be dead in the water.''