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HI5003 - Economics For Business Assignment

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Holmes Colleges

   

HI5003 Economics for Business (HI5003)

   

Added on  2020-03-02

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The objective of the current report is to highlight the woes of the car manufacturing industry along with the role of government and possible options for the industry in wake of economic theory.

HI5003 - Economics For Business Assignment

   

Holmes Colleges

   

HI5003 Economics for Business (HI5003)

   Added on 2020-03-02

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ECONOMICS FORBUSINESSCosts of ProductionSTUDENT ID:[Pick the date]
HI5003 -  Economics For Business Assignment_1
Economics For BusinessManufacturing costs in car manufacturing industry in AustraliaIntroductionOne of the critical manufacturing industries based in Australia is the car manufacturing whichis currently reeling under pressure as the government announced way back in 2014-2015about the decision to stop all aid being extended to the industry by 2017. This announcementhas negative impact not only on the car manufacturing industry but the manufacturing sectoron the whole in Australia as the economy is dominated by tertiary and primary sectors, Thewithdrawal of support by the government had led to withdrawal of General Motors and Fordfrom their Australia based manufacturing facilities. The key issue with the car manufacturingindustry is in the form of high labour cost which makes it difficult for Australian carmanufacturers to compete with other global car manufacturers. As a result, the imported carsare emerging as lucrative option to Australian customers and this trend has accelerated in therecent times as the Australian currency has appreciated making imports cheaper (Jericho,2014). In this background, the objective of the current report is to highlight the woes of thecar manufacturing industry along with role of government and possible options for theindustry in wake of economic theory.DiscussionWith regards to manufacturing industry cost is significant so that competitive edge can bemaintained against other manufacturers. One of the key costs with regards to carmanufacturing is labour cost which despite automation still remains significant. In Australiaon account of limited supply of labour, availability of other avenues and minimum wages, thelabour costs tends to be significantly higher in comparison with the low cost manufacturinghubs based in South East Asia particularly India and China. These countries have hugesupply of skilled and semi-skilled manpower who are willing to work for a fraction of wagesprevalent in Australia. In this regards, the Australian car manufacturers tend to lag which is a matter of graveconcern. In the last four to five decades, this situation has not dramatically altered and theindustry along with the government has not taken innovative measures to reform the industryand make it self-sustaining. Instead, the government policy has been content with followingthe managed decline policy where the government has continuous provided state support toensure that the industry remains viable and has progressed aimed to lower the state support
HI5003 -  Economics For Business Assignment_2
Economics For Businesswithout actually making attempts to make the industry sustainable (Conley, 2014). Eventhough the Australian economy may seem to be dominated by services and mining, butmanufacturing also has immense utility to the economy not only in terms of GDP but alsocreation of jobs. The manufacturing industry contribution to the economy of Australia isreflected from the following table (Jericho, 2014).Further, the contribution of the car manufacturing industry and allied firms to the overallemployment in manufacturing sector is captured by the following graph which reflects thepotential impact of closure of car manufacturing facilities in Australia (Jericho, 2014).
HI5003 -  Economics For Business Assignment_3

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