Impact of Automotive Industry Report

1The impact of the automotive industry closure
Running head: THE IMPACT OF THE AUTOMOTIVE INDUSTRY CLOSURE
The impact of the automotive industry closure in Australia
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2The impact of the automotive industry closure
Abstract
This report discusses the risks associated with the decision of the three major
automotive manufacturers to withdraw from Australia. It analyses the reasons behind
the decision, the impact on the economy and the workers, the main causes, and the
governmental policies that should be taken to keep the automotive industry operating
in Australia.

3The impact of the automotive industry closure
Table of contents
Introduction....................................................................................................................4
History and background.................................................................................................5
Research objectives........................................................................................................6
Research questions.........................................................................................................6
The literature review......................................................................................................7
Australia and the global automotive manufacturing industry....................................7
The automotive manufacturing industry’s role in the Australian economy...............7
Domestic market share losses....................................................................................8
The reasons behind the withdrawal of car manufacturing companies like Ford,
Holden, Toyota from Australia.................................................................................10
Automotive closure impact on the workers..............................................................12
Causes of the three major automotive companies withdrawal from Australia........13
The recommended governmental policies to save the automotive industry in.........15
Conclusion....................................................................................................................16
References....................................................................................................................18

4The impact of the automotive industry closure
Introduction
The Australian automotive industry is witnessing major changes represented
in the closure of the three major vehicle manufacturers, Ford, Holden, and Toyota by
the end of 2017. Australia is a well-known country as a leader in car manufacturing
since 1890's. The global changing conditions represented in the trade liberalization
forced global vehicles manufactures to withdraw from high cost countries to low cost
countries including Australia. According to the estimates of the Australian
Automotive Aftermarket Association (AAAA) as cited in Neale (2017), about 25
thousand workers in the automotive supply chain business will lose their jobs and
about 50% of the automotive component industry firms will close, and the other firms
could adapt to change their business into other markets.
However, the optimistic scenario suggests that the automotive industry would
adapt through involvement in wholesale and retail of imported parts, and vehicles.
The incentives offered by the Australian government and the low interest rates
indicate that the Australian automotive industry shall witness a positive growth in the
mid of 2018 (Motor trade association in Australia, 2016). The Australian
economy is stable and the social protection scheme is strong which illustrate the
optimistic scenario.
The following sections address the Australian automotive industry
background, the research objectives, the research questions, the reasons behind the
withdrawal of the major three automotive companies from the domestic market, the
impact of their withdrawal on the Australian economy and the industry workforce, the
main causes of the closure decision and the actions that could be made by the
government to manage the risk of the closure decision.