MGT726 - Australian Automotive Manufacturing Industry: Report Analysis

This report provides an in-depth analysis of the Australian automotive industry, examining its growth and subsequent decline. It explores the impact of factors such as the withdrawal of import tariffs, the influx of foreign imports, and the changing preferences of consumers. The report delves into the financial challenges faced by Australian car manufacturers, including the inability to achieve economies of scale and the impact of labor costs. It also investigates the role of government policies, including free trade agreements and currency valuation, in shaping the industry's fate. The research incorporates a literature review, outlining key themes and theoretical frameworks, alongside a detailed methodology that includes quantitative data analysis and surveys. The analysis of the results aims to identify the key trends and factors that influenced the industry's trajectory, offering insights into potential strategies for future growth and sustainability. The report concludes with recommendations for addressing management issues and offers a comprehensive understanding of the automotive industry's evolution in Australia.

Reason behind the rise and fall of Automobile manufacturing industry of Australia
[Shivam Desai]
[1100613]
[8/9/2017]
[Course Code – e.g. MGT726 Managerial Project]
School of Business
Faculty of Arts and Business
University of the Sunshine Coast

i
Executive Summary
This paper will draw a close comparison of the growth and downfall of Australian car
manufacturing companies. It has been found that the Australian car manufacturing companies
are shutting down its operation due to heavy losses incurred by them. The import tariffs were
withdrawn and this has made foreign imports easier and cheaper. The customers of these
companies have preferred to use these foreign cars and thus it has led to decline of the
Australian companies.
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Table of Contents
Executive
Summary………………………………………………………………………………………………
………………….…i
List of
Figures…………………………………………………………………………………………………
………………………...iii
List of
Tables…………………………………………………………………………………………………
…………………….…….iv
List of
Abbreviations………………………………………………………………………………………
…………………………..v
1.
Introductio
n…………………………………………………………………………………………………
………………….1
1.1
Purpose………………………………………………………………………………………
…………………………………..1
1.2 Background and
significance…………………………………………………………………………………
……….1
1.3 Management problem and research
question……………………………………………………………..…1
1.4 Research boundaries…………………………………………………...
………………………………………………….1
1.5 Report outline……………………………………………………………….
………………………………………………..1
2. Literature Review/Theoretical
Framework…………………………………………….…………………..2
2.1
Introduction…………………………………………………………………………………
………………………………..2
2.2 Topic
1…………………………………………………………………………………………………
………………………….3
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2.3 Topic
2…………………………………………………………………………………………………
…………………………3
2.4 Topic
3…………………………………………………………………………………………………
…………………………3
2.5
Implications…………………………………………………………………………………
…………………………………3
3.
Methodolog
y…………………………………………………………………………………………………
………………..4
3.1
Introduction…………………………………………………………………………………
………………………………..4
3.2 Sources of data and
justification…………………………………………………………………………………
…4
3.3 Details of specific
techniques……………………………………………………………………………………
…..4
4. Proposed Analysis of Results…………………………………………………………
…………………………5
References…………………………………………………………………….…...
……………………………………………………7
Appendices…………………………………………………………………….…...
…………………………………………………..8
Appendix A: TITLE…………………………………………………………………….
…...…………………………….8
List of Figures
[This is optional and I would only use if you had more than 5 figures in the report]
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List of Tables
[This is optional and I would only use if I had more than 5 Tables in the report]
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List of Abbreviations
[Optional - If appropriate, list any abbreviations used in the report.]
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1. Introduction
1.1 Purpose
The automobile industry of Australia is one of the successful and emerging industries
after the Second World War. The automotive industry of Australia plays an important role in
the economy and it is boosting innovation and investment and is also driving wide scale
industrial activity. Australia is the only industrial country which lacks vehicle assembly. The
Australian car manufacturing sector is so small that each company had to rely on each other
for their survival. The purpose of this research paper is to analyse the reasons for the sudden
collapse of the automobile industry of Australia. It will also help to find out the factors which
will be necessary for the growth and survival of the automotive industry. This paper will also
highlight the specific reasons as to why the automotive manufacturing industries had to rely
on foreign products as their inputs (O’Neill, Sohal and Teng 2016).
1.2 Background and significance
Australia is the first country who manufactured cars and it has helped them in
designing their culture. The Australian constructors played an active role in the beginning of
aircraft and car development. General Motors manufactured their cars in Australia by
importing the spare parts from UK and USA. They also provided support to the Australian
military vehicle and thus designed their armoured vehicles, aircraft engines and weaponries.
Holden Group also had built more than 10 million cars in Australia and they were trying to
produce more cars. Moreover, this industry has also provided employment to many workers
and there are many small businesses which have supports this industry. Recently, the two
leading car manufacturers in Australia i.e. Mahindra and Toyota have decided to stop their
production by the end of 2017. Toyota has stated it might start up is production if they find
improvement in the automotive industry. There are several important reasons for the downfall
of the Australian car manufacturing industry. The automotive industry cannot exploit
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economies of scale because the Australian market is very small. Moreover, to survive in such
markets there were no other options available but to use cheaper foreign production inputs
including labour. The domestic market conditions has become weaker due to lower import
tariffs and also signing of Free trade agreement. Moreover, better working conditions and
higher wages were demanded by the union and it became difficult for the automotive
companies to fulfil their demands of the labourers. Although Ford and Holden has announced
that it will retain its R&D activities in Australia but there is a big doubt that these companies
will move their R&D activities closer to their manufacturing plants. With the downfall of car
manufacturing industries, it is vital to spend more amounts in R&D activities so that it does
not affect the other sectors of the economy (Ulengin et al. 2014).
1.3 Research question and objectives
Research Question
What are the key factors and trends which affected the automotive
industry of Australia which was one of the booming industry?
Research Objectives
 To identify the trends of customers which drives the business for
Australian Automotive industry?
 To investigate the reason behind the decline of such huge industry
which affected the economy and unemployment in Australia?
 To identify and explore a business strategy for manufacturing
industry in Australia which can lead to economic sustainability.
 To identify and develop business strategies using journal’s which
may give success in manufacturing Automotive Industry of
Australia.
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1.4 Research boundaries
This research paper will be restricted only on the automotive industry of Australia. It
will draw a close comparison of the leading car manufacturers of Australia i.e. Toyota,
Holden, Iveco, Paccar Inc. and many more.
1.5 Report outline
This report will start with an introduction and then it will review the relevant existing
literature (Section 2). It will also outline the methodology that is used to gather data and
address the research objectives (Section 3). Section 4 will highlight the results while the final
Section 5 will draw conclusions and makes recommendation to address the management issue
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2. Literature Review/Theoretical Framework
2.1 Introduction
This section will review literature on the downfall and growth of automotive car
manufacturing industry in Australia. Section 2.2 will highlight the implications from the
literature impacting on this study.
2.2 Topic 1
Darux (2014) has stated that financial crisis is the main reason for the downfall of the
Australian manufacturing companies. These companies had to outsource a majority of their
processes to other companies and thus ensure that there is no effect on the production
facilities. Jasinski, Meredith and Kirwan (2015) have highlighted the processes of
outsourcing rather than giving more preference to in-sourcing activities. It has been found
that the process of in-sourcing in times of lower sales volume has been attracting the
employees and the manufacturers for full utilisation of their existing capacity. Stanford
(2017) has highlighted that the automobile companies has faced a pessimistic outlook in
domestic sales, costs and export opportunities. Stanford has drawn a close comparison
between the automotive industry of Australia and Canada. Günther, Kannegiesser and
Autenrieb(2015) has stated that the production of automotive components in Australia is
larger than Canada and it has also been developing in R&D activities. The continuous
influence of the fiscal incentives in the previous years has made the R&D activities of
Australia very strong. Moreover, trade liberalization has eliminated the rationale to
manufacture vehicles in Australia. The overvaluation of the Australian currency which is
combined with political and inconsistent approach has led to the demise of Australian
automotive industry. The incentive program has also tried to foster innovation in Australia.
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2.2 Topic 2
According to Hua, Oliphant and Hu (2016), the manufacturing industry is posed with
several of recovery and it has created jobs for millions of workers. There has been certain
economic indicators that are helping the Australian manufacturing industry to recover its real
output which has fallen to a very low level. Yan and Fang (2015) has opined that the profit
margins of the Australian manufacturing industry are also falling and the Government is
trying to take several steps to protect these industry. According to Chen, Feldmann and Tang
(2015), there were some external causes for the decline of the manufacturing industry and
this industry is trying to adopt the western style. Ong (2016) has opined that tax evasion by
the tax payers is one of the main reasons for the death of the manufacturing industry of
Australia.
2.3 Topic 3
Galliers and Leidner (2014) has highlighted that the role of planning, operations
assessment and budgeting is linked directly with the strategic plan of an organisation.
According to Gamble and Thompson (2014), it is important to assess and evaluate the
effectiveness of a strategic map and the development of balance scorecard as an important
management tool. Wheelen and Hunger (2017) has stated that strategic management has
helped in the long term development of the organisation. Peppard and Ward (2016) has
opined that strategic management will help in the revitalization and also to bring changes for
the improvement of business plan.
.
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2.4 Implications
There are certain gaps in the above mentioned literature. Darux has focused only on
the financial condition of Australia as the main reason for the downfall of the automotive
industry. He has not given more importance on in-sourcing and its advantages which is a
crucial factor in this era of globalisation. There are certain other factors which needs due
consideration in this case. The downfall of the automotive industry has also affected the other
industries on a large scale. The research work of Stanford also highlighted a close
comparison of the automotive industry of Australia and Canada but it has not specifically
pointed out the reasons of downfall of the companies in Australia.
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3. Methodology
3.1 Introduction
The methodology of a research will discuss the underlying methods and process
which will be followed in meeting the research objectives. This section describes the
design adopted by this study to achieve the aims and process objectives stated in Section
1.3. Section 3.2 discusses the methodology (or sources of data) to be used in the study.
3.2 Sources of data and justification
In this research, quantitative data will be used to identify the growth and downfall of
the car manufacturing companies of Australia. The choice if quantitative data will help to
find how the downfall of the various car manufacturing companies will affect the other
leading sectors of the economy. Data will be collected from the annual reports of Ford,
Holden and Toyota. Moreover, some data will also be collected from the annual reports of the
companies which provide different kinds of inputs to these leading companies (Wright and
Lansbury 2014). Data will be collected from the primary sources also. Surveys will be carried
out for the customers of these leading companies. The customers of the leading automobile
companies will be asked to provide feedbacks and thus the evaluations will be carried out on
this basis. Data will also be collected from people of both the genders who are in the age
group of 25-40 years. This data will be collected through random sampling and thus it will
help to keep the sample group as homogenised as possible. It will also help to prevent
biasness of the research output. Non probability sampling method will be used to reduce the
biasness in the project. Moreover, descriptive research design will be used to get rigid and
flexible results.
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3.3 Details of specific techniques
Data will be analysed from the annual reports by using SPSS and other statistical techniques
so that it helps the researcher to monitor the downfall of the car manufacturing company. The reports
of the leading companies will be analysed and studied and descriptive methods will also be used for
the analysis. Random sampling method will be followed when data needs to be collected from the
customers so as to avoid biasness. The customers will not be chosen based on the volume of sales or
profitability of the companies. These will help the researcher to conduct the research
successfully and there will be transparency in research work. The correlation conducted through
Pearson correlation and regression will also help in meeting the research objectives (Bryman and Bell
2015.).
3.4 Analysis of Results
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Activities 1st Week 2nd-6th Week 7th- 11th Week 12th -18th
Week
19th-22nd
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23rd -27th
Week 28th-31st Week
Selectio
n of the
topic
Literatur
e review
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Data
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It is important to identify the customer base who will respond and provide accurate
data in this research work. It has been found that the customers will prefer to buy cars from
other countries because the local companies in Australia are charging huge amount of taxes
and costs from the customers and thus they prefer to buy cars from other countries. The
companies are also incurring losses because due to import tariffs and free trade agreements
with other countries (Agana, Reeve and Orbell 2013). Several data were also collected from
the annual reports of Holden, Ford and other leading companies who have decided to shut
down their manufacturing plants in Australia. The reports of these companies have helped to
make a comparison between these companies and also analyse the losses in the previous
years (Marks 2013). The statistical report of the Australia will also give an idea of the
number of unemployed people who have lost their jobs due to the downfall in this sector.
Surveys and interviews will also be carried for the unemployed people who have lost their
job. The business strategies which will be followed by these manufacturing companies will
also be analysed and highlighted in this paper (Bell et al. 2014).
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4. Conclusions and Recommendations
Thus, it can be said that the downfall of the Australian car manufacturing
industry will incur a huge loss for economy as a whole. It will affect the R&D
activities of the other sectors and also affect the automotive industry. Australia
is one of the most competitive economy and it has tried to keep the prices low
despite all other factors. But due to avoidance of a large sum of taxes,
Government of Australia has imposed a huge sum of penalty and these
companies have decided to shut down their plants. Moreover, the foreign cars
became cheaper and this attracted the people to purchase them and thus it has
led to the downfall of the Australian car manufacturing companies. Due to
cheaper imports, it has become easier for the Australian car buyers to purchase
these cars. Moreover, the economy of Australia is surrounded by various
countries where labour is cheap and the costs of materials are also very low. It
can be suggested that the import tariffs in Australia must be raised so that the
local car manufacturing companies can run their business successfully. The
import tariffs on these manufacturing companies which were resumed due to
certain reasons must again start its operation. Moreover, better working conditions
and higher wages were demanded by the union and it became difficult for the automotive
companies to fulfil their demands of the labourers. The collapse of this automotive industry
also affected research and development. Thus, it is important to for the Government to find
out certain steps so that it can protect these companies.
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References
Agana, B.A., Reeve, D. and Orbell, J.D., 2013. An approach to industrial water
conservation–a case study involving two large manufacturing companies based in
Australia. Journal of environmental management, 114, pp.445-460.
Bell, J.M., Frater, B., Butterfield, L., Cunningham, S.D., Dodgson, M., Fox, K.,
Spurling, T. and Webster, E., 2014. Securing Australia's future: The role of science,
research and technology in lifting Australian productivity.
Bryman, A. and Bell, E., 2015. Business research methods. New York: Oxford
University Press.
Chen, L., Feldmann, A. and Tang, O., 2015. The relationship between disclosures of
corporate social performance and financial performance: Evidences from GRI reports in
manufacturing industry. International Journal of Production Economics, 170, pp.445-
456.
Drauz, R., 2014. Re-insourcing as a manufacturing-strategic option during a crisis—
Cases from the automobile industry. Journal of Business Research, 67(3), pp.346-353.
Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management:
challenges and strategies in managing information systems. Routledge.
Gamble, J.E. and Thompson Jr, A.A., 2014. Essentials of strategic management. Irwin
Mcgraw-Hill.
Günther, H.O., Kannegiesser, M. and Autenrieb, N., 2015. The role of electric vehicles
for supply chain sustainability in the automotive industry. Journal of Cleaner
Production, 90, pp.220-233.
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Hua, Y., Oliphant, M. and Hu, E.J., 2016. Development of renewable energy in
Australia and China: A comparison of policies and status. Renewable Energy, 85,
pp.1044-1051.
Jasinski, D., Meredith, J. and Kirwan, K., 2015. A comprehensive review of full cost
accounting methods and their applicability to the automotive industry. Journal of
cleaner production, 108, pp.1123-1139.
Marks, A., 2013. The globalization of the Australian textile, clothing, footwear and
motor vehicle industries: results in line with other western market economies. Global
Economy Journal, 13(1), pp.129-150.
O’Neill, P., Sohal, A. and Teng, C.W., 2016. Quality management approaches and their
impact on firms׳ financial performance–An Australian study. International Journal of
Production Economics, 171, pp.381-393.
Ong, S.H., 2016. Measuring the quality and identifying influencing factors of
sustainability reporting: Evidence from the resources industry in Australia.
Peppard, J. and Ward, J., 2016. The strategic management of information systems:
Building a digital strategy. John Wiley & Sons.
Stanford, J., 2017. When an Auto Industry Disappears: Australia's Experience and
Lessons for Canada. Canadian Public Policy, 43(S1), pp.S57-S74.
Ülengin, F., Önsel, Ş., Aktas, E., Kabak, Ö. and Özaydın, Ö., 2014. A decision support
methodology to enhance the competitiveness of the Turkish automotive
industry. European Journal of Operational Research, 234(3), pp.789-801.
Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy.
pearson.
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Wright, C.F. and Lansbury, R.D., 2014. Trade unions and economic reform in Australia,
1983–2013. The Singapore Economic Review, 59(04), p.1450033.
Yan, X. and Fang, Y.P., 2015. CO 2 emissions and mitigation potential of the Chinese
manufacturing industry. Journal of Cleaner Production, 103, pp.759-773.
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Appendices
Appendix A: TITLE
[This section is optional and should only be used for supplementary information that
you want to include to support your report]
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