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withdrawn and this has made foreign imports easier and cheaper.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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