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NEWS
Submissions closed for automotive industry review
Productivity Commission receives over 70 submissions concerning the fate of the local industryFord wants more support for product development, Holden is concerned about labour costs, and Toyota is vehemently opposed to free trade agreements in their current form.
That's a basic summary of the submissions from the three manufacturers to the Productivity Commission for a review of the local automotive industry.
Over 70 submissions have been received by the Commission, from a host of interested parties, including the three remaining local manufacturers. Others to put pen to paper (or digits to keyboard) were private citizens, industry consultants, think tanks, parts suppliers, industry bodies and associations, at least one trade union and a couple of state governments.
Vested interests are as broad and varied as cutting CO2 emissions, bringing down the prices of imported cars, saving jobs and retaining advanced engineering and manufacturing expertise.
Toyota has gone in hard, with a succinct section entitled 'Correcting the Record'. In four bullet points it lays bare the company's views:
- A five per cent tariff does not allow local manufacturers more margin in its pricing, contrary to the Productivity Commission's previous assertion,
- Car makers DO build cars Australians want to buy, with Cruze, Commodore and Camry all appearing in the top 10 cars sold this year,
- The Luxury Car Tax does NOT protect local manufacturers,
- Government support for the manufacturing industry is "modest" and "reasonable", when measured against other industries in Australia, and auto manufacturing in other countries.
Toyota also takes a broad swipe at free trade agreements, under the section of the submission entitled 'Market factors impacting the industry'. While the company observes that Australia is a small market for domestic sales, and the recent strength of the Australian dollar places its products at a disadvantage – both here and abroad – it's 'inequitable trade agreements' that seem to be rubbing salt into the wound for Toyota, which remains Australia's largest exporter of CBU (Completely Built Up) cars.
Calling for work by the federal government to match the USA's bi-lateral trade agreements throughout the Middle East, Toyota also highlighted an exception made in the FTA (free trade agreement) with Vietnam, and a punishing excise tax in Thailand that favoured (mostly locally-built) pick-ups ahead of imported passenger cars.
With more restrictive scope for export than Toyota, Holden is focused more closely on lowering production costs in Australia. In its submission the GM brand defended previous industry assistance from federal and state governments, and echoed Toyota's view that the manufacturers are building cars Australians want to buy.
In an enlightening chart, Holden has illustrated the way combined local production for domestic sales and export has dropped away significantly as the number of new imported models has expanded between 2001 and 2012. Over that same period, imported passenger vehicle tariffs were whittled down from 15 to five per cent, and the Australian dollar effectively doubled in value against the greenback. The final straw is the number of active FTAs arranged by the federal government over that 11-year timeframe, rising from two in 2001 to eight by 2012.
Of most immediate concern to Holden is the cost of building a car in Australia. The company claims that for each car, it is paying $250 more to transport its vehicles abroad, $1500 more to parts suppliers, and $2000 more to assembly plant workers. Holden has arrived at the conclusion that labour to build a Commodore or Cruze is twice the cost in Europe and four-times the cost in Asia.
Since 1993, Holden has reduced the hours spent building a car from 14 to 8.8 – a gain of 37 per cent.
This year it has entered into a new EBA (Enterprise Bargaining Agreement) with its workers to reduce wages by three per cent and cap wages at that level until November 2016. Workers agreed to deliver 16 minutes of extra productivity per day, for each person, and the workers have also accepted Holden's need for flexibility on such matters as planned shutdown to suit volatile customer demand. Holden is also dispensing with income protection insurance for workers, and reducing the overtime allowance on Sundays from 2.5 to two per cent. Other concessions were made by the workers in the EBA.
Ford noted in its submission to the Productivity Commission that "the automotive industry is one of the top six industry sectors for R&D spending." The blue oval brand wants the government to direct relatively more funding to product development, rather than manufacturing alone. This is the future for Ford Australia, after vehicle assembly ends in 2016.
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