Toyota closure to cause ‘potential recession', says union

The same trade union that prevented Toyota Australia making efficiency gains that may have ensured its manufacturing future beyond 2017 has warned of a “potential recession” following the end of Australia’s car manufacturing industry.

Toyota Australia today became the final local car-maker to announce it will close its factory doors, confirming it will cease manufacturing in 2017 – the same year as Holden and a year after Ford.

The Japanese brand cited the strong Australian currency, low economies of scale, high manufacturing costs, free-trade agreements and the fragmented new-vehicle market for the cessation of its manufacturing operations in Australia.

The Productivity Commission’s recent recommendation for all taxpayer-funded manufacturing assistance to end by 2020 is also seen as a key factor in Toyota’s decision.

Speculation of Toyota’s Australian manufacturing pull-out reached fever pitch when the company’s workforce, led by the Australian Manufacturing Workers Union (AMWU), succeeded in achieving a Federal Court ruling that prevented Toyota changing its workplace agreement.

Those changes were central to its attempt to reduce its manufacturing costs -- to the tune of $3800 per car -- as part of its bid to win the right to produce the next-generation Camry in Victoria from 2017, alongside nations such as Thailand and the USA.

Unlike Holden workers, who had agreed to a pay freeze in an effort to secure their long-term future, Toyota workers would have received two scheduled pay increases this year.

To pay for them, Toyota Australia said it needed to reduce labour costs by $17 million by changing 27 “outmoded” conditions currently enjoyed by Toyota workers, including four hours' paid time off to donate blood, cutting Sunday penalty rates from 2.5 times to twice the normal rate and sick leave without a medical certificate.

Late last month federal industry minister Ian MacFarlane urged Toyota workers to accept changes to their “archaic” entitlements and “think about their futures”, warning that 30,000 jobs across the country would be lost if Toyota exited Australian manufacturing.

“'All I can do is plead with employees on the shop floor to think about their futures and the need for competitive work practices,” he said.

“I'm not comparing them to an assembly line in Thailand. I'm talking about the Toyota plant in Kentucky. “The unions need to show leadership. The priority should be preservation of jobs, not maintaining archaic conditions in the award.”

Instead, just six days ago on February 4, Toyota shop stewards launched new legal action to safeguard themselves from any further attempts by the company to remove some of their entitlements.

Today, national AMWU vehicle secretary Dave Smith said Toyota’s decision is devastating and could cause an economic recession.

“This decision will see thousands of jobs exit Australia, not only at Toyota directly but all the way down the supply chain," said national AMWU vehicle secretary Dave Smith.

“The magnitude of this decision in the community cannot be underestimated. We are looking at a potential recession all along the south-eastern seaboard.”

Former union boss, federal opposition leader Bill Shorten, described Toyota’s announcement as an “unmitigated disaster”.

“The car industry has died under the Abbott government -- it's a disgrace,” he said.

The Federal Chamber of Automotive Industries this evening said it was saddened by Toyota’s decision.

“Our thoughts are with the workers and their families at this difficult time,” said FCAI Chief Executive Tony Weber.

“This is a very sad day for Australia.”

Toyota Australia, which employs more than 4000 people nationwide, produced its first vehicle in 1963 -- a Tiara (pictured) -- and last year manufactured 106,000 cars and 108,000 engines, about 70 per cent of which were exported.

Holden, which produced ‘Australia’s first car’ in 1948, announced in December it will axe about 2900 jobs in the same year.

Ford Australia, which produced its first vehicles in 1925, announced last May -- when Labor was in government – that it will sack 1200 workers by 2016, including 300 as early as this year.

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