Australia’s peak manufacturing body believes the Productivity Commission is being optimistic predicting just 40000 car sector job losses, according to Australia’s leading industry group.
The Australian Industry Group (Ai Group) thinks the commission’s expectation that 60% of the car parts sector will survive is too optimistic.
“The new Productivity Commission report on the automotive sector seriously underplays the impact of the end of car making in Australia and should be treated with caution,” says Ai Group chief executive Innes Willox.
“This isn’t just another minor adjustment to the economy. It represents the virtual closure of an entire industry. This will happen within a relatively short span of time and it will affect a large number of businesses, employees and communities.”
The Commission says $30 billion of taxpayer assistance to carmakers between 1997 and 2012 had only delayed the significant structural adjustment now facing the industry. Australian carmakers were unable to survive in the highly-competitive global and domestic market, with Ford, Holden and Toyota all announcing they will cease local manufacturing by the end of 2017.
“It is estimated that up to 40,000 people may lose their jobs as a result of the closure of the motor vehicle manufacturing plants and the rationalisation of firms in the supply chain,” says the report.
Willox says that assessment, based on job losses for 80% of the carmaker workforce and 40% of the component supply chain, seemed optimistic.
Meanwhile, the Federal Chamber of Automotive Industries (FCAI) estimates up to 90% of the industry would close or move offshore.
Willox also points out the commission’s assessment that 60% of component makers would be able to move into exports or other industries with no extra government assistance also seemed fanciful.
“These markets are already crowded and are extremely competitive, with many auto components suppliers already operating in them,” he says.
The assessment that two-thirds of the 40,000 retrenched workers would find another job seemed to be based on the experience of 700 Mitsubishi workers retrenched in 2004.
“This time around, there will be far more displaced auto workers in a very concentrated geography and with far fewer local alternative employment options.”
Labor industry spokesman Kim Carr says the real jobs impact would be closer to 200,000, not 40,000.
Hardest hit would be Victoria, where 100,000 jobs could be lost.
“Welfare payments and lost tax revenue from an industry shutdown are projected to exceed $20 billion and it will be more than 10 years before the economy recovers from the underlying hit to GDP,” Carr says in a statement.
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