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Michael writes on emerging markets, architecture and engineering. He has served as a correspondent in Tokyo, London and Johannesburg and has written for Reuters, the Financial Times, The Age and The Sydney Morning Herald.

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End of the road: Ford, Holden, Toyota to ‘shut down local manufacturing within 3 years’

Published 09 April 2013 11:53, Updated 10 April 2013 07:32

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End of the road: Ford, Holden, Toyota to ‘shut down local manufacturing within 3 years’

The Holden manufacturing plant in Elizabeth, Adelade. Holden says it will sack 400 of the plant’s 2100-strong workforce. Photo: Nic Walker

Australia’s car manufacturing industry is in a state of irreversible decline and Ford, Holden and Toyota are all likely to end production in this country within three years, industry observer Clive Matthew-Wilson says.

While state economies in SA and Victoria are reeling from Holden’s decision on Monday to cut production and 500 jobs across its two operations, rival Ford is likely to be the first to announce is it pulling out completely, says Matthew-Wilson, the editor of car review site dogandlemon.com.

“It’s going to happen a lot quicker than people think,” said Auckland-based Matthew-Wilson, whose site has been running for 16 years. “My guess is that Ford has already decided to close down and will probably announce that this year. Without Ford, most of the major components manufacturers in Australia will struggle to survive and after that, the rest (of the manufacturers) will be gone within three years.”

Without Ford, most of the major components manufacturers in Australia will struggle to survive and after that, the rest will be gone within three years.

The issue is a vexed one. While Australia cannot cope on volume or cost terms with rival industries around the world, governments on both sides of the divide have until now decided that propping up the industry - to the tune of $2.2 billion over the past 12 years - was worth it for the sake of jobs and the wider spread of industries that were supported by car manufacture.

Questions have been growing about the overall benefit to Australia, especially given speculation that the new Holden VF Commodore SS, due to be exported to the US and sold as the Chevrolet SS later this year, will be at least $10,000 cheaper for American consumers than for those at home.

This year would be the year Australia decided if it wanted to have a car industry, Labor Senator and former industry minister Kim Carr said yesterday. Holden’s announcement, just one year after the company was promised $275 million in support in exchange for the company’s pledge to invest a further $1 billion in domestic manufacturing, is hastening a conversation on that topic, at least.

The company had breached the obligations of that agreement by its decision to sack 400 workers from the assembly plant at Elizabeth, north of Adelaide - a fifth of the 2100 it employs there - along with 100 of the 900 workers from its design and engineering operations at Fishermens Bend in Melbourne South Australian Premier Jay Weatherill said yesterday.

“I’m not prepared to accept a unilateral variation. There will have to be further discussions. I need to reflect upon this,’’ he said.

Without a large domestic market, a large export market or low production cost base to exploit. However, efforts to produce motor vehicles in Australia were on a hiding to nothing, Matthew-Wilson said on Tuesday.

“No amount of bailouts from the state and federal governments can solve this basic problem,” he said. “It’s not a matter of whether these factories will close down but when. They’re losing so much money on every car.”

Ford, which last year said an upgraded 2014-model Falcon model would take production in Australia “through to at least the end of 2016,” declined to comment.

“We haven’t got anything to share on any speculation over the company’s operation,” Ford Motor Co Australia Brand Communications Manager Neil McDonald said.

Toyota Australia spokeswoman Beck Angel also declined to comment on speculation.

General Motors-owned Holden did not immediately respond to request for comment.

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