Toyota plans to say, “oo-roo,” or farewell in Australian slang, as it prepares to pull the plug on its manufacturing base there by 2017, following General Motors and Ford out the door.
The closure of Toyota’s Australian assembly operations would not only cost 2,500 jobs but mark the end of what was once a vibrant automotive manufacturing sector on the continent. All three carmakers have cited high production costs and the increasing challenge posed by an onslaught of foreign-made automobiles.
“We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia,” Toyota Australia President Max Yasuda said in a statement announcing the planned shutdown.
Other automakers have fled Australia over the last decade leaving Toyota, GM and Ford as the last to still operate assembly lines there. Those factories were, in turn, propped up by subsidies offered from the country’s capitol in Canberra. But the conservative government of Prime Minister Tony Abbott decided to yank that support when it came into power last year despite loud calls to save the automotive sector.
“This is obviously devastating news for everyone involved with Toyota. It’s devastating for me and for the government,” said Abbott, who was told by GM that it was pulling out last December.
(For more on GM’s decision to leave Australia,Click Here.)
Carmakers have repeatedly warned that they could not afford to continue manufacturing operations without subsidies, pointing to a variety of problems, including the strong Australian currency that made imports relatively cheap and plentiful, as well as high wages.
“It’s hand-to-hand combat there,” Mark Reuss, GM’s global product development chief, and formerly the president of the company’s Australian arm Holden, late last year.
As of last year, domestically produced vehicles accounted for barely one in nine of the 1.14 miilion automobiles sold in Australia, down from a peak of 80% three decades ago. As recently as 2004, Australian assembly plants were producing 400,000 vehicles annually. By 2012 that had dropped by half.
With Australia already hurt by cuts to its mining industry, “The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy,” warned Australia Council of Trade Unions Secretary David Oliver.
(Toyota nearing $1 bil settlement with U.S. Justice Dept. over sudden acceleration criminal probe. Click Here for details.)
Along with the workers impacted at Toyota, GM and Ford, as many as 45,000 other Australian jobs could be in jeopardy. About 45,000 are employed at the 150 companies in the country’s automotive sector, according to government data.
As with GM and Ford, Toyota plans to maintain its Australian dealer network but will, after 2017, import all of its vehicles from plants in other parts of the world, very likely including the United States.
And all of the money and jobs that were in Australia will go to China.