Toyota Australia has announced that it will reduce its workforce from 3,900 to 1,300 by 2017 as its shutters its local assembly operations, with the corporate headquarters also to shift to Melbourne from Sydney. From The Australian:
“There will also be a significant reduction in corporate support roles and the four Toyota parts centres located throughout the country will undergo major reform to improve global competitiveness’’…
“The decision to consolidate our corporate operations to Melbourne supports our long-term vision and will assist us in improving business efficiency, increase collaboration and reduce operating costs’’…
It’s worth reminding readers that the shuttering of the local automotive assembly industry will be one of two employment shocks to hit the Australian economy over the next three years (the other being the unwinding of the mining investment boom).
Modelling by the Productivity Commission (PC) estimated that the closure of Australia’s car industry would cost up to 40,000 jobs, mostly in Victoria and South Australia. The PC’s findings were broadly similar to modelling undertaken late last year by the Allen Consulting Group, using economic analysis from Monash University, which estimated that the closure of the local car industry would cost around 33,000 jobs in Melbourne and around 6,600 jobs in Adelaide by 2018.
Both studies appear optimistic, however, given they assume that a high proportion of component manufacturers will move into exports and/or the after-sales parts market, which are already crowded and highly competitive. The PC also assumed that two thirds of the expected 40,000 retrenched auto workers will find another job – an assumption that seems heroic given the lack of other manufacturing industries in Australia, the sheer size of the employment shock (alongside the sharp decline of mining investment), and the overall weak labour market.
The great irony, of course, is that the Australian dollar is likely to head lower as commodity prices falls, which could mean that the cost of importing Holdens from South Korea could end up being higher than if the cars were built locally.
