It’s going to be a sad Christmas for automotive assembly workers, with Holden confirming that it will cease production on its Cruze small car on 7 October – the same day that Ford will shutter its Broadmeadows plant. This means that 320 additional jobs will be axed from Holden’s Elizabeth plant, leaving about 1,000 still working on Holden’s Commodore range, which will shutter in late 2017, as will Toyota’s Altona plant, leaving some 6,500 direct workers out of jobs.
About 200 workers at Holden’s Port Melbourne engine plant are also expected to be retrenched by year’s end, with Holden intending to stockpile engines to see out the final year of production in 2017.
I have noted previously that the closure of the car industry over the year from October 2016 will have large employment impacts; although estimates vary.
On the rosy side sits the Productivity Commission (PC) and the Allen Consulting Group (ACG). The PC estimated that the car industry’s closure would cost up to 40,000 jobs overall, mostly in Victoria and South Australia, whereas ACG’s modelling, which used economic analysis from Monash University, estimated that the closure would cost around 33,000 jobs in Melbourne and around 6,600 jobs in Adelaide by 2018.
Both studies were arguably overly optimistic, given they assumed that a high proportion of component manufacturers would 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 and the sheer size of the employment shock.
On the pessimistic side sits the University of Adelaide researchers, Lance Worrall and John Spoehr, who estimate that the car industry’s closure could cost up to 200,000 jobs once employment multipliers are added into the mix.
Irrespective, the impact of the car industry’s closure will be large and represent a big hit to the economy, particularly in South Australia and Victoria. Manufacturing remains an important source of full-time jobs in both states, accounting for around 11% of total full-time employment in Victoria and 12% in South Australia.
The timing of the car industry’s closure is also poor, since these job losses are set to coincide with the cratering of mining investment and the expected downturn in dwelling construction.
