29 days until Australia’s car industry shutters

Advertisement

By Leith van Onselen

It’s been years in the making, but in just one month’s time, Australia’s automotive assembly industry will shutter for good.

Toyota is scheduled to cease operations at its Altona Plant on 3 October, whereas Holden is scheduled to close on 20 October. On Holden, ABC News published the following last night:

Some 950 Holden employees remain at the factory in Adelaide’s north — a month out from the site’s closure — with many yet to find alternative work.

A Holden spokesperson said about 800 employees had “transitioned” from the factory since it announced in December 2013 that the company would withdraw from Australian manufacturing.

Of those workers, 71 per cent have found jobs, 8 per cent have retired, 4 per cent are in full-time study and 1 per cent are full-time volunteers.

Some 200 were released early into alternative work.

The Elizabeth factory will be locked down to media from Thursday until the last car rolls off the production line on October 20.

Holden is continuing to assist ongoing employees to find alternative work through its Transition Centre, which is located on-site.

Holden said it would not downscale manufacturing ahead of the closure date and would continue to produce 175 cars per day — except the final day as production will finish early for a private celebration.

The official Department of Employment projection is for the closure of the car industry to cost some 27,500 manufacturing jobs over the five years to November 2020:

Advertisement
ScreenHunter_16851 Jan. 15 16.18

However, Valadkhani and Smyth (2016, Table II, p.698-701) also estimated that beyond the direct impact on manufacturers and parts suppliers, there will be a significant impact on output and tens of thousands of job losses in downstream and upstream industries, in particular the Professional, Scientific and Technical Services (PSTS) sector (see below chart).

Advertisement

On the uber-pessimistic side of the scale, University of Adelaide researchers, Lance Worrall and John Spoehr, estimated that the car industry’s closure could cost up to 200,000 jobs once employment multipliers are added into the mix, with about $29 billion wiped off Australia’s GDP.

It will also leave a big dint in Australia’s balance of payments, with Australia’s automotive industry becoming 100% consumers, not producers, meaning that all our cars will need to be funded by other exports or external borrowings.

Earlier this year, two automotive component makers announced they would close after Toyota and Holden, resulting in 350 and 250 job losses respectively. Surely this is only the tip of the iceberg.

Advertisement

[email protected]

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.