The end of the Australian manufacturing, Toyota exit

Posted: February 11, 2014 in Uncategorized
Tags: , , ,

The last big Australian manufacturer has gone. In total somewhere between 25,000 and 50,000 jobs will be lost (probably excessive figures as some small manufacturer will be smart enough to tap into the Asian markets, but not by much.

All blame the Australian Dollar…..but in reality that was just the last nail in the coffin. The main manufacturing costs are workforce and utilities and rents.

I arrived in Australia in 2003 and Australia was at least 30% cheaper.

Housing costs from 2003 soared as the real estate market rocketed fuelled by tax discounts (negative gearing) and Asian demand  (it is extremely easy to circumvent, legally, the no-foreign ownership rules). Plus electricity and water bills went up and up.

Wage naturally had to increase – less than the property market – but they had to increase.

On top of this the various government made a lot of free trade agreements with countries have manufacturing cost much lower than us (Thailand and South Korea, for example, that are large car manufacturer).

On top of all this, the manufacturers concentrated on low cost cars (it really does not work building cheap cars in high cost countries…the Germans understand that very well).

So the Australian Dollar was the last nail in the coffin.

Naturally the political class is to blame – not just Tony Abbott. Once upon a time, instead of the cheap solution of offering subsidies they should have looked into what was the problem.

Too late, bye bye Toyota. I wish it was so easy…..what about Australia?


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