The cost of keeping automotive manufacturing in Australia is high and the investment not always spent wisely, but the loss of the sector would be felt profoundly, according to a team of workplace academics.
Writing in the Fairfax papers, Doctor Stephen Clibborn and Professor Russell Lansbury of the University of Sydney and Dr Chris Wright from Macquarie University note that car makers in Australia have always been reliant on government support and the decisions of their parent companies.
The decision announced by General Motors yesterday to end Holden’s manufacturing operations in Australia has brought immediate speculation about the impact on the broader auto industry. Toyota’s viability is under increasing pressure and there are predictions that a third of the automotive sector’s jobs could be lost with Holden.
Clibborn, Lansbury and Wright argue that, though their research has found governments haven’t always held car makers to account over R & D investment, the loss of the industry’s spill-over benefits would be vast for the rest of manufacturing.
"The fallout from the downfall of the automotive industry could be greater than many anticipated," said the academics in a statement published by the University of Sydney.
"This could possibly lead to the demise of the remaining manufacturing sector, leaving the Australian economy vulnerable when the mining boom inevitably ends."
The Australian Industry Group also pointed to the spill-over benefits from automotive that would be lost if the country stopped making cars altogether.
“The sector adds materially to Australia’s efforts in research, development and design and it contributes indirectly to product and process innovation across the economy," said Ai Group CEO Innes Willox yesterday.
"In 2011-12 alone the auto industry invested nearly $700 million in research and development. These investments bring important spill-over benefits to many other parts of manufacturing and to the economy more broadly. "