Australia Auto Exports at 13-Year Low as GM, Toyota Cut Jobs

The value of Australia’s automobile exports plunged to the lowest level since 1998 last year as the strength of the local currency reduced overseas demand, leading to job cuts at the local units of General Motors Co. and Toyota Motor Corp.

Passenger vehicle shipments fell 26 percent from a year earlier to A$1.35 billion ($1.45 billion), the Australian Bureau of Statistics said today in its December trade report. Car exports have slumped 63.7 percent since their peak of A$3.6 billion in 2008, when they were the largest export by the country’s manufacturing industry.

The decline highlights the so-called two-speed nature of Australia’s economy as industries outside the booming mining sector suffer from a more than 60 percent rise of the local currency against the U.S. dollar in the past three years. Toyota said last month it’s cutting more than a 10th of its assembly plant workforce in Australia, while GM Holden said today its reducing the number of contractors it employs.

“Our capacity to sustain large levels of export sales has largely evaporated,” said Ian Chalmers, chief executive officer of the Federal Chamber of Automotive Industries, a car industry lobbying group. “We’re competing in an internationally difficult space while dealing with a very high Australian dollar at the same time.”

Toyota Cuts

Australian manufacturing, accounting for about 10 percent of gross domestic product, has contracted even as booming demand for the nation’s commodities helped the economy avoid a recession after the 2008-09 global financial crisis.

Toyota Australia, the country’s largest car exporter, cited the strong dollar when it said Jan. 23 that 350 people face compulsory redundancy at its main plant in Altona, a suburb of the country’s second-largest city Melbourne.

The division’s production has fallen 36 percent since 2007, it said in an e-mailed statement last month. The unit shipped 83,000 cars worth A$1.5 billion in 2010, the majority to the Middle East, the largest importer of Australian-made cars, according to Toyota’s website.

Holden, Australia’s largest producer of cars for the domestic market, blamed the high Australian dollar for the job cuts at its assembly plant in the South Australian city of Adelaide.

Growth Under Threat

“At the current exchange rate we won’t be able to realize further growth in our export programs,” GM Holden Chairman Mike Devereux said in a statement. About 100 jobs will go and the company “will not be able to do business” in Australia without government support, Devereux said in an interview today with Australian Broadcasting Corp. radio.

Prime Minister Julia Gillard said today the government is determined to “keep car manufacturing here” and acknowledged the problems posed by the high Australian dollar. The so-called Aussie is likely to stay “relatively high for years to come,” Gillard said yesterday and urged businesses to adapt to it.

Driven by demand for the country’s mining and petroleum exports and top-rated government debt, the Australian dollar has been the best-performing group of 10 currency against the U.S. dollar during the past two years, rising 22.1 percent over the period, according to data compiled by Bloomberg.

While that strength helps contain inflation by making imports cheaper, it hurts exporters by making their products more expensive relative to overseas competitors. BlueScope Steel Ltd., the country’s largest steel producer, in August shuttered its export division, and Australian wine exports fell to a 10- year low in 2011.

The Australian Industry Group’s performance of manufacturing index has shown a contraction in 13 months over the past two years. A comparable survey in the U.K. has seen contractions in five months during the period, while U.S. manufacturing has grown in every month since July 2009.

Ford, Holden motoring again after Slump Australia Cars

Carmakers Ford and Holden say the industry has started to bounce back after the economic downturn.

During the global financial crisis Australia's two biggest car manufacturers were forced to cut jobs and reduce production.

Holden's plant at Elizabeth, in Adelaide's north, cancelled one of its production shifts because of a slump in sales.

But it appears the industry has turned a corner, with Holden announcing the cancelled shift will be restored in November.

Staff will return to full-time employment, allowing the company to hire more staff.

Holden says confidence has returned and Adelaide production of its Cruze model will start in November.

There will also be a VE series two Commodore released within months.

South Australia's Industry Minister Tom Koutsantonis says Holden's recovery is important to the SA economy.

"It's the heart and soul of South Australia ... There's a massive components industry that goes alongside Holdens," he said.

He says the next step for Holden is to regain its share of international markets in the United States and the Middle East.

Federal Industry Minister Kim Carr says the Holden announcement is welcome.

"In terms of its research and development, its employment of high-skilled, high-wage jobs, for exports, it's the backbone of manufacturing in


South Australia across and Australia. It's a vital part of our future," he said.
The SA Government says Holden received about $180 million of state and federal funding to help it through the downturn.

Meanwhile, Ford is marking the 50th anniversary of the Ford Falcon today.

Almost 3.5 million Falcons have rolled off production lines since the first XK model was produced and the company's president Marin Burela says the industry has stayed viable during tough economic times.

"There's been a lot of challenging times for the industry over the last 12 months; we've certainly come through it over 2009 and into 2010," he said.

"The industry this year is very strong and it looks like it will certainly exceed a million units.

"Since June, July of last year we have been lifting our production volumes through the plant and also we have been working production overtime on Saturdays to meet demand the Falcon continues to be a roaring success."

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