Time to give the local car makers a break
News that a car components supplier in Tasmania is in danger of going out of business underlines the huge challenges facing the local car industry.
Launceston bearings maker ACL has received a $2.3 million bail-out from the Federal Government to allow it to keep its doors open.
ACL is the sole supplier of precision auto bearings to Ford, Holden and Toyota. If they go under, the local manufacturers have a huge headache on their hands.
ACL cites tariff cuts and currency challenges as the main reasons for its difficulties.
Itâs a predicament that is shared by the local manufacturers.
Tariffs have been cut from 57.5 per cent in 1988 to 10 per cent. Add to that free trade agreements with the United States and more importantly, Thailand, and the pressure on the locals is obvious.
By the end of 2008, Australians will have bought more Thai-built cars than Australian-made ones.
But if you ask the local manufacturers, the strength of the Australian dollar is the biggest thorn in their side.
In 2001, the value of the Australian dollar was around US50c. In January last year it was up to US77c and today it is trading at about US92c. It has been just as strong against the Japanese Yen, South Korean Won and the Thai Baht.
The impact of this shift in currency was evident at the recent release of the new generation Subaru Forester, which was bigger, better equipped and up to $3000 cheaper than its predecessor.
Subaru boss Nick Senior readily admits the currency situation helped the company sharpen its pencil.
But thatâs not the only way the strength of the dollar is hurting the locals.
Most people agree that the key to survival of the local industry is exports. But as both Toyota and Holden are finding, the strong Aussie dollar is making the Commodore and Camry less attractive to export customers.
It also makes Australia a relatively high-cost manufacturing base. Recent rumours out of Detroit suggest that Ford has decided against basing its rear-wheel-drive development program in Australia because of currency issues.
And the local Toyota operation is facing similar pressure from low cost plants in China and Russia.
So do you think itâs time the Government reviewed its tariff policy and gave greater protection to the local industry?
After all, the Thai and Korean governments put up plenty of barriers to protect their local industry while benefiting from our free trade approach.
Isnât it time to level the playing field a little?
Richard Blackburn
posted in Car News Articles | 0 Comments

