Auto industry more complex than just manufacturing

The Australian Motor Industry Federation has warned of dire consequences, particularly in rural areas, if the federal government allows the local car manufacturing industry to close down.

Speaking after this week’s Productivity Commission hearing, AMIF chief executive Richard Dudley said the auto industry had tentacles reaching into the community that are probably not well understood even by the industry itself.

“The car in this country is absolutely essential to our national wellbeing,” Mr Dudley said after the hearing heard testimony from GM Holden.

He said he wanted to see the federal government make some “studious decisions, some long term decisions, some sustainable decisions” about how to support an industry that is among those supporting the nation.

“We are going to be reliant on road transport for the foreseeable future and unless this is taken into account, not just the pure economics, we will be in a bit of a bother trying to replace that investment.”

He repeated the call made by the AMIF in its submission to the enquiry for there to be an examination of the full effects of a closure, not just on the component suppliers, but on the entire automotive industry.

AMIF figures show that manufacturing represents only about 25 per cent of the total automotive sector, with the rest comprising the retail, service, repair and recycling sectors.

“The federal government needs to understand the entire complexity of the auto industry, not just that it is about manufacturing.”

Mr Dudley was particularly worried about the effects of a possible contraction in dealer networks in rural areas after a closure of manufacturing.

“Those dealerships are the cornerstone of communities in regional and rural Australia, as well as metropolitan. What does it mean if they have to reduce the number of those dealerships?“What does it mean if there aren’t the people there to service those vehicles going forward in a country reliant on road transport.”

He said he was disappointed to see some of the commentary in newspapers in the last few days suggesting that General Motors had already decided to close down Holden, and that this would be good because it would be cheaper for Australian taxpayers.

“They are not the only industry that is supported. The auto industry in every other country that has car manufacturing is also supported, and we have other industries in this country that are also supported publicly as well.

“In the finish, the taxpayer supports all sorts of things. They support health and medical research, other forms of industry, they support mining, they support agriculture.

“For the auto industry, as you have just heard, it’s about $18 per person per year.

“There’s $37 billion worth of return to the economy (from GM Holden over 12 years) that will have to be found if they don’t continue to manufacture.”

The AMIF represents state-based bodies like the Victorian Automobile Chamber of Commerce and Motor Trades Associations in other states and territories.