Australian economy will suffer from collapse of auto manufacturing, says Ford boss

The collapse of Australia’s auto manufacturing sector will cause the economy to suffer in the long term, Ford CEO Alan Mulally said at the Detroit motor show.

Responding to a question on the importance of government assistance in manufacturing, Mulally responded, “No country is ever successful in the long term … without a really strong and vibrant manufacturing base. It’s the foundation of all economic development. You actually make things that create value. That’s why every country around the world is collaborating with the private sector … to figure out how to create an environment where manufacturing is viable.”

Mulally referred to manufacturing as the “foundation of wealth creation”, News Limited reported. “You create value and you create jobs,” he said.

When asked whether Australia is “doomed”, Mulally responded, “I don’t know about that word, but clearly Australia is going where it’s going. And what Australia’s done with their (low import) tariffs and what they’ve done (reducing) support of their industry …”

Stefan Jacoby, General Motors’ executive VP consolidated international operations, says that it is “impossible” to manufacture cars in Australia. “Since the market is so open, with a lot of free trade agreements coming up, it is fundamentally impossible to produce vehicles in Australia, regardless of what the government is saying,” Jacoby told Australian media at the Detroit motor show.

“If they would make barriers and would truly support their local automotive industry it would lead to an uncompetitive business. Local production, even if it were a pure assembly operation, doesn’t make any sense.

“Our business is driven by scale of economics, of productivity, of an efficient supplier industry … Australia is just too small in these scales.”

Toyota is grappling with some difficult decisions, with Tony Cramb, Australia’s executive director of sales and marketing, saying that Holden’s plan to cease Australian manufacturing in 2017 “puts unprecedented pressure on Toyota and makes it more difficult for us to be the sole manufacturer here in Australia”.

“We are now studying all relevant business impacts and a decision will be made on future investments some time this year,” a statement from Toyota Australia said.