Automotive industry crucial to Australian economy: FCAI

Australia stands at a fork in the road and needs to invest in the nation’s ability to design, engineer and – most importantly – build vehicles if we are to remain a strong and diverse knowledge economy and a viable automotive manufacturer, according to the president of the Federal Chamber of Automotive Industries (FCAI).
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Mike Devereux, who is also the chairman and managing director of GM Holden, says investing in the automotive industry is crucial to ensure Australia is more than “a farm, a mine or a hotel” in the future.

“That’s the future we’re contemplating – if we give up manufacturing capability, we mortgage our future for the things we can’t even imagine today,” Devereux said. “If we’re serious about Australia being a ‘knowledge economy’, we need strategic capability. A first-class education system and the ability to build things – high-tech, value-add products like cars – are the building blocks.”

He said developing sustainable technologies and creating efficient vehicles would be fundamental to the local industry’s future success.

“There’s no silver bullet here or in any other market when it comes to the environment. We need to pursue a range of options including electrification, but we also need real world solutions for today that support the way Australians really live.”

Devereux says the rapid shift towards global vehicle development was an opportunity for Australia rather than a roadblock, and believes the battle between brands has been superseded by the larger issue of country versus country.

“It’s not about Holden vs Toyota vs Ford vs importers. It’s about how each of us convince our parent companies to invest right here in Australia. When we compete to design, engineer or build a new model in this country, we’re not competing with rival brands, we’re competing with rival countries.”

The Australian automotive industry directly employs 59,000 people, and the FCAI estimates that for each of those jobs another six people are employed in supporting industries – equating to more than 410,000 workers in total.

Devereux refuted the common criticism that the local industry resembled a dinosaur, and insisted that it deserves the government support that many other industries enjoy. He highlighted the mining industry, which has received more than $6.2 billion from the Federal Government over the past four years through the Diesel Fuel Rebate Scheme.

“Government investment, or intervention, should not be a dirty word,” Devereux said. “Government support and investment in automotive capability can happen in several ways.”

He also made an example of Australia’s vehicle import tariff rate, which, at 3.5 per cent, is significantly lower than a number of other countries (South Korea: eight per cent, European Union/UK: 10 per cent, China: 25 per cent, India: 60 per cent, Thailand: 80 per cent).

Regardless of the strategy, Devereux says “long-term policy certainty, clarity, consistency and competitiveness” is absolutely critical.

“We can’t establish long-term co-investment plans only to pull the rug out from under companies halfway through decade-long product development and investment cycles.”

Devereux admitted the industry also had to play its role in securing its future.

“It’s our job to be as flexible as possible, we have to run extremely lean and efficient operations. We are committed to being the best of the best and competing to overcome the challenges that high labour costs and high currency present this country,” Devereux said.