Ex-Ford Motor Company CEO and now BHP Billiton chairman Jac Nasser says a combination of the continuing high Australian dollar, weak overseas currencies, a lack of patriotism from Australians towards local car making and other factors, places the industry in a dire position.
“The signs aren't good,” Nasser told journalists yesterday, as reported by News Limited.
“You've got an exchange rate at a 30-year high, you've got higher costs in Australia, you've got excess capacity in the motor industry worldwide, you've got a very weak currency in Japan and you've got a weak euro.
“When you put that mix together, it's very difficult to expect a relatively small but talented Australian auto industry to work its way.”
Nasser’s comments come just days after Holden announced it was cutting 500 manufacturing and product development jobs from its local operations, slashing its workforce to 1680 employees and cutting daily vehicle production from 400 to 335.
The situation is even more grim at Nasser’s old employer Ford Australia, which last year reduced its workforce to fewer than 1500 employees and wound back production 30 per cent to 148 vehicles per day.
“The signs aren't good, and particularly when the car industry is reducing the number of engineers they have in the workforce, that's a leading indicator of a reduction in future programs and future technology," Nasser said.
“As soon as you have a reduction in the scale of domestic manufacturing – let’s assume one of the three decide to exit Australia in terms of manufacturing – then you end up potentially with sub-scale supplier infrastructure.
“Once that happens, I think it's a domino effect. It would be a very sad day for Australia but unfortunately it looks like it could be inevitable.”
While Australia’s car makers are often criticised for the amount of government funding they receive, Nasser said handouts given to the local industry needed to be assessed in context compared with other industries.
“I would say we haven't spent a lot on it, when you compare the incentives that the automotive industry has received, to others. I don't know whether that is the appropriate conclusion, he said, as reported by Fairfax Media.
“I'm disappointed in some of the rhetoric that I hear, where it's clear that the general feeling in Australia is that they're not patriotic around their automotive industry.
“In most countries around the world they are emotional about their automotive industry.”