1

"#$%&""&'( )' )*+ ,-'.#/)&0&)1

/'%%&""&'(

'( )*+

-+0&+2 '3 )*+ 4#")-45&4(
4#)'%')&0+ %4(#34/)#-&(6
&(.#")-1

('0+%$+- 789:

2

!"#$% '( )'*+%*+,
LxecuLlve Summary ............................................................................................................................. 3
1. lnLroducLlon .................................................................................................................................. 11
2. lmporLance of Lhe AuLomoLlve lndusLry ....................................................................................... 14
2.1 ManufacLurlng ln SouLh AusLralla ......................................................................................... 17
2.2 CM Polden ............................................................................................................................ 18
2.3 ClLy of layford ...................................................................................................................... 18
3. CompeLlLlveness and roducLlvlLy ................................................................................................ 22
3.2 CompeLlLlveness and roducLlvlLy of Lhe AusLrallan AuLomoLlve lndusLry .......................... 23
3.2.1 uomesLlc MarkeL .................................................................................................................. 28
3.2.2 1rade ollcy, markeL access and Larlffs ................................................................................ 31
3.2.3 Lxchange 8aLes .................................................................................................................... 32
3.2.4 lndusLry asslsLance ............................................................................................................... 33
3.2.3 ollcy LnvlronmenL .............................................................................................................. 34
3.3 lmpllcaLlons for LxporL MarkeLs ........................................................................................... 36
3.4 lorelgn ulrecL lnvesLmenL llows .......................................................................................... 38
4. CovernmenL AsslsLance ................................................................................................................ 39
4.1 lmpacL and LffecLlveness ...................................................................................................... 43
3. SLrucLural Ad[usLmenL and 1ranslLlon .......................................................................................... 44
3.1 Lconomlc CuLlook ................................................................................................................. 44
3.2 1lmlng of SLrucLural Ad[usLmenL ........................................................................................... 46
3.3 ulsLrlbuLlonal lmpacLs ........................................................................................................... 47
3.4 8eallocaLlon of 8esources and Ad[usLmenL AsslsLance ........................................................ 30
6. Concluslon ..................................................................................................................................... 33
Appendlx A: SLaLe CovernmenL lndusLry Mapplng ............................................................................... 34
Appendlx 8: AusLrallan CovernmenL SLrucLural Ad[usLmenL lunds slnce 1997 ................................... 37



3

-.%/0+12% 3044"56
1he CovernmenL of SouLh AusLralla ls commlLLed Lo an economy whlch encourages Lhe
creaLlon of lnnovaLlve, ouLward looklng enLerprlses whlch collaboraLe wlLh each oLher for
Lhelr muLual beneflL. ln Lhls way Lhe SouLh AusLrallan economy can besL conLrlbuLe Lo
Australias economic prosperity.
ln March 2013 Lhe CovernmenL of SouLh AusLralla publlshed an Lconomlc SLaLemenL. ln lL
we set out South Australias long term outlook, its challenges and opportunities. We also
ldenLlfled four areas of focus for our economy. Cne of Lhese areas of focus was advanced
manufacLurlng. Advanced manufacLurlng ls Lhe creaLlon of goods and servlces whlch draws
on advanced Lechnologles, skllls and processes, more lnnovaLlve producLs, servlces and
buslness models and uses excellence ln deslgn and markeLlng.
1he SouLh AusLrallan CovernmenL chose advanced manufacLurlng as an area of focus
because bulldlng a dlverslfled economy lncreases our reslllence ln a dynamlc global
envlronmenL. An advanced manufacLurlng secLor creaLes greaLer opporLunlLles for our
buslnesses Lo add value Lo our naLural resources and more broadly shares our economlc
prosperlLy.
This necessarily involves the transformation of South Australias traditional manufacturing
secLor LransformaLlon whlch ls well underway. Whlle Lhls has seen a subsLanLlal reducLlon
ln manufacLurlng employmenL ln recenL decades Lhrough Lhe lnLernaLlonallsaLlon of Lhe
AusLrallan economy, manufacLurlng producLlon and employmenL remaln a subsLanLlal
proporLlon of Lhe SouLh AusLrallan economy.
A slgnlflcanL and sLraLeglc elemenL of Lhe manufacLurlng secLor ls Lhe auLomoLlve
manufacLurlng secLor. lL ls slgnlflcanL because lL amounLs Lo a subsLanLlal proporLlon of all
manufacLurlng employmenL and lLs loss could mean a number of manufacLurlng enLerprlses
would no longer be vlable. lL ls sLraLeglc because Lhe skllls and capablllLles of Lhe auLomoLlve
manufacLurlng lndusLry are leadlng edge and passed onLo Lhose enLerprlses whlch supply Lo
lL and Lo Lhose who access Lhe skllls of employees and managers who have worked ln lL.
Securing the future of the automotive industry is therefore central to South Australias
advanced manufacturing sector, to South Australia and to the nations economic prosperity.
All reasonable sLeps should Lherefore be Laken Lo secure Lhe fuLure of Lhe auLomoLlve
manufacLurlng lndusLry ln AusLralla.
Cver Lhe pasL decade Lhe compeLlLlve envlronmenL faclng Lhe AusLrallan auLomoLlve
lndusLry has proved challenglng. 1here are several facLors LhaL have undermlned Lhe
auLomoLlve lndusLrys ability to compete within both the domestic and international
markeLs lncludlng:
1he susLalned appreclaLlon of Lhe AusLrallan dollar agalnsL oLher key currencles,

4

AusLralla belng one of Lhe mosL open auLomoLlve markeLs ln Lhe world,
lorelgn Larlff and non-Larlff barrlers prevenLlng reclproclLy of markeL access, and
1he slgnlflcanLly lower level of governmenL asslsLance provlded Lo Lhe AusLrallan
lndusLry compared Lo lLs compeLlLors.
1hese facLors have resulLed ln a decllne ln markeL share of locally made vehlcles ln Lhe
domesLlc markeL and have lmpeded efforLs Lo expand producLlon for exporL.
!"#$%%"&'()*$& ,
As o mottet of otqeocy tbe Aosttolloo Covetomeot potsoe lmptoveJ motket occess
fot Aosttolloo ptoJoceJ veblcles ooJ ootomotlve compooeots botb lo moltllotetol
ooJ bllotetol spbetes.
As a resulL of Lhe susLalned lmprovemenL ln Lhe Lerms of Lrade and growLh ln average
lncome, Lhe reduced growLh ln labour producLlvlLy evldenced ln Lhe perlod 2000 Lo 2012 has
been masked. However, in the next decade, Australias terms of trade are expected to
decllne and labour uLlllsaLlon raLes are also expecLed Lo decllne (due Lo an agelng
populaLlon). As a consequence naLlonal lncome growLh may decllne Lo abouL half a per cenL
per year by 2022, lf producLlvlLy remalns aL Lhe same level as Lhe lasL decade. A compeLlLlve
buslness envlronmenL wlll be crlLlcal Lo llfLlng producLlvlLy.
Llke oLher Lrade exposed lndusLrles ln AusLralla, Lhe Australian automotive industrys
capacity to compete is affected by a vast array of business environment issues. A close
examlnaLlon of opporLunlLles Lo address lmpedlmenLs ls warranLed.
!"#$%%"&'()*$& -
1be Aosttolloo Covetomeot lostlqote lmmeJlote octloo oo televoot pollcy settloqs
tbot slqolflcootly lmpoct oo tbe oblllty of Aosttolloo loJostty to compete qlobolly fot
lovestmeot ooJ soles locloJloq. skllls ooJ ttololoq, bllotetol ooJ moltllotetol ttoJe
oqteemeots, ttoospott ooJ eoetqy costs, k&u ooJ otbet mlctoecooomlc tefotm.
1he auLomoLlve lndusLry ls a slgnlflcanL conLrlbuLor Lo Lhe AusLrallan economy, wlLh Lhe
ma[orlLy of lLs acLlvlLles based wlLhln vlcLorla and SouLh AusLralla, and ls focussed around
Lhe Lhree auLomoLlve manufacLurers CM Polden, 1oyoLa and lord. naLlonally, Lhe
lndusLry produces 223,000 vehlcles per year plus a range of auLomoLlve componenLs.
1he auLomoLlve lndusLry has played a ma[or role ln Lhe developmenL and growLh of Lhe
AusLrallan and SouLh AusLrallan economles. Accordlng Lo 8urgan and Spoehr
1
ln 2013 Lhe
LoLal acLlvlLy conLrlbuLed by CM Polden, afflllaLed suppllers and all wage cosLs are

1
8urgan, 8 & Spoehr, !. 2013. The Contribution of GMHs Elizabeth Operations to the South Australian
cooomy ooJ loteotlol lmpocts of closote upJoteJ Assessmeot 201J. Adelalde: AusLrallan Workplace
lnnovaLlon and Soclal 8esearch CenLre, Lhe unlverslLy of Adelalde.

3

esLlmaLed Lo have conLrlbuLed $0.9 bllllon Lo Cross SLaLe roducL, 9,300 [obs and $33
mllllon per year Lo Lhe sLaLe LaxaLlon base.
1he AusLrallan auLomoLlve lndusLry has developed lnLo a dynamlc, lnnovaLlve and globally
lnLegraLed supply chaln lndusLry. roducLlvlLy and quallLy levels have conLlnued Lo lncrease
and 8&u and lnnovaLlon have been lncreaslngly recognlsed as an lmporLanL conLrlbuLor Lo
the industrys performance.
1he long lead Llmes and subsLanLlal caplLal lnvesLmenL requlred, speclflcally for Lhe
lnLroducLlon of new car models (around 3 Lo 6 years), dlcLaLe Lhe need for a degree of
cerLalnLy ln CovernmenL pollcy poslLlons Lo enable flrms Llme Lo commlL Lo fuLure
lnvesLmenL ln Lhe domesLlc lndusLry.
!"#$%%"&'()*$& .
1be Aosttolloo Covetomeot ptovlJe pollcy cettoloty fot tbe ootomotlve loJostty to
eooble lt to ploo fot tbe looq tetm.
SLrucLural ad[usLmenL occurs as parL of Lhe normal flows of labour and caplLal markeLs lL
wlll be dlspersed and, ln many cases, dlfflculL Lo observe. 8uL Lhere wlll be Llmes when
parLlcular lndlvlduals, buslnesses, communlLles and lndusLrles wlll suffer dlslocaLlon,
lncludlng Lhrough [ob losses and premaLure obsolescence of caplLal. 1hese slLuaLlons are
mosL llkely Lo occur when change ls concenLraLed ln areas where Lhere ls llLLle dlverslLy ln
lndusLry and hence few oLher employmenL opporLunlLles, and where Lhere ls llLLle
geographlc or occupaLlonal moblllLy of labour.
ln addlLlon, ln Lhe less favourable economlc condlLlons currenLly belng experlenced and
forecasLed for AusLralla Lhere ls an lncreased rlsk LhaL reduced asslsLance aL Lhls Llme wlll
poLenLlally lead Lo slgnlflcanL hardshlp, large dlslocaLlon and lncreased cosLs of ad[usLmenL.
Case sLudles analyslng Lhe closure of Lhe MC 8over facLory ln 8lrmlngham and Lhe
MlLsublshl planL ln Lonsdale, ln souLhern Adelalde, concur LhaL sLrucLural ad[usLmenL ls
easler and less dlsrupLlve ln a buoyanL economy. ulsplaced workers face fewer obsLacles Lo
flndlng new work when condlLlons are sLrong and Lhe demand for labour ls hlgh.
lf CM Polden were Lo cease AusLrallan operaLlons and close Lhe LllzabeLh planL ln 2016, or
earller, Lhe lmmedlaLe lmpacL ls llkely Lo be slgnlflcanLly compounded by concurrenL evenLs
lncludlng: workforce reducLlons by Lhe AusLrallan Submarlne CorporaLlon Ly LLd followlng
Lhe flnallsaLlon of Lhe flrsL of Lhe Lhree alr warfare desLroyers, and Lhe compleLlon of ma[or
SLaLe CovernmenL funded caplLal works such as Lhe new 8oyal Adelalde PosplLal and ma[or
road lnfrasLrucLure.
The regional impact of a closure of GM Holdens Australian operations wlll be furLher
compounded by Lhe hlgh lncldence of unemploymenL and socloeconomlc dlsadvanLage ln

6

Adelaides northern suburbs, particularly in the ClLy of layford (Lhe slLe of Lhe CM Polden
planL), whlch has an unemploymenL raLe of 13.3 per cenL.
!"#$%%"&'()*$& /
uoe to tbe poteotlol scole of coottoctloo ooJ tbe slqolflcoot ecooomlc ooJ soclol
costs ooJ tbe teqloool loclJeoce of tbese, fottbet teJoctloos lo Aosttolloo ootomotlve
loJostty osslstooce sboolJ be ovolJeJ.
lf CM Polden were Lo wlLhdraw Lhelr domesLlc manufacLurlng operaLlons, as lord MoLors
are scheduled Lo do ln 2016, lL would leave 1oyoLa as Lhe sole manufacLurer of cars ln
AusLralla. 1hls would deprlve Lhe lndusLry of economles of scale and furLher erode Lhe
compeLlveness of auLomoLlve componenL manufacLurlng, Lhereby LhreaLenlng Lhe long-
term viability of Toyotas Australian operations.
All Lhree domesLlc auLomoLlve manufacLurers and a number of componenL suppllers are
forelgn owned, and lf all local auLomoLlve manufacLurlng were Lo cease, lL could be
expecLed LhaL head offlces wlll dlrecL lnvesLmenL Lo oLher auLomoLlve manufacLurlng
counLrles. AL Lhe very besL lL wlll Lake slgnlflcanL Llme for alLernaLlve lndusLrles wlLhln
AusLralla Lo aLLracL Lhe levels of lnvesLmenL, esLabllsh Lhe skllled workforce and access Lo
new markeLs Lo replace LhaL whlch wlll be losL.
!"#$%%"&'()*$& 0
wbeo estlmotloq tbe Jeqtee of ecooomlc lmpoct of teJoctloos lo loJostty osslstooce
tbe ltoJoctlvlty commlssloo toke loto occooot tbe llkellbooJ tbot fotelqo lovestmeot
wlll foll.
1he auLomoLlve lndusLry generaLes poslLlve splll over beneflLs and exLernallLles LhaL are vlLal
Lo a dlverse hlgh value manufacLurlng secLor. AuLo manufacLurlng ls of crlLlcal lmporLance Lo
manufacLurlng overall, because of lLs Lransmlsslon of new Lechnologles and enLerprlse
based lnnovaLlons, and because Lhese capablllLles provlde plaLforms for dlverslflcaLlon lnLo
hlgh value new manufacLurlng opporLunlLles.
AuLomoLlve producLlon ls complex manufacLurlng as lllusLraLed by Lhe SouLh AusLrallan
CovernmenL-conducLed supply chaln mapplng exerclse Lo deLermlne Lhe slze and
concenLraLlon of Lhe auLomoLlve lndusLry ln SouLh AusLralla and Lhe exposure of assoclaLed
suppllers ln Lhe evenL of Lhe wlLhdrawal of CM Polden from Lhe domesLlc markeL:
1here are 33 1ler 1 companles (where CM Polden and/or Lhe auLo lndusLry ln
general are the firms core business) ln SouLh AusLralla employlng 3,719 people and
provldlng componenLs and servlces Lo Polden, 1oyoLa and lord. 1hese 1ler 1
companles have comblned revenue of $1.131 bllllon and supply Lhe Lhree CLMs wlLh
supporL from 1,270 suppllers naLlonally,

7

A furLher 719 companles employlng 28,000 Lo 32,000 people are esLlmaLed Lo supply
a wlde range of servlces and producLs Lo Lhe 1ler 1 companles 1ler 2, 3 or 4
dependlng on Lhelr locaLlon ln Lhe supply chaln,
Cnly 23 per cenL of Lhese 1ler l companles are sufflclenLly dlverslfled Lo conLlnue ln
Lhe markeL were domesLlc car manufacLurlng Lo cease, and
All 719 companles surveyed would be vulnerable, wlLh rlsks ranglng from moderaLe
Lo severe. 1he mosL pesslmlsLlc forecasL places 6,600 ouL of 7,700 l1Ls aL rlsk.
WlLhouL a sLrong manufacLurlng base, Lhe economy would become more sub[ecL Lo Lhe
volaLlllLy of Lhe commodlLy markeL and would lose skllls and Lechnology LhaL wlll be cosLly
and Llme consumlng Lo replace. 1he auLomoLlve manufacLurlng lndusLry has provlded Lhe
foundaLlons for crlLlcal flow-on capablllLles Lo oLher secLors lncludlng lean manufacLurlng
prlnclples and senlor managemenL capablllLles and conLrlbuLes a proporLlonally greaLer
share Lo LoLal manufacLurlng research and developmenL Lhan lLs share of employmenL and
lndusLry value added.
CovernmenL asslsLance, Lhrough Lhe malnLenance of Larlffs on auLomoLlve producLs (albelL
aL slgnlflcanLly lower levels) and Lhrough Lhe AuLomoLlve 1ransformaLlon Scheme, musL be
credlLed for lLs conLrlbuLlon Lo a beLLer performlng, more efflclenL secLor.
AsslsLance has conLrlbuLed ln a number of key ways:
lL has allowed sLrucLural ad[usLmenL wlLhln Lhe lndusLry Lo Lake place aL a reallsLlc
and measured pace wlLhln a secure pollcy envlronmenL, whlch has promoLed
lnvesLmenL, long-Lerm plannlng, and Lhe adapLaLlon of Lechnology and new
managemenL pracLlces,
lL has provlded lmporLanL slgnals Lo Lhe auLomoLlve lndusLry LhaL AusLralla conLlnues
Lo be commlLLed Lo a domesLlc auLomoLlve lndusLry, and
lL has reduced Lhe dlsparlLy ln aLLracLlng lnvesLmenL wlLh lLs global compeLlLors
whlch conLlnue Lo recelve governmenL supporL Lhrough a varleLy of mechanlsms,
boLh overL and hldden and ofLen on a much broader scale.
!"#$%%"&'()*$& 1
1be Aosttolloo Covetomeot cootlooe osslstooce to secote o sostolooble ootomotlve
loJostty boseJ oo lts Jltect coottlbotloo to tbe ecooomy, tbe btooJet ecooomlc
beoeflts tbe loJostty Jellvets tbtooqb lopot-ootpot llokoqes os o JemooJloq
potcboset, ooJ tbe slqolflcoot splll-ovet beoeflts qeoetoteJ lo socb oteos os skllls
Jevelopmeot ooJ tecbooloqy ttoosfet.


8

!"#$%%"&'()*$& 2
1be Aosttolloo Covetomeot.
cootlooe tbe Aotomotlve 1toosfotmotloo 5cbeme,
co-lovest lo tbe opftoot costs fot oew veblcle moJels,
telostote tbe 5500 mlllloo temoveJ ftom tbe Aotomotlve 1toosfotmotloo
5cbeme, ooJ
cootlooe ootomotlve totlffs ot cotteot levels.
1he read[usLmenL and resource reallocaLlon requlred lf Lhe auLomoLlve lndusLry closes ls
cosLly and can carry slgnlflcanL Llme delays. As Lhe auLomoLlve lndusLry ls concenLraLed ln
Adelaides northern suburbs (see Appendlx A for deLalls), whlch ln Lurn ls heavlly dependenL
on Lhe conLlnued presence of local manufacLurlng, Lhere ls a subsLanLlal rlsk of ongolng
long-Lerm unemploymenL, adverse soclal consequences, reglonallsed damage Lo
communlLles and lncreased cosLs Lo governmenL. 1hls rlsk ls helghLened by Lhe profound
dlsadvanLage of Lhe ClLy of layford area lL ls ln Lhe boLLom second percenLlle of
dlsadvanLage for all suburbs ln Lhe naLlon as measured by Lhe SLllA lndex. 1hese lmpacLs
wlll be concenLraLed ln Lhose areas of SouLh AusLralla currenLly experlenclng a hlgh level of
economlc and soclal dlsadvanLage.
When deLermlnlng lLs opLlons on asslsLance Lhe roducLlvlLy Commlsslon needs Lo examlne
Lhe dlsLrlbuLlonal effecLs and Lhe assoclaLed LranslLlonal cosLs of changes and look aL boLh
overall naLlonal economlc welfare as well as Lhe reglonal lmpacLs.
Walsh and ONeil (2011) draw a distinction between regional structural adjustment
asslsLance and reglonal developmenL asslsLance:
SLrucLural ad[usLmenL asslsLance seeks Lo manage Lhe process of change wlLhouL
lnLerferlng ln Lhe allocaLlon of resources.
8eglonal developmenL asslsLance seeks Lo lnfluence Lhe allocaLlon of resources
lnLegral Lo Lhe prosperlLy, vlLallLy and susLalnablllLy of Lhe reglon.
1hey suggesL LhaL sLrucLural ad[usLmenL ls abouL economlc efflclency, whereas reglonal
developmenL asslsLance encompasses equlLy conslderaLlons and oLher broader soclal and
pollLlcal ob[ecLlves. 1hose reglons, such as layford and norLhern Adelalde, whlch are
dlsproporLlonaLely lmpacLed and already sufferlng from slgnlflcanL levels of dlsadvanLage,
need boLh.
rograms should be speclflc and well-LargeLed. key lssues LhaL should be lnvesLlgaLed by Lhe
roducLlvlLy Commlsslon are Lhe effecLs on employmenL, lnvesLmenL, ouLpuL and lncome
levels ln reglons where Lhe auLomoLlve lndusLry ls hlghly concenLraLed.


9

!"#$%%"&'()*$& 3
1be ltoJoctlvlty commlssloo toke loto occooot tbe oeeJ fot slqolflcoot oJJltloool
totqeteJ osslstooce fot offecteJ bosloesses, wotkets ooJ teqloos, ooJ otbet costs, lo
tbelt ooolysls of ooy teJoctloos lo ootomotlve loJostty osslstooce.
Many of Lhe roducLlvlLy Commlsslons past findings and recommendations with respect to
sLrucLural ad[usLmenL and esLlmaLed lmpacLs ln Lhe comparaLlve sLaLlc economlc modelllng
have been based on Lhe fundamenLal assumpLlon LhaL Lhere are few resLrlcLlons on Lhe
geographlc and occupaLlonal moblllLy of lndlvlduals.
1he varlablllLy ln levels of unemploymenL ln speclflc reglons, even aL Llmes of economlc
buoyancy would suggesL LhaL dlsplaced workers are less spaLlally moblle Lhan lL has
prevlously been assumed and LhaL facLors oLher Lhan wages and labour demand slgnlflcanLly
affect an individuals incentive and ablllLy Lo flnd work.
The South Australian Government would welcome insights provided by the Commissions
currenL lnqulry lnLo Ceographlc Labour MoblllLy ln lnformlng Lhe esLlmaLed lmpacLs and
sLrucLural ad[usLmenL measures belng consldered ln Lhls sLudy.
!"#$%%"&'()*$& 4
1be ltoJoctlvlty commlssloo toke loto cooslJetotloo tbe Jeqtee of qeoqtopblc ooJ
occopotloool moblllty of people employeJ lo tbe ootomotlve mooofoctotloq loJostty
ooJ loJosttles sopplyloq ootomotlve mooofoctotloq lo Aosttollo, wbeo estlmotloq tbe
Jeqtee of lmpoct of cbooqes lo tbe ootomotlve loJostty ooJ fotmolotloq lts optloos
fot poteotlol sttoctotol oJjostmeot meosotes.
ln summary, Lhe SouLh AusLrallan CovernmenL has some reservaLlons regardlng Lhe
convenLlonal assumpLlon LhaL, followlng Lhe closure of a flrm or lndusLry acLlvlLy, resources
wlll be reallocaLed wlLhln Lhe economy Lo Lhelr nexL besL use. 1he exLenL Lo whlch Lhls can
occur ln pracLlce, and Lhe Llme LhaL lL may Lake, wlll depend on a varleLy of facLors whlch
cannoL be convlnclngly assessed Lhrough economlc modelllng. lL cannoL be ruled ouL LhaL
Lhe ad[usLmenL process lmposes very large cosLs on socleLy and lndlvlduals.
Some of Lhese could be permanenL losses for example, caplLal speclflc Lo auLomoLlve
manufacLurlng ls Lransferred offshore, or sklll deflclLs force some dlsplaced workers lnLo
early reLlremenL, or lf perlods of unemploymenL are assoclaLed wlLh greaLer rlsks of ongolng
healLh problems. Lven where Lhey are lmpacLs LhaL resolve Lhemselves ln Lhe very long run,
Lhelr lmpacL may sLlll be very cosLly and prolonged. SocleLal cosLs are llkely Lo be
exacerbaLed lf Lhe ad[usLmenL occurs ln reglons where alLernaLlve employmenL
opporLunlLles are relaLlvely low and levels of soclal dlsadvanLage are relaLlvely hlgh, glven
poLenLlal barrlers Lo moblllLy and LhreaLs Lo Lhe reslllence of famllles and broader
communlLles.

10

ln assesslng Lhe case for furLher supporL for Lhe auLomoLlve secLor Lhe roducLlvlLy
Commlsslon cannoL lgnore Lhe poLenLlally very large ad[usLmenL cosLs (and poLenLlal
permanenL cosLs) whlch may arlse from lndusLry closure or rely on comparaLlve sLaLlc
economlc modelllng resulLs whlch do noL adequaLely esLlmaLe Lhelr scale, Llmlng or
dlsLrlbuLlon.
1he Allen ConsulLlng Croup
2
reporL found LhaL desplLe Lhe long Lerm lmprovemenL ln Lhe
economy Lhe loss of lncome and assoclaLed consumpLlon conLlnues for many years afLer Lhe
collapse of Lhe moLor vehlcle lndusLry. 1he dlscounLed presenL value of Lhe welfare beneflLs
from reLenLlon of Lhe lndusLry was esLlmaLed Lo be ln Lhe order of $21.3 bllllon.
1he SouLh AusLrallan CovernmenL conslders Lhe approprlaLe basls for a declslon by Lhe
AusLrallan CovernmenL regardlng supporL for Lhe auLomoLlve lndusLry should be Lhe use of
an economlc evaluaLlon. namely, assesslng wheLher Lhe neL presenL value of Lhe beneflLs
from supporLlng Lhe secLor ouLwelgh Lhe neL presenL value of Lhe cosLs of LhaL supporL,
Laklng full accounL of Lhe avolded cosLs assoclaLed wlLh lndusLry closure.
!"#$%%"&'()*$& ,5
1be ltoJoctlvlty commlssloo ossess wbetbet tbe oet pteseot voloe of tbe beoeflts
ftom soppottloq tbe ootomotlve loJostty ootwelqb tbe oet pteseot voloe of tbe costs
of tbot soppott, tokloq foll occooot of tbe ovolJeJ costs ossocloteJ wltb loJostty
closote.
lL ls Lhe vlew of Lhe SouLh AusLrallan CovernmenL LhaL conslsLenL CovernmenL supporL for
Lhe auLomoLlve lndusLry has ensured AusLralla ls recognlsed as a low soverelgn rlsk naLlon
wlLh lnsLlLuLlonal sLablllLy and pollcy cerLalnLy. Cur low rlsk sLandlng lnLernaLlonally beneflLs
all AusLrallan lndusLrles and creaLes a hlghly compeLlLlve and aLLracLlve lnvesLmenL cllmaLe
whlch can lncreaslngly conLrlbuLe Lo Lhe economlc wellbelng of Lhe naLlon.

2
Allen ConsulLlng, 2013, 1be 5ttoteqlc kole of tbe Aosttolloo Aotomotlve Mooofoctotloq loJostty,
hLLp://www.acllallen.com.au/cms_flles/lCAl_26SepLember2013.pdf

11

78 9*+5':0/+1'*
The Productivity Commission has been asked to quantify the costs and benefits, including
aL Lhe economy-wlde and reglonal level, of existing and alternative assistance mechanisms.
ln vlew of Lhe poLenLlally very large ad[usLmenL cosLs (and poLenLlal ongolng cosLs) whlch
may arlse from flrm closure and lndusLry conLracLlon, economlc lmpacL analysls musL be
comprehenslve Lo adequaLely esLlmaLe Lhelr scale and naLure.
As noLed by Lhe roducLlvlLy Commlsslon:
Asslstooce to tbe loJostty ls oow mocb lowet tboo lo tbe post. As o coosepoeoce, tbe
purely allocative efficiency gains that would ensue from further assistance
teductions are likely to be small and dynamic and other considerations assume
qteotet slqolflcooce.
3

1he SouLh AusLrallan CovernmenL has some reservaLlons regardlng Lhe convenLlonal
assumpLlon LhaL, followlng Lhe closure of a flrm or lndusLry acLlvlLy, resources wlll be
reallocaLed wlLhln Lhe economy Lo Lhelr nexL besL use. 1he exLenL Lo whlch Lhls can occur ln
pracLlce, and Lhe Llme LhaL lL may Lake, wlll depend on a varleLy of facLors whlch cannoL be
convlnclngly assessed Lhrough a comparaLlve sLaLlc economlc lmpacL analysls.
lL cannoL be ruled ouL LhaL Lhe ad[usLmenL process lmposes very large cosLs on socleLy and
lndlvlduals. Some of Lhese could be permanenL losses for example lf sklll deflclLs force
some dlsplaced workers lnLo early reLlremenL, or lf perlods of unemploymenL are assoclaLed
wlLh greaLer rlsks of ongolng healLh problems. Lven where Lhere are lmpacLs LhaL resolve
Lhemselves ln Lhe very long run, Lhelr lmpacL may sLlll be very cosLly and prolonged. SocleLal
cosLs are llkely Lo be exacerbaLed lf Lhe ad[usLmenL occurs ln reglons where alLernaLlve
labour markeL opporLunlLles are relaLlvely low and levels of soclal dlsadvanLage are
relaLlvely hlgh, glven poLenLlal barrlers Lo moblllLy and LhreaLs Lo Lhe reslllence of famllles
and broader communlLles.
1he lmpacLs of downslzlng and closures durlng economlc downLurns are quanLlLaLlvely and
quallLaLlvely dlfferenL Lo Lhose LhaL Lake place durlng perlods of growLh and relaLlvely low
unemploymenL. lor example Lhe prevalence of long-Lerm unemploymenL amongsL
manufacLurlng workers ls very hlgh as a consequence of flrm closures or downslzlng durlng
economlc downLurns. 1he scale and focus of lnLervenLlons Lo manage and mlnlmlze Lhe
negaLlve lmpacLs of slgnlflcanL change and shocks should conslder Lhe economlc and labour
markeL condlLlons LhaL prevall aL Lhe Llme.
8eglons wlLh a hlgh dependency on mass manufacLurlng have proven Lo be parLlcularly
vulnerable Lo large-scale downslzlng and flrm closures over Lhe lasL 20 years
4
. uurlng

3
roducLlvlLy Commlsslon, 2002, kevlew of tbe Aotomotlve Asslstooce lopolty kepott
4
Spoehr, J and Shanahan, M. 1994. Alternatives to retrenchment : job retention and structural adjustment in
a regional economy, ceotte fot loboot 5toJles, unlverslLy of Adelalde.

12

perlods of economlc decllne Lhose experlenclng reLrenchmenL are much more llkely Lo
become long-Lerm unemployed (unemployed for 12 monLhs or more). uurlng Lhe recesslons
of Lhe early 1980s and 1990s, reLrenchmenLs ln SouLh AusLralla lncreased sharply from
23,000 ln 1988 Lo 48,000 ln 1992
3
. Around one ln Lhree of Lhese [ob losses were
concenLraLed ln manufacLurlng. 8eLrenchmenL as a proporLlon of unemploymenL ln SouLh
AusLralla doubled durlng Lhe helghL of Lhe 1990s recesslon
6
.
1he Allen ConsulLlng Croup
7
reporL found LhaL desplLe Lhe long Lerm lmprovemenL ln Lhe
economy Lhe loss of lncome and assoclaLed consumpLlon conLlnues for many years afLer Lhe
collapse of Lhe moLor vehlcle lndusLry. 1he dlscounLed neL presenL value of Lhe welfare
losses were esLlmaLed Lo be ln Lhe order of $21.3 bllllon.
ConsequenLly Lhe SouLh AusLrallan CovernmenL ls of Lhe vlew LhaL when boLh Lhe Langlble
and lnLanglble cosLs are Laken accounL of, Lhe declslon Lo wlLhdraw all asslsLance from Lhe
automotive industry may not be in Australias best economlc and soclal lnLeresLs.
lL ls Lhe vlew of Lhe SouLh AusLrallan CovernmenL LhaL Lhe roducLlvlLy Commlsslon should
fully assess Lhe economlc and soclal cosLs of alLernaLlve asslsLance arrangemenLs for Lhe
lndusLry, parLlcularly wlLhln dlrecLly affecLed communlLles, Lhrough Lhe use of economlc
evaluaLlon. namely, assesslng wheLher Lhe neL presenL value of Lhe beneflLs from
supporLlng Lhe secLor ouLwelgh Lhe neL presenL value of Lhe cosLs of LhaL supporL, Laklng full
accounL of Lhe avolded cosLs assoclaLed wlLh lndusLry closure. ApproprlaLe senslLlvlLy
analysls should also be applled Lo all key assumpLlons LhaL crlLlcally lmpacL on Lhe
magnlLude and Llmlng of Lhe sLream of beneflLs and cosLs assessed.
Lconomlc evaluaLlon ls a wldely used Lool ln economlcs for organlslng lnformaLlon Lo ald
declslons abouL Lhe allocaLlon of resources and assesslng wheLher a parLlcular program ls a
sound lnvesLmenL of publlc funds. An economlc evaluaLlon ls concerned wlLh lncremenLal
changes LhaL ls, effecLs LhaL would noL have occurred ln Lhe absence of Lhe pro[ecL or
pollcy and provldes an esLlmaLe of Lhe slze of Lhe neL soclal beneflLs
8
(l.e. soclal beneflLs
mlnus soclal cosLs) assoclaLed wlLh a program.
Whlle lL may noL be posslble Lo value some of Lhese beneflLs lL ls sLlll lmporLanL LhaL a
quallLaLlve assessmenL be provlded. ln slLuaLlons where cosLs exceed beneflLs and many
(slgnlflcanL) beneflLs cannoL be quanLlfled, a Lhreshold approach can be used.


3
lbld
6
lbld
7
Allen ConsulLlng, 2013, 1be 5ttoteqlc kole of tbe Aosttolloo Aotomotlve Mooofoctotloq loJostty,
hLLp://www.acllallen.com.au/cms_flles/lCAl_26SepLember2013.pdf
8
Benefits and costs are social rather than private or individual, as they are measured irrespective of the
people Lo whom Lhey accrue and Lhey are noL conflned Lo speclflc markeL LransacLlons (eg lncluslon of
envlronmenLal lmpacLs).

13

1he followlng chapLers ln Lhe SouLh AusLrallan submlsslon wlll furLher explore Lhese cosLs by
examlnlng Lhe sLrucLure of Lhe lndusLry, lLs conLrlbuLlon Lo Lhe SLaLe and reglonal economles
and Lhe facLors LhaL have lnfluenced lLs compeLlLlveness and producLlvlLy, lncludlng pasL
SLaLe funded asslsLance.

14

;8 94<'5+"*/% '( +=% >0+'4'+12% 9*:0,+56
1he global auLomoLlve manufacLurlng lndusLry ls one of Lhe largesL manufacLurlng secLors ln
Lhe world and ls sub[ecL Lo rapld change and broader macroeconomlc Lrends. Whlle Lhls
lndusLry has hlsLorlcally been a key acLlvlLy of advanced lndusLrlal naLlons, and has been
used as a means of lndusLrlallsaLlon by many economles, Lhe lndusLry ls now lnvesLlng
slgnlflcanLly ln emerglng economles, especlally Asla and LasLern Lurope.
1he auLomoLlve lndusLry ls a slgnlflcanL conLrlbuLor Lo Lhe AusLrallan economy, wlLh Lhe
bulk of lLs acLlvlLles based wlLhln vlcLorla and SouLh AusLralla, and focused around Lhe Lhree
passenger moLor vehlcle manufacLurers CM Polden, 1oyoLa and lord. naLlonally Lhe
lndusLry dlrecLly employs around 30,000 people, of whlch around 17,000 work for lord, CM
Polden and 1oyoLa, and ln 2011-12 conLrlbuLed $3.4 bllllon of lndusLry value Added Lo
Australias economy.
9

1he lndusLry produced ln excess of 220,000 passenger moLor vehlcles ln 2012,
10

11
down
from 408,000 vehlcles ln 2004. ln 2012, 39 per cenL of vehlcles produced were exporLed and
61 per cenL produced for Lhe domesLlc markeL.
1he lndusLry has undergone slgnlflcanL sLrucLural change. nlssan closed ln 1992 and
MlLsublshl ceased lLs domesLlc operaLlons ln 2008. lf CM Polden were Lo wlLhdraw Lhelr
domesLlc manufacLurlng operaLlons, as lord MoLors are scheduled Lo do ln 2016, lL would
leave 1oyoLa as Lhe sole manufacLurer of cars ln AusLralla. 1hls would deprlve Lhe lndusLry
of Lhe economles of scale lL can already aLLaln, further erode the industrys competiveness
and subsLanLlally LhreaLen Toyotas long Lerm vlablllLy and LhaL of Lhe auLomoLlve
componenLs secLor.


9
ueparLmenL of lndusLry, 2013, Aboot tbe Aotomotlve loJostty,
hLLp://www.lnnovaLlon.gov.au/lndusLry/auLomoLlve/ages/AbouLLheAuLomoLlvelndusLry.aspx
10
ueparLmenL of lndusLry, roducLlon volume of AusLrallan-made vehlcles, 2002-2012 (unlLs),
hLLp://www.lnnovaLlon.gov.au/lndusLry/auLomoLlve/SLaLlsLlcs/ages/AuLomoLlveuaLaCard1exLuescrlpLlon.asp
x#1
11
Allen ConsulLlng, 2013, 1be 5ttoteqlc kole of tbe Aosttolloo Aotomotlve Mooofoctotloq loJostty

13

3;<=>? 9@ ,>AB=CD;AE AF G?H;CI?J ;E 4=JD>KI;K

5ootce. key Aotomotlve 5totlstlcs 2001-2011. 2012 flqotes boseJ oo loJostty estlmotes12

1he Allen ConsulLlng Croup conducLed economlc modelllng based on Lhe assumpLlon LhaL lf
CM Polden were Lo wlLhdraw from Lhe domesLlc markeL, lL would lead Lo Lhe subsequenL
wlLhdrawal of 1oyoLa. 1he analysls suggesLs LhaL Lhe followlng would also occur:
Australias GDP would be $7.3 billion smaller (in todays dollars) by 2018.
8llllons ln forelgn dlrecL lnvesLmenL would cease. Pead offlces overseas would dlrecL
lnvesLmenL Lo oLher auLomoLlve manufacLurlng counLrles, noL Lo oLher lndusLrles ln
AusLralla.
1he economles of Adelalde and Melbourne would be devasLaLed wlLh Cross 8eglonal
roducL (C8) conLracLed by 0.9 per cenL and 1.4 per cenL respecLlvely and lL ls llkely
C8 wlll be lower Lhan currenL levels unLll Lhe end of 2031, whlle employmenL for
Lhe Lwo clLles could fall by around 1.3 per cenL.
13

ln addlLlon Lo Lhe Lhree passenger moLor vehlcle manufacLurers, Lhe lndusLry also lncludes
hundreds of componenL manufacLurers, ranglng from small AusLrallan producers Lo
companles LhaL are also subsldlarles of very large mulLlnaLlonals.
1he AusLrallan auLomoLlve lndusLry has developed lnLo a dynamlc, lnnovaLlve and globally
lnLegraLed supply chaln lndusLry. roducLlvlLy and quallLy levels have conLlnued Lo lncrease
and 8&u and lnnovaLlon has been lncreaslngly recognlsed as an lmporLanL conLrlbuLor Lo
the industrys performance. This has provided the foundations for the automotive
manufacLurlng lndusLry Lo drlve lnnovaLlon and provlde crlLlcal flow-on capablllLles Lo oLher
secLors lncludlng lean manufacLurlng prlnclples and senlor managemenL capablllLles.


13
Allen ConsulLlng, 1he SLraLeglc 8ole of Lhe AusLrallan AuLomoLlve ManufacLurlng lndusLry
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2001 2003 2005 2007 2009 2011
Export market Domestic market

16

ln Lhls sense Lhe auLomoLlve lndusLry plays an lnLegral parL ln developlng and malnLalnlng
Lhe essenLlal skllls and Lechnology base LhaL drlves modern lndusLrlal economles. Cnly 13
naLlons, lncludlng AusLralla, can lnLegraLe all of Lhe Lechnology and resources Lo
manufacLure a car from concepL Lo producLlon. 1he splll-over beneflLs, or poslLlve
exLernallLles, lnclude Lhe followlng:
1echnology Lransfer As mulLlnaLlonal auLomoLlve companles lnvesL ln AusLralla
Lhey brlng new or lmproved Lechnology. 1he process ls Lwo-way: Lechnology
developed ln AusLralla also flnds lLs way lnLo Lhe global lndusLry Lhrough parenL
companles. 1hls resulLs ln lncreased lnLernaLlonal compeLlLlveness ln Lhe domesLlc
lndusLry buL also can provlde AusLrallan brandlng Lo developmenLs Lransferred ouL.
8esearch and developmenL 1he auLomoLlve lndusLry ls a large source of research
and developmenL acLlvlLy. new developmenLs ln componenLs, manufacLurlng
Lechnlques, deslgn and developmenL processes sourced from Lhe auLomoLlve
lndusLry have appllcaLlon elsewhere. ln Lhe case of componenLs companles, for
lnsLance, LransferablllLy may be as close as Lhe ad[acenL workshop servlng anoLher
lndusLry secLor, such as defence or food processlng.
new producL developmenL whlle lncreaslng exporL opporLunlLles, new producL
developmenL also provldes Lhe consumer wlLh vehlcles LhaL are, amongsL oLher
Lhlngs, safer, more fuel efflclenL, and produce reduced levels of emlsslons, all of
whlch have beneflLs Lo Lhe broader communlLy. 1he car lndusLry ls one of Lhe few
lndusLrles ln AusLralla Lo dellver a reducLlon ln CC2 emlsslons well above Lhe
Australian Governments overall target of 5 per cent by 2020.
14
8oLh producL
lmprovemenLs and Lhelr assoclaLed developmenLs ln producLlon Lechnlques are
Lransferable across lndusLrles and flnd appllcaLlon ln oLher lndusLrles. Cnce
Lransferred domesLlcally, Lhese dellver greaLer lnLernaLlonal compeLlLlveness across
Lhe economy.
Skllls Lransfer 1he auLomoLlve lndusLry supporLs a growlng pool of hlghly skllled
people avallable Lo oLher manufacLurlng lndusLrles.
1he roducLlvlLy Commlsslon has concluded LhaL:
wblle tbete coo be oo Jlspote tbot tbe ootomotlve loJostty qeoetotes slqolflcoot
splllovets, poootlfyloq tbelt pteclse exteot ls well-olqb lmposslble.
13


14
lederal Chamber of AuLomoLlve lndusLrles, 2012 Aooool kepott,
hLLp://www.fcal.com.au/llbrary/publlcaLlon//fcal_ar_2012_web_2.pdf
13
roducLlvlLy Commlsslon, 2002, kevlew of Aotomotlve Asslstooce,
hLLp://www.pc.gov.au/__daLa/asseLs/pdf_flle/0003/23284/auLo.pdf, p.xxlll

17

;87 ?"*0("/+051*@ 1* 3'0+= >0,+5"$1"
ln March 2013 Lhe CovernmenL of SouLh AusLralla publlshed an Lconomlc SLaLemenL. ln lL
we set out South Australias long term ouLlook, lLs challenges and opporLunlLles. We also
ldenLlfled four areas of focus for our economy. Cne of Lhese areas of focus was advanced
manufacLurlng. Advanced manufacLurlng ls Lhe creaLlon of goods and servlces whlch draws
on advanced Lechnologles, skllls and processes, more lnnovaLlve producLs, servlces and
buslness models and uses excellence ln deslgn and markeLlng.
1he SouLh AusLrallan CovernmenL chose advanced manufacLurlng as an area of focus
because bulldlng a dlverslfled economy lncreases our reslllence ln a dynamlc global
envlronmenL. ManufacLurlng has helped dlverslfy Lhe SouLh AusLrallan economy away from
lLs hlsLorlcal agrlculLural base and has dellvered relaLlvely hlgh producLlvlLy levels compared
wlLh oLher lndusLrles. lor every [ob ln manufacLurlng 2.8 [obs are supporLed elsewhere ln
Lhe economy.
16

An advanced manufacLurlng secLor creaLes greaLer opporLunlLles for our buslnesses Lo add
value Lo our naLural resources and more broadly shares our economlc prosperlLy. 1hls
necessarlly lnvolves the transformation of South Australias traditional manufacturing sector
LransformaLlon whlch ls well underway. Whlle Lhls has seen a subsLanLlal reducLlon ln
manufacLurlng employmenL ln recenL decades Lhrough Lhe lnLernaLlonallsaLlon of Lhe
AusLrallan economy, manufacLurlng producLlon and employmenL remaln a subsLanLlal
proporLlon of Lhe SouLh AusLrallan economy. 1he SouLh AusLrallan economy ls more rellanL
on manufacLurlng Lhan AusLralla as a whole. ln SouLh AusLralla manufacLurlng accounLs for
10 per cenL of CS,
17
whlle naLlonally lL accounLs for approxlmaLely 7 per cenL of Cu.
18

A slgnlflcanL and sLraLeglc elemenL of Lhe manufacLurlng secLor ls Lhe auLomoLlve
manufacLurlng secLor. lL ls slgnlflcanL because lL amounLs Lo a subsLanLlal proporLlon of all
manufacLurlng employmenL and lLs loss could mean a number of manufacLurlng enLerprlses
would no longer be vlable. lL ls sLraLeglc because Lhe skllls and capablllLles of Lhe auLomoLlve
manufacLurlng lndusLry are leadlng edge and passed onLo Lhose enLerprlses whlch supply Lo
lL and Lo Lhose who access Lhe skllls of employees and managers who have worked ln lL.
Securing the future of the automotive industry is therefore central to South Australias
advanced manufacLurlng secLor, Lo SouLh AusLralla and Lo Lhe nations economic prosperity.
All reasonable sLeps should Lherefore be Laken Lo secure Lhe fuLure of Lhe auLomoLlve
manufacLurlng lndusLry ln AusLralla. Clven Lhe degree of global supply chaln lnLegraLlon and
connecLlvlLy of flrms ln Lhe lndusLry, lL would be almosL lmposslble Lo rebulld lf lL ls losL.

16
CovernmenL of SouLh AusLralla (2012), Mooofoctotloq wotks. o sttoteqy fot Jtlvloq blqb-voloe
mooofoctotloq lo 5ootb Aosttollo
17
lbld
18
ullS81, key lacLs AusLrallan lndusLry 2011-12,
hLLp://www.lnnovaLlon.gov.au/lndusLry/8eporLsandSLudles/uocumenLs/keylacLsAusLrallanlndusLry.pdf

18

;8; A? B'$:%*
1he CM Polden planL ls locaLed ln LllzabeLh vale ln Lhe ClLy of layford and produces 333
vehlcles per day. lL currenLly employs around 1,700 people.
CM Poldens Elizabeth facility builds 45 varlanLs, on Lwo archlLecLures runnlng on Lhe same
assembly llne, lncludlng slx body sLyles and nlne varlanLs ln lefL hand and rlghL hand drlve.
Commodore lncludes shorL and long wheelbase sedan, wagon and uLlllLy varlanLs, ln rlghL
and lefL hand drlve. lL produces Lhe Cruze sedan and haLch models ln rlghL hand drlve.
1he 124 hecLare slLe lncludes a press shop and meLal assembly operaLlon, body hardware
faclllLy, palnL shop, plasLlcs operaLlon, body assembly and vehlcle assembly llne, ln addlLlon
Lo an admlnlsLraLlon bulldlng and warehouslng and sLorage. As parL of Lhe vL Commodore
program, Lhe faclllLy underwenL a $300 mllllon upgrade program ln 2006, wlLh upgrades Lo
Lhe general assembly and body shop ln parLlcular.
8ecenL economlc modelllng
19
lndlcaLes LhaL ln 2013 CM Poldens operations supports 4,300
dlrecL [obs and supporLs $400 mllllon of value added a year aL CM Polden and lLs flrsL round
(1ler 1) suppllers. When producLlon lnduced lmpacLs are added Lhese flgures rlse Lo 6,300
[obs and $0.62 bllllon a year ln value added. 1he same analysls esLlmaLes LhaL Lhe LoLal
economlc acLlvlLy losL ln Lhe sLaLe because of CM Poldens closure (wlLhouL Lhe
accompanylng ad[usLmenL) would be ln Lhe order of $1.24 bllllon of CS, 13,200 [obs and
$72 mllllon per year lost from South Australias taxation base.
20

1he SouLh AusLrallan CovernmenL conducLed a supply chaln mapplng exerclse Lo deLermlne
Lhe slze and concenLraLlon of Lhe auLomoLlve lndusLry ln SouLh AusLralla and Lhe exposure
of assoclaLed suppllers ln Lhe evenL of Lhe wlLhdrawal of CM Polden from Lhe domesLlc
market. Its conclusion was that if Holden and Toyota cease their operations in Australia it is
predicted to have a catastrophic impact on component and parts suppliers. Appendix A
provldes furLher deLall.
;8C )1+6 '( D$"6('5:
ln lLs 2002 8evlew of AuLomoLlve AsslsLance, Lhe roducLlvlLy Commlsslon sLaLed LhaL were
a vehlcle manufacLurer or one of Lhe ma[or componenL producers Lo exlL, Lhe knock-on
effecLs for oLher producers as well for employees, Lhelr famllles and Lhe reglonal economles
concerned, would mosL llkely be slgnlflcanL.
21
AusLralla now faces Lhe prospecL of all vehlcle
manufacLurers and many componenL producers exlLlng wlLhln a shorL Llmeframe. Cur besL
assessmenL of such a shock ls LhaL Lhe effecLs would be exLremely damaglng on CM Polden

19
8urgan, 8 & Spoehr, !. 2013. 1be coottlbotloo of CMn llzobetb Opetotloos to tbe 5ootb Aosttolloo cooomy
ooJ tbe loteotlol lmpocts of closote upJoteJ Assessmeot 201J. Adelalde: AusLrallan Workplace lnnovaLlon
and Soclal 8esearch CenLre
20
lblJ
21
roducLlvlLy Commlsslon, 2002, kevlew of Aotomotlve Asslstooce,
hLLp://www.pc.gov.au/__daLa/asseLs/pdf_flle/0003/23284/auLo.pdf, p.xxxlx

19

workers and Lhelr famllles, communlLles ln whlch Lhe lndusLry ls locaLed and Lhe SLaLe as
whole.
norLhern Adelalde ls poorly poslLloned Lo wlLhsLand a ma[or economlc lmpacL of Lhe
magnlLude of Lhe closure of CM Polden and ma[or suppllers. 1he ClLy of layford ls locaLed
ln Adelalde's ouLer norLhern suburbs, abouL 30 kllomeLres from Lhe Adelalde C8u. lL covers
an area of 346 km
2
and comprlses suburbs such as LllzabeLh, Cralgmore, SmlLhfleld, uavoren
ark and Munno ara. ln 2012 Lhe populaLlon of layford was sllghLly more Lhan 83,000
people.
lL ls an area LhaL has a sLrong herlLage ln manufacLurlng, whlch has been ln sLrucLural
decllne for a number of years. A recenL roducLlvlLy Commlsslon sLaff paper ldenLlfled Lhe
decllne of manufacLurlng as a naLlonal Lrend, noLlng LhaL demand for unskllled workers has
been falllng.
5ttoctotol cbooqe tesoltloq ftom tecbooloqlcol cbooqe ooJ locteoseJ lotetootloool
competltloo bos tesolteJ lo o sblft lo employmeot owoy ftom ttoJltloool loJosttles socb os
mooofoctotloq ooJ oqtlcoltote to setvlce loJosttles.
22

Soclo-Lconomlc lndexes for Areas (SLllA) ls a producL developed by Lhe A8S LhaL ranks areas
ln AusLralla accordlng Lo relaLlve soclo-economlc advanLage and dlsadvanLage. 1he ClLy of
Playfords overall SEIFA index of Disadvantage raLe of 871 ranks lL as Lhe fourLh mosL
dlsadvanLaged Local CovernmenL Area (LCA) ln SA, afLer Lhe A? Lands, eLerborough
ulsLrlcL Councll and Coober edy ulsLrlcL Councll. 1he LllzabeLh and SmlLhfleld areas are ln
Lhe boLLom 2 per cenL of dlsadvanLage among AusLrallan suburbs.
layford ls one of Len LCAs ldenLlfled ln Lhe 2012-2013 8udgeL under Lhe ueparLmenL of
Puman Servlces 8ettet lotote locol 5olotloos lnlLlaLlve Lo recelve fundlng for measures Lo
address dlsadvanLage.
1he AusLrallan CovernmenL also recognlsed Lhe speclal clrcumsLances LhaL exlsL ln Lhe ClLy
of layford, when lL chose Lhe reglon as one of flve Lrlal slLes for lncome managemenL, lL
recognlsed LhaL more ls needed Lhan Lhe sLandard approaches. lurLhermore layford was
deslgnaLed as a slLe for locaLe of one of Lhree AusLrallan CovernmenL Suburban !obs
rogram pro[ecLs ln recognlLlon of Lhe need Lo acceleraLe efforLs ln Lhe reglon Lo lncrease
Lhe employmenL and skllls base of Lhe reglon. 1hls has resulLed ln Lhe esLabllshmenL of Lhe
SLreLLon CenLre whlch has recenLly released a deLalled proflle of Lhe ClLy of layford whlch
we refer Lhe Commlsslon Lo for evldence of Lhe dlfflculL condlLlons experlenced ln Lhe area.
A summary of key flndlngs ls provlded ln 1able 1.


22
McLachlan eL al, 2013, ueep ooJ letslsteot ulsoJvootoqe lo Aosttollo

20

)KLI? 9@ /;DM AF ,IKMFA>B N?M "DKD;JD;CJ
/;DM AF ,IKMFA>B 6>?KD?> 4B?IK;B?
+B=CKD;AE
ersons (aged 13 years and over) compleLed ?ear 12 hlgh
school
30.7 47.1
ersons wlLh posL-school quallflcaLlon 23.8 36.3
5KLA=> FA>C? OK>D;C;OKD;AE P ACC=OKD;AE
?ouLh (13 Lo 24 years) unemploymenL 18.3 11.8
ManufacLurlng [obs (as a proporLlon of [obs ln Lhe area) 20.6 10.7
&ECAQ? P L?E?F;DJ
Medlan household weekly lncome $896 $1,106
ersonal weekly lncome below Lhe poverLy llne 32.4 28.2
ersons (aged 16 Lo 64 years) recelvlng unemploymenL beneflL
for more Lhan 180 days
6.4 3.0
ersons (aged 13 Lo 24 years) recelvlng unemploymenL beneflL 12.3 3.6
lemale (aged 13 Lo 34 years) sole parenL pensloners 12.6 3.6
CenLrellnk concesslon holders 33.3 23.8
*?KIDH
remaLure morLallLy (AS8 per 100,000)* 347.8 231.9
Delayed purchasing prescribed medication because couldnt
afford lL*(AS8 per 100)
14.3 10.9
ClrculaLory sysLem dlsease (AS8 per 100) 20.0 18.3
,AO=IKD;AE P CAQQ=E;DM
CrowLh (LoLal) beLween 2006 and 2011 Census 13.0 6.2
ersons aged 13-24 years 13.4 13.7
Aborlglnal populaLlon 3.0 1.3
Sole parenL famllles 17.4 11.0
uwelllngs renLed 36.7 28.3
uwelllngs wlLhouL moLor car 12.6 9.7
no lnLerneL connecLlon 26.9 22.3
5ootce. notJocte, 5poebt, ctossmoo ooJ 8otboto (201J) clty of lloyfotJ soclo-Jemoqtopblc, employmeot ooJ eJocotloo
ptoflle, 5ttettoo ceotte, Aosttolloo wotkploce looovotloo ooJ 5oclol keseotcb ceotte, 1be uolvetslty of AJelolJe.
unemploymenL ln Lhe layford area ls very hlgh compared Lo Lhe resL of SouLh AusLralla and
Lhe naLlon as llgure 2 lndlcaLes. Closure of CM Polden would furLher compound Lhls
problem. AbouL 31 per cenL of Lhe CM Polden workers hold a CerLlflcaLe lll or lv
quallflcaLlon, alLhough lL ls posslble LhaL Lhls ls an underesLlmaLe because of skllls acqulred
whlle on Lhe [ob. Clven Lhe educaLlonal proflle of Lhe CM Polden workers employed ln
LllzabeLh, currenL unemploymenL raLe and large conLrlbuLlon of manufacLurlng Lo Lhe
norLhern Adelalde economy, Lhere ls a hlgh probablllLy LhaL any exlL of CM Polden from Lhe
domesLlc markeL and Lhe llkely subsequenL collapse of Lhe componenL manufacLurlng
lndusLry would lead Lo a slgnlflcanL rlse ln unemploymenL ln Lhe reglon.

21

3;<=>? 7

5ootce. uwk 5moll Ateo loboot motkets, Iooe 201J


22

C8 )'4<%+1+12%*%,, "*: D5':0/+121+6
Cver Lhe pasL decade Lhe compeLlLlve envlronmenL faclng Lhe AusLrallan auLomoLlve
lndusLry has proved challenglng. 1he appreclaLlon ln Lhe value of Lhe AusLralla dollar has
slgnlflcanLly eroded Lhe compeLlLlveness of Lhe lndusLry, maklng exporL of cars more
dlfflculL and lmporLs of componenLry and fully assembled vehlcles more aLLracLlve. ln Lhls
envlronmenL Lhe markeL share of AusLrallan made cars conLlnues Lo be eroded. 1hls Lakes
place ln a conLexL where Lrade proLecLlon ln AusLralla has decllned, buL slgnlflcanL barrlers
to entry to many of Australias trading partners remain in place. Australias place in global
auLomoLlve manufacLurlng has come under slgnlflcanL pressure over Lhe lasL decade as
manufacLurers welgh up Lhe relaLlve beneflLs of naLlonal asslsLance reglmes. noL only flrms,
buL governmenLs and naLlons compeLe for Lhe beneflLs of a domesLlc auLomoLlve
manufacLurlng lndusLry.
A perslsLenLly hlgh AusLrallan dollar ls currenLly a source of conslderable compeLlLlve
dlsadvanLage whlch we belleve governmenL pollcy needs Lo conslder ln Lhe formulaLlon of
an asslsLance package for Lhe auLomoLlve lndusLry. 1here are of course many oLher facLors
which impact on the automotive sectors ability to compete in both domestic and
lnLernaLlonal markeLs. 8road sysLemlc problems lmpacL on all our lndusLrles buL parLlcularly
affecL our Lrade exposed secLors and our appeal as a desLlnaLlon for forelgn dlrecL
lnvesLmenL. WhllsL acknowledglng LhaL many of Lhe challenges faclng Lhe lndusLry are a
reflecLlon of changes ln oLher counLrles, some of Lhese challenges such as Lhe hlgh
AusLrallan dollar are able Lo be lnfluenced by Lhe AusLrallan CovernmenL.
As a resulL of Lhe susLalned lmprovemenL ln Lhe Lerms of Lrade and growLh ln average
lncome, Lhe producLlvlLy decllne evldenced ln Lhe perlod 2000 Lo 2012 has been masked.
However, in the next decade, Australias terms of trade are expected to decline and labour
uLlllsaLlon raLes are also expecLed Lo decllne (due Lo an agelng populaLlon), so naLlonal
lncome growLh wlll decllne Lo abouL half a per cenL per year by 2022, lf producLlvlLy remalns
aL Lhe same level as Lhe lasL decade and key Lrade exposed lndusLrles are noL able Lo
compeLe lnLernaLlonally, as shown ln Lhe flgure below.

23

3;<=>? :@ /AED>;L=D;AEJ DA <>ARDH ;E KG?>K<? ;ECAQ?J

5ootce. A85 cot oo. 5204.0, oopobllsbeJ A85 Joto ooJ 1teosoty colcolotloos
5ootce. 1toos-1osmoo 8osloess cltcle ltoJoctlvlty 5etles Jlooet, letet nottls cboltmoo ltoJoctlvlty commlssloo, 18
5eptembet 201J
C8; )'4<%+1+12%*%,, "*: D5':0/+121+6 '( +=% >0,+5"$1"* >0+'4'+12%
9*:0,+56
ln Lhelr 2013 report on Australias CompeLlLlveness for CA AusLralla, LnrlghL and eLLy
assessed Lhe facLors affecLlng Lhe compeLlLlveness of Lhe moLor vehlcle manufacLurlng
lndusLry and raLed Lhem ln Lerms of lmporLance as drlvers of compeLlLlveness and
performance agalnsL compeLlLors. 1he Lhree lssues LhaL were mosL lmporLanL and where
AusLralla was assessed as mosL compeLlLlve were:
1ransporLaLlon lnfrasLrucLure,
SclenLlflc and 1echnlcal Skllls, and
CovernmenL lreedom from CorrupLlon.
lssues LhaL were raLed mosL lmporLanL and where AusLralla ls leasL compeLlLlve lncluded:
SLaff and CLher LmploymenL CosLs,
Slze of Local MarkeL uemand,
lorelgn 1rade, MarkeL Access and 1arlff ollcy,
Lxchange 8aLes, and
CompeLlLlon ollcy.
kMC (2012b) compares buslness cosLs and oLher compeLlLlveness facLors for auLomoLlve
parLs manufacLurlng (a Ller 2/3 suppller) ln 14 counLrles lncludlng AusLralla, unlLed SLaLes,
!apan, 8ussla, Chlna, lndla, Cermany and 8razll. AusLralla was ranked 8
Lh
mosL expenslve ln
Lerms of overall cosLs for Lhe counLrles llsLed above. Comparlsons for Lhe Lhree key locaLlon-

24

senslLlve cosLs - labour, uLlllLles (elecLrlclLy and gas) and LransporLaLlon, are provlded ln Lhe
flgures followlng.
3;<=>? S

5ootce. klMC competltlve Altetootlves cost MoJel uetolleJ compotlsoo kepott
3;<=>? T

5ootce. klMC competltlve Altetootlves cost MoJel uetolleJ compotlsoo kepott
3;<=>? U@

5ootce. klMC competltlve Altetootlves cost MoJel uetolleJ compotlsoo kepott
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Australia Japan US Germany Brazil Russia India China
V
#
"
.
W
8
8
8
X

Total Labor & Benefits
0
500
1,000
1,500
2,000
2,500
3,000
Australia Japan US Germany Brazil Russia India China
V
#
"
.
W
8
8
8
X

Transportation
0
200
400
600
800
1,000
1,200
1,400
Australia Japan US Germany Brazil Russia India China
V
#
"
.
W
8
8
8
X

Utilities

23

1he auLomoLlve lndusLry has conLlnued Lo be a key conLrlbuLor of 8&u lnvesLmenL for Lhe
manufacLurlng secLor. 1he lndusLry accounLs for around 13 per cenL of 8&u underLaken by
Lhe manufacLurlng secLor compared Lo lLs employmenL and lndusLry valued added share of
approxlmaLely 9 per cenL.
23
1hls lndlcaLes LhaL lL ls conLrlbuLlng a greaLer Lhan proporLlonal
share Lo LoLal manufacLurlng 8&u.
As deplcLed ln llgure 7, lndusLry 8&u expendlLure has exhlblLed a general upward Lrend
over Lhe lasL decade especlally ln llghL of falllng revenues and decllnlng employmenL and
ln 2011-12 was worLh $693 mllllon.
3;<=>? Y@ 4=DAQAD;G? &EB=JD>M $=J;E?JJ -P. +ZO?EB;D=>? VWQX

5ootce. Aosttolloo 8oteoo of 5totlstlcs, keseotcb ooJ xpetlmeotol uevelopmeot. 8osloesses 2011-12 cot. 8104.0
Lxpressed as Lhe number of vehlcles produced per employee, producLlvlLy has lncreased ln
Lhe perlod slnce 2002 (see 1able 1), conLlnulng Lhe Lrend LhaL was esLabllshed durlng Lhe
early Lo mld-1990s.
lL ls noL surprlslng LhaL auLomoLlve employmenL largely exhlblLs a downward Lrend as Lhe
lndusLry has endeavoured Lo lmprove lLs compeLlLlveness and producLlvlLy by adopLlng new
labour-savlng Lechnologles. MoLor vehlcle producLlon per employee over Lhe lasL 20 years
has lncreased by [usL over 70 per cenL.
1hls has also, ln many cases, poslLlvely conLrlbuLed Lo AusLrallan-made cars belng prlce
compeLlLlve (ln Lhe domesLlc markeL) on a number of purchase and whole-of-llfe ownershlp
measures.
24
AusLralla manufacLures small, medlum and large vehlcles wlLh fuel efflclenL and
envlronmenLally frlendly englne opLlons. 1he local lndusLry also made slgnlflcanL

23
AusLrallan 8ureau of SLaLlsLlcs, 2013, keseotcb ooJ xpetlmeotol uevelopmeot. 8osloesses 2011-12 cot.
8104.0
24
lederal Chamber of AuLomoLlve lndusLrles, 2011, Aosttolloo Aotomotlve loJostty kepott
0
100
200
300
400
300
600
700
800
900
LxpendlLure ($m)

26

conLrlbuLlons wlLh CC
2
emlsslons of locally made cars reduclng by 8.8 per cenL, whlch more
Lhan doubled Lhe lndusLry average.
23

)KLI? 7@ 5KLA=> ,>AB=CD;G;DM
1?K>
,>AB=CD;AE
GAI=Q?
,>AB=CD;AE GKI=?
VWLX +QOIAMQ?ED
4G? G?H;CI?J [
?QOIAM??
4G? O>AB=CD;AE
GKI=? [ ?QOIAM??
2002 339,731 8 20,914 17.2 $382,041
2003 406,668 8.3 23,119 17.6 $366,798
2004 407,337 8.9 22,483 18.1 $393,373
2003 387,821 8.4 20,908 18.3 $402,238
2006 329,428 7.8 18,390 17.9 $426,319
2007 333,623 7.7 17,731 18.9 $433,947
2008 324,684 7.3 14,728 22 $308,396
2009 218,238 3.6 12,294 17.8 $439,216
2010 242,941 6.2 13,033 18.6 $473,103
2011 221,937 3.3 12,334 18 $430,937
2012 221,234 3.4 11,033 20.0 $486,022
5ootce. uepottmeot of loJostty, key Aotomotlve 5totlstlcs 2012, kefeteoce 1oble 20 p14
lor example, low speed colllslon replacemenL parLs cosLs and proxlmlLy Lo auLhorlsed dealer
neLworks favours AusLrallan produced vehlcles. lollowlng a low speed colllslon domesLlcally
manufacLured vehlcles are ofLen cheaper, qulcker and more convenlenL Lo repalr. 1able 2
followlng shows a sulLe of 12 vehlcle parLs LhaL would Lyplcally be replaced (elLher one or all
parLs, dependlng on severlLy) ln a low speed fronLal vehlcle colllslon. As Lhe Lable hlghllghLs,
Lhe parLs for AusLrallan made vehlcles are generally lower lndlvldually or collecLlvely ln cosL
Lhan an equlvalenL lmporLed vehlcle.
1he Lhree AusLrallan car manufacLurers have also responded Lo demand for cleaner and
more fuel efflclenL vehlcles by addlng new models wlLh hybrld, LC and dlesel englnes,
along wlLh Lhe addlLlon of Lhe four cyllnder Polden Cruze and lord lalcon. L83 (LLhanol
blend) renewable fuel capability and cylinder deactivation technology has also been
embraced on cerLaln AusLrallan made models.
A LesLamenL Lo Lhe quallLy of vehlcle produced by Lhe AusLrallan auLomoLlve lndusLry ls
provlded ln 1exL 8ox 1.



23
lederal Chamber of AuLomoLlve lndusLrles, 2012 Aooool kepott,
hLLp://www.fcal.com.au/llbrary/publlcaLlon//fcal_ar_2012_web_2.pdf

27


)+\) $'\ 9@ ]=KI;DM 4=JD>KI;KE %KB? /K>J
Lven ln Lhe face of lnLense compeLlLlon from low-cosL lnLernaLlonal manufacLurers, Polden ls
dlsprovlng Lhe myLh of Lhe supposedly lnferlor bulld quallLy of local car manufacLurers wlLh Lhe
hlgh quallLy of lLs new models.

ln a slde-by-slde revlew of Lhe 2013 Polden Calals v and Lhe Mercedes-8enz L230 (a premlum
sedan from one of Lhe mosL dlsLlngulshed car manufacLurers ln Lhe world), Lhe Polden
compared favourably, parLlcularly conslderlng lL reLalls for less Lhan half Lhe prlce of LheL230.
lrom cotAJvlce:

For just under $50,000, though, the Holden Calais V is arguably a more astounding car.
lt setves os o temloJet tbot lf mooofoctotloq closes lo tbls coootty, we lose wltb lt tbe
ooly cot left to offotJobly bleoJ spoce, Jyoomlcs, style ooJ feototes to oeot-Metc
levels.

)?CHE;CKI JO?C;F;CKD;AEJ
*AIB?E /KIK;J %?>C?B?J^$?E_ +7T8
rlce $46,490 $ 96,400
Lnglne 3.6L v6 2.0L v4 Lurbo
ower 210kW 133kW
1orque
330nm aL
2800rpm 330nm aL 1200-4000rpm
1ransmlsslon 6-speed auLomaLlc 7-speed auLomaLlc

In a further demonstration of the quality of Holdens cars, the Holden SV6 Commodore, made in
AusLralla for over 33 years, was Lhe only locally-bullL wlnner aL Lhe AusLrallan 8esL Car Awards
on november 19.

On a winners list dominated by imported vehlcles, Lhe lconlc AusLrallan-bullL Polden
Commodore sLood alone, wlnnlng Lhe prlze for besL large vehlcle under $60,000.

28

)KLI? :@ /AJD AF IAR CAII;J;AE G?H;CI? OK>DJ
5ootce. lleet 5A
C8;87 E'4%,+1/ ?"5F%+
AlLhough Lhe AusLrallan passenger vehlcle markeL ls much smaller Lhan ln Lhe unlLed SLaLes,
Lurope or Chlna (see llgure 8), lL ls an aLLracLlve markeL ln Lerms of value wlLh sales of more
Lhan one mllllon vehlcles per year generaLlng revenue ln excess of $30 bllllon.
26

uomesLlc demand for lmporLed and locally produced vehlcles has sLeadlly lncreased over
Lhe pasL decade, wlLh 1,049,902 llghL moLor vehlcle sales ln 2007 rlslng Lo 1,112,032 sales ln
2012 (see 1able 4 below). 1hls represenLs an lncrease ln demand of around 6 per cenL
durlng Lhls perlod.

26
MoLor vehlcle ManufacLurlng ln AusLralla 2012, l8lSWorld lndusLry 8eporL C2811, as presenLed ln lAM,
ulscossloo lopet 5tlmolotloq tbe Aosttolloo Aotomotlve loJostty, 2013.
Current Passenger Vehicle Type

Parts Holden
VEII
Omega
2012
JHII Cruze
Equip 1.4
2012
Holden
Captiva
CGII 2012
SZ Ford
Territory
TX 2012
Subaru
MY13
Forester
XT 2012
Toyota
Camry
Altise
2012
Toyota Prius
3 Hybrid
2012
Toyota
Corolla
Ascent
2012
Front Bumper
Cover
$350.00 $450.00 $415.00 $378.16 $523.13 $253.38 $323.32 $367.83
Front Bar
Reinforcement
$139.00 $280.00 $500.00 $248.31 $288.11 $154.32 $253.59 $305.23
RH Headlamp $335.00 $335.00 $390.00 $396.08 $808.96 $176.57 $737.51 $822.69
RH Front Guard $320.00 $300.00 $320.00 $324.14 $464.55 $210.80 S412.32 $605.36
RH Front Guard
Liner
$69.50 $69.50 $64.50 $37.33 $110.28 $43.02 $108.95 $108.60
LH Headlamp $335.00 $335.00 $390.00 $396.08 $808.96 $176.57 $737.51 $822.69
LH Front Guard $320.00 $300.00 $310.00 $324.14 $464.55 $210.80 S412.32 $605.36
LH Front Guard
Liner
$69.50 $69.50 $64.50 $37.33 $110.28 $43.73 $108.95 $108.60
Front Grille $191.00 $287.00 $438.75 $140.46 $341.38 $118.34 $166.99 $412.46
Bonnet $585.00 $640.00 $710.00 $700.99 $1,158.18 $480.86 $423.35 $569.88
Radiator $390.00 $400.00 $555.00 $205.60 $672.38 $233.30 $519.24 $537.46
Air Condition
Condensor
$390.00 $615.00 $720.00 $281.40 $465.41 $180.90 $413.19 $547.62
TOTAL COST $3,494 $4,081 $4,878 $3,470 $6,216 $2,282 $3,792 $5,814
All Pricing based on Recommended List Price ex. GST

29

3;<=>? `@ &ED?>EKD;AEKI G?H;CI? JKI?J 7897
5ootce. lotetootloool Otqoolzotloo of Motot veblcle Mooofoctotets, bttp.//olco.oet/coteqoty/soles-stotlstlcs/
uemand growLh, hlgh exchange raLes and Larlff reducLlons have all conLrlbuLed Lo maklng
Lhe AusLrallan markeL more aLLracLlve Lo vehlcle lmporLers and Lhe AusLrallan auLomoLlve
markeL becomlng, wlLhouL quesLlon, one of Lhe mosL compeLlLlve ln Lhe world:
AusLralla 67 brands compeLlng for 1.1 mllllon sales
unlLed klngdom 34 brands compeLlng for 2.3 mllllon sales
unlLed SLaLes 31 brands compeLlng for 12 mllllon sales
As a resulL Lhe sale of locally produced vehlcles has been decllnlng and now accounL for 13
per cenL (or 140,000) of all vehlcles sold, down from 20 per cenL [usL slx years ago.
27

)KLI? S@ /AQOAJ;D;AE AF .AQ?JD;C 4=DAQAD;G? QK>a?D LM JA=>C? AF G?H;CI?
Year
Sales of
Locally Made
Vehicles
Per cent of
Total Market
Sales of
Imported
Vehicles
Per cent of
Total Market
2007 200,000 19.05 849,000
80.95
2008 171,000 16.9 841,000
83.1
2009 148,000 15.8 790,000
84.2
2010 146,000 14.1 889,000
85.9
2011 142,000 14.1 866,000
85.9
2012 140,000 12.6 972,000
87.4
Source: Department of Innovation, Automotive Industry Data Card September 2013
1he CovernmenL fleeL markeL currenLly accounLs for around 13 per cenL of Lhe LoLal sales
each year of AusLrallan-produced vehlcles. lleeL demand for AusLrallan made vehlcles
asslsLs ln malnLalnlng volumes wlLhln Lhe local lndusLry, as well as fosLerlng compeLlLlon
beLween local car companles.

27
AusLrallan AuLomoLlve lnLelllgence, eotbook 2012, as presenLed ln lederaLlon of AuLomoLlve roducLs
ManufacLurers, ulscossloo lopet 5tlmolotloq tbe Aosttolloo Aotomotlve loJostty, 2013
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000

30

Powever CovernmenL fleeL procuremenL has also conLrlbuLed Lo Lhe decrease ln domesLlc
sales. ln 2012, CovernmenLs, lncludlng AusLrallan, SLaLe, 1errlLory and Local, procured
34,121 vehlcles, down from 101,326 ln 2004. nearly all of Lhe decrease ln sales was ln Lhe
purchase of locally made vehlcles such LhaL ln 2012 33 per cenL were domesLlcally
produced, a slgnlflcanL decrease from 2004 levels of 66 per cenL. 1he level of lmporL
purchases has remalned sLable, wlLh Lhe excepLlon of local governmenL, whlch has acLually
lncreased lLs proporLlon of lmporLed fleeL vehlcles. See 1able 3 followlng.
vlcLorla, SouLh AusLralla and Lhe AusLrallan CovernmenL all have exlsLlng procuremenL
pollcles LhaL requlre purchase of locally manufacLured vehlcles.
Table 5: Annual Government Fleet Sales

788S 788T 788U 788Y 788` 788b 7898 7899
AusLrallan
lmporLed 3377 4039 4636 3678 3782 3394 2348 3234
AusLrallan 9734 10483 7349 3770 2931 2262 1774 2672
)ADKI 9::99 9ST77 9788T YSS` UY9: T`TU S:77 Tb8U
SLaLe/1errlLory
lmporLed 23269 23361 23901 23036 29393 24496 30336 23897
AusLrallan 41330 31831 23361 22838 16887 14973 13338 14897
)ADKI US`9b TTS97 T9SU7 SYb9S SUS`8 :bSUb STb9S S8YbS
Local
lmporLed 7861 7318 8423 10697 12246 12747 11791 10962
AusLrallan 13333 11603 8198 6803 3029 3429 2834 2203
)ADKI 7:9bU 9b97: 9UU79 9YT87 9Y7YT 9U9YU 9SU7T 9:9UT
1oLal AusLrallan CovernmenL
lleeL Sales 101326 89037 80088 72864 70468 61301 64861 39863
5ootce. leJetol cbombet of Aotomotlve loJosttles Joto 9 Moy 201J.
uesplLe Lhls, AusLrallan bullL cars conLlnue Lo feaLure sLrongly ln Lhe 1op 10 vehlcle sales ln
Lhe domesLlc markeL (* denoLes vehlcle bullL ln AusLralla) and have been conslsLenL and
domlnanL performers ln Lhe large and medlum car markeL.
)KLI? U@ )AO 98 G?H;CI? JKI?J ;E DH? 4=JD>KI;KE QK>a?D
Toyota Corolla 3,861

Toyota Camry* 2,251
Mazda 3 3,613 Ford Ranger 2,027
Holden Commodore* 3,315 Nissan Navara 1,969
Toyota Hilux 3,172 VW Golf 1,967
Hyundai i30 2,379 Holden Cruze* 1,923
5ootce. lCAl, vlAc15 Octobet 201J

31

C8;8; !5":% D'$1/6G 4"5F%+ "//%,, "*: +"51((,
1he ablllLy of Lhe AusLrallan auLomoLlve lndusLry Lo wln exporL orders has been and wlll
conLlnue Lo be hampered by Lrade proLecLlon measures ln key markeLs, largely creaLed by a
lack of progress ln some areas ln markeL access galns Lhrough Asla aclflc Lconomlc
CooperaLlon (ALC), bllaLeral Lrade negoLlaLlons and World 1rade CrganlsaLlon (W1C)
processes.
AusLralla has commlLLed Lhrough Lhe W1C Lo keep Larlffs on moLor vehlcles below 13-40 per
cenL (range depends on purpose).
28
Australias vehicle tariffs are set below the maximum
allowed by Lhe W1C wlLh a reducLlon ln !anuary 2010 from 10 per cenL Lo 3 per cenL.
Australias approach to lndusLry and Lrade pollcy, ln parLlcular Lhe pursulL of unllaLeral
reducLlons ln Lrade barrlers, has conLrlbuLed Lo an lncreaslngly uneven playlng fleld for
Australias car manufacturing sector. Of the 87 per cenL of vehlcles lmporLed, approxlmaLely
21 per cenL aLLracL no Larlff and Lhe remalnlng lmporLs aLLracL a 3 per cenL Larlff. 1hls degree
of markeL access ls noL reclprocaLed by many of our Lradlng parLners, lncludlng Lhose wlLh
whlch AusLralla malnLalns lree 1rade AgreemenLs (l1As).
lor example, whlle Lhe 1halland-AusLralla l1A has seen a subsLanLlal reducLlon ln Larlffs, lL
has noL prevenLed 1halland erecLlng non-Larlff barrlers:
Thailands restructuring of motor vehicle excise tax applies the new excise rates on a non-
Jlsctlmloototy bosls to oll expottets. nowevet, tbe foct tbot tbe totes escolote occotJloq to
eoqloe slze JlsoJvootoqes Aosttollo (op to 80 pet ceot soles tox fot tbe lotJ 1ettltoty).
29

ln Lhe currenL regulaLory envlronmenL a locally made vehlcle such as Lhe 1errlLory aLLracLs
an exclse whlch pushes lLs cosL Lo almosL Auu$100,000 ln 1halland. WlLhouL a change Lo Lhe
current arrangement, Ford Australias continued attempts to enter the Thai market are
pointless.
30

Cn 18 Aprll 2003, AusLralla and Chlna agreed Lo negoLlaLe a l1A. 1he 19Lh round of
AusLralla-Chlna l1A negoLlaLlons was held ln 8el[lng on 4-6 !une 2013. Whlle recognlslng
LhaL negoLlaLlons are complex and cover an array of lssues lncludlng agrlculLural Larlffs and
quoLas, manufacLured goods, servlces, Lemporary enLry of people and forelgn lnvesLmenL,
Lhe lack of progress Lo daLe places slgnlflcanL llmlLaLlons on Lhe ablllLy of Lhe AusLrallan
auLomoLlve lndusLry Lo access some of Lhe fasLesL growlng markeLs ln Lhe world.

28
ulA1 (2013) SCPLuuLL l AuS18ALlA A81 1: MCS1-lAvCu8Lu-nA1lCn 1A8lll SLC1lCn ll - CLher roducLs (Larlff ld
8703), hLLp://www.dfaL.gov.au/Lrade/negoLlaLlons/schedule/schedule.pdf, accessed 22/7/2013.
29
AusLrallan lndusLry Croup (2010) Aosttolloo loJostty Ctoop sobmlssloo to lc 8llotetol ooJ keqloool 1toJe
Aqteemeots
30
Park, B. 7 October 2013. Fords Thai Territory exports labelled pointless, CoAoto,
hLLp://www.goauLo.com.au/mellor/mellor.nsf/sLory2/9L6633979l3906lACA2378lu0014l7L9

32

AusLralla ls also currenLly engaged ln nlne l1A negoLlaLlons: flve bllaLeral l1A negoLlaLlons
(wlLh Chlna, !apan, korea, lndla and lndonesla) and four mulLllaLeral l1A negoLlaLlons.
AusLralla has seven l1As currenLly ln force wlLh new Zealand, Slngapore, 1halland, Lhe uSA,
Chlle, Lhe AssoclaLlon of SouLh LasL Aslan naLlons (ASLAn) (wlLh new Zealand) and
Malaysla. 1he counLrles covered by Lhese l1As accounL for 28 per cenL of AusLralla's LoLal
Lrade.
C8;8C -./="*@% H"+%,
Llke any Lrade exposed secLor, Lhe exchange raLe plays an lmporLanL parL ln Lhe proflLablllLy
of Lhe auLomoLlve lndusLry. 1he hlgh AusLrallan dollar has hurL AusLrallan vehlcle
manufacLurlng by maklng vehlcle lmporLs more compeLlLlve (offseL Lo some exLenL by
sourclng of cheaper componenL lmporLs) and maklng lL dlfflculL Lo remaln compeLlLlve ln Lhe
global markeL.
1he so-called Dutch Disease refers to the adverse effects through real exchange rate
appreclaLlon LhaL Lhe mlnlng boom can have on varlous exporL and lmporL-compeLlng
lndusLrles. A Canadlan sLudy
31
esLlmaLed LhaL Lhe due Lo Lhe uuLch dlsease phenomenon
and exchange raLe developmenLs beLween 2002 and 2007, beLween 33 and 39 per cenL of
manufacLurlng employmenL was losL.
1here ls a poLenLlal LhaL ln Lhe medlum Lo long Lerm, Lhe exchange raLe may fall back Lo
levels experlenced [usL prlor Lo Lhe Clobal llnanclal Crlsls. 1hls could render some of Lhe
currenL challenges as Lemporary and sLrengLhens Lhe argumenL for shorL Lo medlum Lerm
supporL for Lhe lndusLry Lo provlde foundaLlons for longer Lerm susLalnablllLy.
8eLween 2010 and early 2013 Lhe AusLrallan dollar regularly Lraded aL hlsLorlcal levels above
parlLy wlLh Lhe unlLed SLaLes dollar compoundlng Lhe lmpacL of Lhe 2010 Larlff reducLlon.
ln lLs May 2002 submlsslon
32
Lhe SouLh AusLrallan CovernmenL ralsed serlous concerns
abouL Lhe capaclLy of Lhe AusLrallan auLomoLlve lndusLry Lo absorb Lhe effecLs of a rlse ln
Lhe value of Lhe AusLrallan dollar relaLlve Lo oLher currencles. 1he lnopporLune Llmlng of
slmulLaneous cuL ln Larlff raLes and Lhe hlgh exchange raLe level have furLher compromlsed
the sectors ability to maintain its local market share and compete in international markets.
1he AusLrallan CovernmenL, ln lLs budgeL, also pro[ecLed Lerms of Lrade Lo decllne by a LoLal
of 20 per cenL over a 13-year perlod, seLLllng around Lhelr 2003-06 level. Cver Lhe
pro[ecLlon perlod, Lhe exchange raLe ls assumed Lo move ln llne wlLh Lhe long-Lerm
hlsLorlcal relaLlonshlp beLween Lhe Lerms of Lrade and Lhe real effecLlve exchange raLe. 1he

31
Beine, M, Bos, C and Coulombe, S. 2012. Does the Canadian economy suffer from Dutch disease?, Resource and Energy
Lconomlcs, 34(4), pp-468-492

32
SA CovernmenL, 2002, 5A 5obmlssloo to tbe ltoJoctlvlty commlssloo oo lost 2005 Asslstooce Attooqemeots
fot tbe Aotomotlve Mooofoctotloq 5ectot

33

Lerms of Lrade pro[ecLlons lmply a fall ln Lhe real exchange raLe of 0.9 per cenL per annum
over Lhe pro[ecLlon perlod.
3;<=>? b@ 4=JD>KI;KE .AIIK> KEB )K>;FFJ
5ootce. kesetve 8ook of Aosttollo
1he pro[ecLed reLurn of Lhe AusLrallan dollar Lo a hlsLorlcal mean below parlLy wlLh Lhe
uSu would positively contribute to the sectors competitive position and a more
susLalnable lndusLry ln Lhe longer Lerm. lf Lhe dollar remalns hlgh Lhen lL would be prudenL
for Lhe AusLrallan CovernmenL Lo ensure LhaL levels of asslsLance Lo Lhe lndusLry Lake
accounL of Lhls compeLlLlve dlsadvanLage.
C8;8I 9*:0,+56 ",,1,+"*/%
1he global auLomoLlve lndusLry ls characLerlsed by subsldlsaLlon, proLecLlon and asslsLance.
1he exLenL of asslsLance ls unknown - counLrles are noL renowned for publlclslng asslsLance
measures and much lnformaLlon ls deemed commerclal-ln-confldence. Powever asslsLance
can be broadly caLegorlsed lnLo Lhree grouplngs:
proLecLlon from lmporLs ln Lhe form of Larlffs and non-Larlff barrlers Lo Lrade,
lnvesLmenL aLLracLlon lncenLlves, and
measures Lo bulld lndusLry capablllLy, lncludlng lnnovaLlon capablllLy.
0
2
4
6
8
10
12
14
16
0.4000
0.3000
0.6000
0.7000
0.8000
0.9000
1.0000
1.1000
1.2000
2002 2003 2004 2003 2006 2007 2008 2009 2010 2011 2012 2013 2014
4
=
J
D
>
K
I
;
K
E

.
A
I
I
K
>

AuS uollar 1arlff

34

ln Lhelr lebruary 2002 reporL, Lhe Allen ConsulLlng Croup and uelolLLe examlned asslsLance
measures ln eleven
33
comparaLor overseas counLrles. 1he reporL dlvlded Lhe counLrles lnLo
Lwo caLegorles, developed and developlng counLrles. A concluslon of Lhe reporL was LhaL:
developed naLlons have sLarLed Lo move away from offerlng Lhelr domesLlc
lndusLrles proLecLlon from forelgn lmporLs and Lowards provldlng lnvesLmenL
aLLracLlon lncenLlves (co-investment) and asslsLance Lo bulld lnnovaLlon capablllLy
(such as 8&u lncenLlves and subsldlsed Lralnlng), alLhough !apan ls Lhe excepLlon Lo
Lhls rule, and
developlng counLrles Lend Lo have hlgher barrlers Lo Lrade Lhan developed counLrles
and also provlde slgnlflcanL lncenLlves Lo aLLracL forelgn lnvesLmenL.
34

1he Sapere group (uavey 2011) compared Lhe level of budgeLary asslsLance provlded Lo Lhe
auLomoLlve lndusLry ln 2008-09 and found LhaL Lhe level of dlrecL budgeLary asslsLance
provlded Lo Lhe AusLrallan secLor was qulLe low, aL around uSu18 per person. Powever lL
should be noLed LhaL lL ls very llkely LhaL asslsLance levels Lo some naLlons durlng Lhe perlod
assessed was Lemporarlly boosLed by Lhelr response Lo Lhe global flnanclal crlsls.
3;<=>? 98@ $=B<?DK>M KJJ;JDKEC? FA> DH? K=DAQAD;G? ;EB=JD>M 788`^bc #". O?> CKO;DK
5ootce. uovey (2011), oJjosteJ fot teceot excbooqe totes.
C8;8J D'$1/6 -*215'*4%*+
AusLralla has hlsLorlcally been recognlsed as a low soverelgn rlsk naLlon wlLh a record of
sLable and generally sound pollcy-maklng, creaLlng an envlronmenL where buslnesses have a
hlgh degree of cerLalnLy LhaL Lhelr lnvesLmenLs wlll noL be sub[ecL Lo lnconslsLenL and poor
governmenL declslon maklng. Powever, domesLlc manufacLurers have clLed some recenL
pollcy declslons LhaL poLenLlally LhreaLen Lhls repuLaLlon.

33
Cermany, !apan, uSA, Canada, Sweden, uk, 8epubllc of korea, Malaysla, 1halland, oland, SouLh Afrlca.
34
1he Allen ConsulLlng Croup & uelolLLe 1ouche 1ohmaLsu 2002, 8eocbmotkloq tbe Aotomotlve loJostty
lollcy ovltoomeot kepott to tbe leJetol cbombet of Aotomotlve loJosttles ooJ tbe leJetotloo of
Aotomotlve ltoJocts Mooofoctotets, lebruary.
0
50
100
150
200
250
300
350
400
450
500
Sweden United States France Canada Germany United
Kingdom
Australia
U
S
D

p
e
r

c
a
p
i
t
a


33

1he frequency of Lhe changes, Lhe lack of lndusLry consulLaLlon and Lhe level of lmposL on
industry all threaten the industrys competitiveness and lead to confusion and uncertainty
for Lhe lndusLry. lL also damages global percepLlons of AusLralla as a desLlnaLlon for forelgn
dlrecL lnvesLmenL and fuLure lnvesLmenL declslons.
Lxamples of pollcy seLLlngs LhaL remaln uncerLaln or have unexpecLedly changed and have
reduced Lhe lnvesLmenL appeal of Lhe auLomoLlve lndusLry are brlefly ouLllned below.
!"# %&'((')*( +,-*.-/.(
1he prevlous AusLrallan CovernmenL deLermlned LhaL mandaLory carbon dloxlde (CC
2
)
emlsslons sLandards wlll apply Lo new llghL vehlcles less Lhan 3.3 Lonnes from 2013. 1he
pollcy proposed average mandaLory emlsslon LargeLs of 190 grams per kllomeLre (g/km) by
2013 and 133 g/km by 2024, represenLlng cuLs of 14 per cenL and 30 per cenL on 2008 levels
respecLlvely.
ln a submlsslon Lo Lhe AusLrallan CovernmenL, CM Polden supporLed Lhe adopLlon of Lhe
sLandards ln Lhe orlglnal pollcy proposal. 1he lack of flrm Llmellnes for flnallslng mandaLory
carbon dloxlde emlsslons LargeLs for new llghL vehlcles and poLenLlal shlfL Lo a hlgher
emlsslons reducLlon LargeL would lmpose ma[or Lechnlcal challenges for Lhe lndusLry as well
as slgnlflcanL compllance cosLs.
0/11* !-/ 2**)3-,')* 45*.
ln 2009 Lhe Creen Car lnnovaLlon lund (CCll) was lnlLlaLed Lo help enhance Lhe research
and developmenL and commerclallsaLlon of AusLrallan Lechnologles LhaL slgnlflcanLly reduce
fuel consumpLlon and/or greenhouse gas emlsslons of passenger moLor vehlcles.
Across Lhe AusLrallan auLomoLlve lndusLry, a LoLal of 17 CCll granLs have been announced
LoLalllng $413 mllllon.
1hls $1.1 bllllon granLs program was closed ln !anuary 2011, as parL of Lhe lederal
Governments savlng measures Lo supporL rebulldlng of lnfrasLrucLure damaged by Lhe
floods ln Cueensland.
65,)&),'31 7/-*(8)/&-,')* +9:1&1
1he AuLomoLlve 1ransformaLlon Scheme (A1S) alms Lo encourage compeLlLlve lnnovaLlon
wlLhln Lhe auLomoLlve lndusLry, placlng greaLer emphasls on lnvesLmenL ln research and
developmenL Lo lncrease compeLlLlveness and producLlvlLy. AppllcaLlons for reglsLraLlon ln
Lhe A1S are open Lo moLor vehlcle producers, auLomoLlve componenL producers,
auLomoLlve machlne Lool, auLomoLlve Loollng producers and auLomoLlve servlce provlders.
1he A1S commenced on 1 !anuary 2011 and ls expecLed Lo run Lo 31 uecember 2020. lL
currenLly comprlses:
SLage 1: capped asslsLance of $1.3 bllllon from 2011 Lo 2013,
SLage 2: capped asslsLance of $1 bllllon from 2016 Lo 2020, and

36

uncapped asslsLance of approxlmaLely $847 mllllon.
$300m ls allocaLed Lo be spenL per annum under sLage 1, any underspend ls carrled over Lo
Lhe followlng flnanclal year.
uurlng lLs elecLlon campalgn Lhe former CpposlLlon announced plans Lo cuL $300m of
fundlng from sLage 1 of Lhe A1S, a declslon opposed by Lhe SA governmenL.
!;'&-,1 !:-*<1 =);'9>
ln !uly 2011 Lhe Lhen AusLrallan CovernmenL released Clean Lnergy luLures package whlch
conLalned a broad range of pollcy measures Lo reduce greenhouse gas emlsslons. ln !uly
2012 Lhe carbon prlclng mechanlsm was lnLroduced whlch requlred buslnesses Lo acqulre
and surrender emlsslons unlLs for Lhelr greenhouse gas emlsslons.
lollowlng Lhe change of CovernmenL leglslaLlon was prepared Lo repeal Lhe Clean Lnergy
AcL 2011 and relaLed leglslaLlon LhaL esLabllshes Lhe carbon prlclng mechanlsm. 1hls wlll be
replaced with the Coalitions Direct Action Plan which includes the Emissions Reduction
lund. 1hls wlll allow lndusLry Lo sell carbon abaLemenL back Lo Lhe CovernmenL. 1hls new
pollcy wlll be furLher developed Lhrough a WhlLe aper process.
C8C 94<$1/"+1'*, ('5 -.<'5+ ?"5F%+,
1he AusLrallan auLomoLlve lndusLry has long recognlsed Lhe lmporLance of Lhe exporL
markeL Lo aLLaln sufflclenL scale and drlve down unlL cosLs. Whlle an lncrease ln exporLs ls a
desirable outcome, the South Australian Government shares the industrys concern that the
ma[or lmpedlmenLs Lo exporL aL Lhe presenL Llme are Lhe hlgh value of Lhe AusLrallan dollar
and barrlers Lo enLry lnLo ma[or compeLlLor markeLs.
1able 7 presents data on Australias automotive exports over the period 2000 to 2012. Total
exporLs, boLh of vehlcles and componenLs, Lrended upwards from $4.21 bllllon ln 2000 Lo
$3.76 bllllon ln 2008. 1hls was durlng a perlod when Lhe AusLrallan dollar appreclaLed from
0.60 uSu Lo abouL 0.93 uSu.
33



33
hLLp://www.rba.gov.au/sLaLlsLlcs/hlsL-exchange-raLes/lndex.hLml?accessed=2013-11-19-16-23-36

37

)KLI? Y@ 0KI=? KEB 6>ARDH AF 4=DAQAD;G? +ZOA>DJ VEAQ;EKI F;<=>?JX
1?K>
0?H;CI?
+ZOA>DJ
/AQOAE?EDJ
+ZOA>DJ
)ADKI
+ZOA>DJ
4EE=KI
6>ARDH


VWLX VWLX VWLX VO?> C?EDX

7888 2.42 1.78 4.21 29.3

7889 3.26 1.64 4.90 16.4

7887 3.08 1.71 4.80 -2.0

788: 2.98 1.71 4.69 -2.3

788S 3.03 1.64 4.67 -0.4

788T 3.47 1.68 3.13 10.3

788U 3.06 1.80 4.86 -3.6

788Y 3.23 1.83 3.09 4.7

788` 4.03 1.72 3.76 13.2

788b 1.84 1.23 3.08 -46.3

7898 2.09 1.46 3.36 13.6

7899 1.67 1.38 3.23 -8.7

7897 2.14 1.37 3.71 14.1

5ootce. ulA1, 51Ak5 uotobose.
LxporLs of vehlcles conLracLed dramaLlcally ln 2009 durlng Lhe global flnanclal crlsls, from
$4.03 bllllon Lo $1.84 bllllon. AL Lhe Llme Lhe Polden Commodore was belng sold ln Lhe
unlLed SLaLes as Lhe C8 under Lhe onLlac brand. As a consequence of Lhe Ceneral MoLors
ChapLer 11 bankrupLcy, Lhe company declded Lo drop lLs onLlac brand, and as a resulL
exporLs of Commodores Lo Lhe unlLed SLaLes ceased.
1hls followlng flgure shows AusLrallan auLomoLlve exporLs Lo reglons and counLrles ln 2012-
13. lL lllusLraLes LhaL 39 per cenL of auLomoLlve exporLs by value was Lo Lhe Mlddle LasL,
maklng it Australias largest automotive export market. Next largest was New Zealand (13
per cenL), and Lhe norLh Amerlcan lree 1rade AssoclaLlon (14 per cenL), followed by Lhe
AssoclaLlon of SouLh LasL Aslan naLlons (slx per cenL), 8epubllc of korea (flve per cenL),
Chlna (four per cenL), Lhe Luropean unlon 27 (four per cenL) and oLhers (13 per cenL).


38

3;<=>? 99@ 4=DAQAD;G? +ZOA>DJ LM >?<;AE

5ootce. ulA1 51Ak5 uotobose, boseJ oo A85 cot No. 5J68.0, Aoqost 201J Joto
AusLralla ls ldeally locaLed Lo exporL cars and componenLs Lo Lhe fasLesL growlng moLor
vehlcle markeLs ln Lhe world ln Asla, buL faces hlgh Larlff and non-Larlff barrlers. As
dlscussed prevlously, Lhls hlghllghLs Lhe lmporLanL role of CovernmenL ln galnlng markeL
access Lhrough boLh bllaLeral and mulLllaLeral Lrade negoLlaLlons.
C8I K'5%1@* E15%/+ 9*2%,+4%*+ K$'L,
WlLh low levels of domesLlc savlngs, lul has played an lmporLanL parL ln Lhe hlsLorlcal
growth of Australias manufacturing sector. lul has broughL wlLh lL new Lechnologles and
approaches, lmprovlng producLlvlLy, whlch Lends Lo have a larger lmpacL on economlc
growLh, per dollar lnvesLed, Lhan domesLlc lnvesLmenL.
All Lhree domesLlc vehlcle manufacLurers and a number of componenL suppllers are forelgn
owned, and lf Lhelr local manufacLurlng were Lo cease, lL could be reasonably expecLed LhaL
head offlces wlll redlrecL lnvesLmenL Lo oLher auLomoLlve manufacLurlng counLrles. lor
example MlLsublshl MoLors sold lLs planL and equlpmenL (lncludlng Lhe producLlon llne) Lo
Lhe Chlnese auLomoLlve lndusLry and nlssan dld noL re-lnvesL elsewhere ln AusLralla.
lL wlll Lake slgnlflcanL Llme for alLernaLlve lndusLrles wlLhln AusLralla Lo aLLracL Lhe levels of
lnvesLmenL requlred Lo bulld new producLlon capaclLy and secure new markeLs.

39

I8 A'2%5*4%*+ >,,1,+"*/%
As demonsLraLed ln Lhe prevlous chapLers, over Lhe lasL decade Lhe AusLrallan auLomoLlve
lndusLry has been an lmporLanL conLrlbuLor Lo Lhe naLlonal economy Lhrough dlrecL
employmenL and lnvesLmenL, 8&u and Lechnologlcal advances, and splll-over effecLs lnLo
oLher lndusLrles.
CovernmenL asslsLance and lnLervenLlon are ublqulLous ln Lhose counLrles manufacLurlng
auLomoLlves. noL only flrms, buL also governmenLs and naLlons, compeLe for Lhe dynamlc
Lechnologlcal and oLher beneflLs LhaL havlng a domesLlc auLomoLlve manufacLurlng
capablllLy brlngs.
SouLh AusLralla agrees wlLh Lhe roducLlvlLy Commlsslon LhaL any furLher galns ln allocaLlve
efflclency from furLher reducLlons ln auLomoLlve asslsLance would be relaLlvely small
compared Lo Lhe economlc and soclal cosLs of ad[usLmenL.
36

ln SouLh AusLralla, where lL comprlses a greaLer proporLlon of Lhe economy Lhan for any
oLher sLaLe or LerrlLory, Lhe auLomoLlve manufacLurlng secLor ls an even more slgnlflcanL
conLrlbuLor Lo overall economlc performance. ln vlew of Lhe scale of economlc conLracLlon
whlch would resulL from Lhe closure of Polden and poLenLlally Lhe lndusLry, and Lhe
slgnlflcanL and prolonged negaLlve lmpacLs on employmenL and lncomes, Lhe SouLh
AusLrallan CovernmenL sLrongly supporLs Lhe conLlnuaLlon of AusLrallan CovernmenL
asslsLance Lo Lhe auLomoLlve lndusLry.
1he roducLlvlLy Commlsslon esLlmaLed LhaL Lhe auLomoLlve manufacLurlng lndusLry
recelved LoLal asslsLance of $1,179.9 mllllon ln 2010-11.
37
1hls lncluded $319.7 mllllon ln
budgetary assistance and $660.7 million of net tariff assistance. Adjusting for a sectors
contribution to the economy shows the automotive manufacturing industrys net effective
raLe of asslsLance was 8.3 per cenL ln 2010-11, reduced from 11.3 per cenL ln 2009-10.
1able 8 followlng compares Lhe neL effecLlve raLes of asslsLance for oLher AusLrallan
lndusLrles. lL shows asslsLance Lo Lhe auLomoLlve lndusLry ls noL as hlgh as ls commonly
belleved, wlLh Lhe effecLlve raLe of comblned asslsLance Lo manufacLurlng as a whole (4.2
per cenL) noL much hlgher Lhan for prlmary producLlon (3.4 per cenL).
lL should also be noLed LhaL Lhls analysls excludes Lhe luel 1ax CredlL Scheme, whlch allows
a number of lndusLrles (lncludlng mlnlng and agrlculLure) Lo clalm a rebaLe on exclse pald on
cerLaln Lypes of fuel (lncludlng dlesel).


36
roducLlvlLy Commlsslon, 2002, kevlew of tbe Aotomotlve Asslstooce lopolty kepott.
37
roducLlvlLy Commlsslon, 2012, 1toJe ooJ Asslstooce kevlew 2010-11, Annual 8eporL Serles
hLLp://www.pc.gov.au/__daLa/asseLs/pdf_flle/0004/117292/Lrade-asslsLance-revlew-2010-11.pdf


40

)KLI? `@ +FF?CD;G? >KD? AF CAQL;E?B KJJ;JDKEC? LM ;EB=JD>M <>A=O;E<c 788T^8U DA 7898^99

5ootce. ltoJoctlvlty commlssloo, 1toJe & Asslstooce kevlew 2010-11
1he roducLlvlLy Commlsslon records asslsLance Lo mlnlng as low ($131 mllllon ln 2010-11).
Powever, Lhe Commlsslon does noL counL Lhe luel 1ax CredlLs or SLaLuLory uepreclaLlon
Llves for Lhe Cll and Cas secLor as concesslons.
8ecenL research by Lhe AusLralla lnsLlLuLe
38
lndlcaLes LhaL AusLrallan CovernmenL supporL Lo
Lhe mlnlng lndusLry could be as hlgh as $4 bllllon per year. 1hls ls slgnlflcanLly hlgher Lhan
asslsLance Lo Lhe auLomoLlve lndusLry.
1here ls a crlLlcal relaLlonshlp beLween Lhe lnvesLmenL LhaL CovernmenL has made Lo secure
Lhe fuLure of Lhe auLomoLlve lndusLry and our capaclLy Lo reLaln a vlable manufacLurlng
lndusLry. 1he long lead Llmes and subsLanLlal caplLal lnvesLmenL requlred, speclflcally for Lhe
lnLroducLlon of new car models (around 3 Lo 6 years), dlcLaLe Lhe need for a degree of

38
Crudnoff M 2012 lootloq loel oo tbe llte. 1be ootote ooJ exteot of leJetol Covetomeot sobslJles to tbe
mloloq loJostty ollcy 8rlef no. 38. 1he AusLralla lnsLlLuLe.

41

cerLalnLy ln CovernmenL pollcy poslLlons Lo allow flrms Llme Lo plan fuLure lnvesLmenL ln Lhe
domesLlc lndusLry.
1he SouLh AusLrallan CovernmenL regards a sLrong manufacLurlng secLor as crlLlcal Lo a
dlverslfled and prosperous economy. ln CcLober 2012 Lhe SouLh AusLrallan CovernmenL
released Mooofoctotloq wotks. A 5ttoteqy fot utlvloq nlqb-voloe Mooofoctotloq lo 5ootb
Aosttollo. 1he prlmary ob[ecLlve of Lhe sLraLegy ls Lo LranslLlon Lhe manufacLurlng lndusLry
from predomlnanLly low value-added acLlvlLles compeLlng on cosL, Lhrough medlum value-
added, Lo hlgh value-added acLlvlLles compeLlng on value for money ln global markeLs.
Cn 22 March 2012, Lhe AusLrallan, SouLh AusLrallan and vlcLorlan CovernmenLs [olnLly
announced a $273 mllllon co-lnvesLmenL program for CM Polden Lo bulld Lwo new vehlcles
aL LllzabeLh over Lhe perlod 2016 Lo 2022. 1he SouLh AusLrallan CovernmenL has agreed Lo
provlde a $30 mllllon conLrlbuLlon spread evenly over Lhe years 2016-17 and 2017-18
(sub[ecL Lo condlLlons) and conLlnues Lo work wlLh Polden Lo secure Lhe longevlLy of Lhe
LllzabeLh operaLlons and Lhe nexL generaLlon vehlcle program.
1hrough lLs support for the states automotive sector since 2002, the South Australian
CovernmenL has prevlously commlLLed Lhe followlng flnanclal supporL Lo Polden and
MlLsublshl:
Polden
! $30 mllllon for Lwo nexL generaLlon cars,
! $30 mllllon for Polden Cruze,
! $3 mllllon for Labour Ad[usLmenL followlng Lhe downslzlng of vehlcle
manufacLurlng operaLlons ln recenL years (closure of Lhlrd shlfL),
! $1 mllllon for CM Polden Secondary LmploymenL AcLlvlLy Lo asslsL workers Lo
flnd employmenL whlle on reduced shlfLs, and
! $2.2 mllllon for a Polden SafeLy LnhancemenL ro[ecL.
MlLsublshl
! $33 mllllon (10 year loan) for manufacLure of a new vehlcle llne (repald ln full
followlng Lhe closure of Lhe 1onsley ark manufacLurlng faclllLy ln 2008),
! $2.648 mllllon for reLralnlng of redundanL MlLsublshl employees followlng
2008 closure of Lhe 1onsley ark manufacLurlng faclllLy,
! $189,230 for worker redundancy Lralnlng packages ln 2002,
1he SouLh AusLrallan CovernmenL ls currenLly provldlng $300,000 over Lhree years from
2012-13 Lo Lhe AuLo Co-operaLlve 8esearch CenLre (AuLoC8C) for Lwo pro[ecLs whlch wlll
dellver ouLcomes LhaL wlll enhance Lhe vlablllLy and susLalnablllLy of Lhe auLomoLlve
lndusLry ln SouLh AusLralla Lhrough lncreased producL and process lnnovaLlon LhaL Lakes lnLo
accounL economlc, soclal and envlronmenLal lmpacLs. 1he Lwo pro[ecLs are:

42

nexL CeneraLlon AuLomoLlve CoaLlngs: Lhrough a comblnaLlon of applled and
sLraLeglc fundamenLal research (lnvolvlng Lhe appllcaLlon of Lhln fllm coaLlngs Lo
polymers), dellver hlgh value add, advanced manufacLurlng Lechnologles/producLs Lo
Lhe unlverslLy of SouLh AusLralla and SM8 (a local auLomoLlve flrm).
SLars for Cars: 1he unlverslLy of SouLh AusLralla Lo develop a new raLlng scheme for
vehlcles LhaL wlll apply Llfe Cycle Analysls (LCA) Lechnlques Lo deLermlne Lhe relaLlve
cosLs durlng Lhe manufacLurlng, use and dlsposal phases of a vehlcle's llfe.
1he SouLh AusLrallan CovernmenL, prevlously provlded Lhe AuLoC8C wlLh $700,000 over
seven years (2003-06 Lo 2011-12) for pro[ecLs whlch lncluded:
$200,000 for the establishment of Australias first Ergonomics Laboratory at the
unlverslLy of SouLh AusLralla (unlSA),
$200,000 ln supporL of Lwo elecLrlc vehlcle research pro[ecLs aL unlSA, and
$30,000 ln supporL of Lhe developmenL of magneslum auLomoLlve componenLs by
Lhe SouLh AusLrallan auLomoLlve flrm 1-Mag, ln collaboraLlon wlLh CM Polden,
CSl8C and AuLoC8C.
1he SLaLe CovernmenL has acLlvely supporLed Lhe auLomoLlve and componenL
manufacLurlng lndusLry Lhrough funded employmenL, Lralnlng and skllls developmenL
programs slnce 2009.
1hrough SLaLe and AusLrallan CovernmenL programs such as 5kllls fot All, 5kllls lo tbe
wotkploce, ltoJoctlvlty lloces ltoqtom and Lhe Aotomotlve loJostty 5ttoctotol AJjostmeot
ltoqtom, over $13 mllllon has been lnvesLed lnLo Lhls secLor Lo supporL more Lhan 4,300
people ln Lralnlng and skllls developmenL acLlvlLles lncludlng more Lhan 600 apprenLlces and
Lralnees for 14 auLomoLlve and componenL manufacLurlng companles.
1ralnlng has predomlnanLly been underLaken ln quallflcaLlons from CerLlflcaLe lll Lo
Advanced ulploma for CompeLlLlve ManufacLurlng, Lnglneerlng, LlecLro-Lechnology,
1ralnlng & AssessmenL and speclflc sklll seL needs.
More generally Lhe SouLh AusLrallan CovernmenL recognlses Lhe value of and need Lo
nurture the manufacturing sector. Growing advanced manufacturing is one of the states
seven sLraLeglc prlorlLles and Lhe SouLh AusLrallan CovernmenL has lmplemenLed, amongsL
oLher Lhlngs an $11.1m ManufacLurlng Works SLraLegy, whlch ls bullL around four areas:
enhanclng manufacLurers capaclLy Lo be lnnovaLlve,
upgradlng Lhe leadershlp, knowledge and skllls of our workforce,
capLurlng overseas markeLs, and
addresslng lnfrasLrucLure pollcy and gaps.

43

I87 94<"/+ "*: -((%/+12%*%,,
ln lLs 2002 lnqulry lnLo Lhe lndusLry, Lhe roducLlvlLy Commlsslon recommended LhaL Lhe
auLomoLlve Larlff be reduced Lo Lhe average for Lhe manufacLurlng secLor of 3 per cenL ln
2010, cushloned by an exLenslon of Lhe AuLomoLlve CompeLlLlveness lnvesLmenL Scheme
(AClS) program Lo 2010. lL was consldered LhaL furLher, yeL sLlll gradual, exposure Lo
compeLlLlve pressures would encourage Lhe lndusLry Lo conLlnue Lo enhance lLs
compeLlLlveness. 1he anLlclpaLed beneflLs of lncreased compeLlLlon ln drlvlng workplace and
oLher efflclencles played a greater role than modelled resource effects in the Commissions
recommendaLlons. 1he recommended program also provlded Lhe lndusLry wlLh Lhe decade
of pollcy cerLalnLy LhaL lL soughL, Lo faclllLaLe lnvesLmenL. 8elnforclng Lhls ob[ecLlve, Lhe
Commlsslon made no recommendaLlons Lo modlfy oLher asslsLance schemes pendlng Lhe
phase down of Larlffs and AClS.
39

CovernmenL asslsLance, Lhrough Lhe malnLenance of Larlffs on auLomoLlve producLs (albelL
aL slgnlflcanLly lower levels) and Lhrough Lhe AuLomoLlve 1ransformaLlon Scheme, have
conLrlbuLed Lowards lLs LransformaLlon Lo a beLLer performlng secLor ln a number of key
ways:
lL has allowed sLrucLural ad[usLmenL wlLhln Lhe lndusLry Lo Lake place aL a reallsLlc
and measured pace wlLhln a secure pollcy envlronmenL, whlch has promoLed
lnvesLmenL, long-Lerm plannlng, and Lhe developmenL of Lechnology and new
managemenL pracLlces,
lL has provlded lmporLanL slgnals Lo Lhe auLomoLlve lndusLry LhaL AusLralla conLlnues
Lo be commlLLed Lo a domesLlc auLomoLlve lndusLry,
lL has reduced Lhe dlsparlLy ln aLLracLlng lnvesLmenL wlLh lLs global compeLlLors
whlch conLlnue Lo recelve governmenL supporL Lhrough a varleLy of mechanlsms,
boLh overL and hldden and ofLen on a much broader scale.
1o mlnlmlse Lhe poLenLlal LranslLlon cosLs ongolng CovernmenL asslsLance ls requlred Lo
allow Llme for furLher lndusLry and labour markeL ad[usLmenL.

39
roducLlvlLy Commlsslon, 2008, MoJellloq cooomy-wlJe ffects of lotote Aotomotlve Asslstooce, p.xlv

44

J8 3+50/+05"$ >:M0,+4%*+ "*: !5"*,1+1'*
1he SouLh AusLrallan governmenL recognlses LhaL sLrucLural ad[usLmenL, Lechnologlcal and
workplace lnnovaLlon and managemenL modernlsaLlon are essenLlal lngredlenLs for
lmprovemenLs ln secLoral performance, greaLer producLlvlLy and lmproved compeLlLlveness.
1he auLomoLlve lndusLry has been sub[ecL Lo slgnlflcanL raLlonallsaLlon and ad[usLmenL over
many years and wlll conLlnue Lo face pressures over decades Lo come. CovernmenL has
played a slgnlflcanL role ln asslsLlng Lhe lndusLry Lo ad[usL and has been called upon agaln Lo
conslder whaL level of asslsLance lL wlll provlde Lo secure Lhe fuLure of CM Polden ln
AusLralla. CovernmenL can asslsL Lo slgnlflcanLly reduce Lhe cosLs of ad[usLmenL and has a
leadlng role Lo play durlng perlods of economlc change when secLors llke Lhe auLomoLlve
lndusLry face exLraordlnary compeLlLlve pressures. lnvesLmenLs ln lndusLry LransformaLlon
deslgned Lo secure lnvesLmenL and fosLer lmproved compeLlLlveness have dlrecL and
lndlrecL beneflLs Lo Lhe naLlon.
1he SouLh AusLrallan CovernmenL belleves LhaL asslsLance Lo Lhe auLomoLlve lndusLry ls
[usLlfled Lo faclllLaLe ad[usLmenL, lmprove producLlvlLy and compeLlLlveness, and make an
lmporLanL conLrlbuLlon Lo naLlonal economlc welfare. lL ls lmporLanL LhaL AusLralla pursue
pollcles LhaL are reflecLlve of our compeLlLors. ln Lhls respecL we belleve LhaL close
examlnaLlon of our Lradlng parLners asslsLance reglmes ls of Lhe uLmosL lmporLance ln
helplng Lo deLermlne whaL level of asslsLance governmenL provldes Lo Lhe AusLrallan
auLomoblle lndusLry and oLher lndusLrles sub[ecL Lo global compeLlLlon.
J87 -/'*'41/ N0+$''F
A wealLh of llLeraLure has provlded lmporLanL daLa LhaL has conflrmed Lhe dlfflculLles
experlenced by Lhe global economy ln recenL Llmes. A comblnaLlon of reforms and
governmenL sLlmulus programs has broughL many economles back Lo sLablllLy or anaemlc
growLh. AlLhough many economlc reforms are beglnnlng Lo Lake hold, Lhe prospecLs for Lhe
global economy, and with it, demand for Australias merchandise and manufacLurlng
exporLs, remaln subdued.
1he CrganlsaLlon for Lconomlc CooperaLlon and uevelopmenL (CLCu) has had Lo
slgnlflcanLly revlse down lLs global growLh forecasLs for 2013 and 2014, clLlng parLlcular
weakness ln emerglng markeL economles (LMLs).
40
lL ls Lhe lowesL annual growLh forecasL
from Lhe CLCu slnce Lhe depLhs of Lhe global flnanclal crlsls.
Australias economy has so far proved remarkably robust but our prosperity cannot be
Laken for granLed, parLlcularly as vulnerable LMLs look Lo respond Lo slowlng growLh by
relnforclng Lhelr domesLlc lndusLrles. 1he CLCu reporL cauLloned Lhe AusLrallan

43
Spoehr, !. 2013, nolJeo wotkets welqb oocettolo fotote os fooJloq tolks cootlooe, 7:30 A8C-1

43

CovernmenL agalnsL dramaLlc budgeL cuLs, suggesLlng LhaL publlc secLor demand has a
valuable surrogaLe role Lo play Lo promoLe conLlnued growLh.
41

1he 8eserve 8ank, ln lLs november 2013 board mlnuLes sLaLed LhaL:
keceot loJlcotots soqqesteJ tbot tbe Aosttolloo ecooomy boJ beeo expooJloq ot o below-
tteoJ poce. 1be tevlseJ stoff fotecosts soqqesteJ tbot qtowtb lo tbe oeot tetm woolJ be
coosttoloeJ by tbe Jeclloe lo mloloq lovestmeot, tbe blqb level of tbe excbooqe tote ooJ
weok pobllc JemooJ.
42

8eserve 8ank and lMl economlsLs have recenLly expressed vlews LhaL Lhe AusLrallan dollar
ls slgnlflcanLly overvalued. 1he hlgh AusLrallan dollar has had a dlsproporLlonaLe negaLlve
impact on the economy of South Australia, given this states relatively high levels of exports
and manufacLurlng as a share of Lhe sLaLe economy.
AL Lhe same Llme, Lhe sLaLe has largely yeL Lo beneflL from Lhe mlnlng boom LhaL has
occurred ln oLher sLaLes, parLlcularly WesLern AusLralla and Cueensland, where resource
lnvesLmenL and exporL demand have proven relaLlvely lmmune Lo Lhe hlgh AusLrallan dollar.
South Australias resources industries are at an earlier stage of development, and aLLracLlng
global caplLal necessary Lo develop Lhem ls more challenglng Lhan lL was 12 monLhs ago.
LaLesL daLa from AusLrallan 8ureau of SLaLlsLlcs lndlcaLe LhaL SouLh AusLrallas trend
unemploymenL raLe had rlsen Lo 6.6 per cenL ln CcLober 2013, whlch ls hlgher Lhan Lhe
naLlonal raLe of 3.8 per cenL. Small area labour markeL daLa publlshed by ueparLmenL of
LducaLlon, LmploymenL and Workplace 8elaLlons lndlcaLe LhaL unemploymenL ls hlgher
agaln across norLhern Adelalde, parLlcularly ln Lhe ClLy of layford, aL 13.3 per cenL ln Lhe
!une quarLer 2013. 1hls lmplles LhaL parLs of SouLh AusLralla are well below full employmenL
levels.
unless non-mlnlng lnvesLmenL and oLher acLlvlLy plcks up Lhere ls a rlsk LhaL AusLralla and
SouLh AusLralla wlll face a number of years wlLh below Lrend economlc growLh. 1he
AusLrallan CovernmenL, ln lLs budgeL, pro[ecLed Lerms of Lrade Lo decllne by a LoLal of 20
per cenL over a 13 year perlod, seLLllng around Lhelr 2003-06 level. Cver Lhe pro[ecLlon
perlod, Lhe exchange raLe ls assumed Lo move ln llne wlLh Lhe long Lerm hlsLorlcal
relaLlonshlp beLween Lhe Lerms of Lrade and Lhe real effecLlve exchange raLe. 1he Lerms of
Lrade pro[ecLlons lmply a fall ln Lhe real exchange raLe of 0.9 per cenL per annum over Lhe
pro[ecLlon perlod.
AgalnsL Lhls economlc backdrop, Lhe cessaLlon of auLomoLlve manufacLurlng ln Lhe near
Lerm ls llkely Lo lead Lo a slgnlflcanL loss of confldence and lncrease Lhe rlsk of proLracLed
hlgh unemploymenL and Lhe legacy of a less dlverse economy when Lhe relaLlve economlc
condlLlons for AusLrallan manufacLurlng lmprove.

43
Spoehr, !. 2013, nolJeo wotkets welqb oocettolo fotote os fooJloq tolks cootlooe, 7:30 A8C-1
43
Spoehr, !. 2013, nolJeo wotkets welqb oocettolo fotote os fooJloq tolks cootlooe, 7:30 A8C-1

46

J8; !141*@ '( 3+50/+05"$ >:M0,+4%*+
1he argumenL ls noL abouL sLrucLural ad[usLmenL versus no sLrucLural ad[usLmenL buL raLher
Lhe naLure and ob[ecLlves of sLrucLural ad[usLmenL, and Lhe conLexL ln whlch lL occurs. ln a
well-managed economy wlLh conslsLenL economlc growLh and flexlble labour and caplLal
markeLs, a large volume of change can be comforLably absorbed wlLhouL slgnlflcanL adverse
effecLs. SLrucLural ad[usLmenL can occur as parL of Lhe normal flows of labour and caplLal
markeLs lL wlll be dlspersed and, ln many cases, be dlfflculL Lo observe.
1he 2004 closure of the Mitsubishi Motors engine plant in Lonsdale, in Adelaides southern
suburbs, puL 1,183 people ouL of work lmmedlaLely. 1hls was an adverse soclal and
economlc ouLcome yeL domesLlc auLomoLlve manufacLurlng and Lhe relaLlvely buoyanL
economy was able Lo absorb Lhese losses and conLlnue.
Mltsoblsbl closeJ Jotloq o tlme wbeo tbe ecooomy wos telotlvely booyoot. lt's mocb less
llkely tbot people lost tbelt jobs tbtooqb tbe closote of nolJeo woolJ be oble to floJ
oltetootlve mooofoctotloq jobs.
4J

Measures were puL ln place Lo deal wlLh Lhe 2008 closure of Mitsubishi in Adelaides
souLhern suburbs. AlLhough ln a growlng economy, lL was found LhaL many of Lhe asslsLed
ex-MlLsublshl workers dld noL malnLaln worklng hours or prlor earnlngs, wlLh lmpllcaLlons
for Lhe reglon overall.
Many MlLsublshl workers experlenced a slgnlflcanL deLerloraLlon ln Lhelr lncome and
securlLy posL redundancy:
44

223 of 316 respondenLs (72 per cenL) reporLed earnlng less Lhan Lhey dld afLer
redundancy,
[usL 11 per cenL reporLed earnlng around Lhe same posL-redundancy whlle 13 per
cenL reporLed earnlng more,
around one Lhlrd of Lhose ln employmenL had held Lhree or more [obs ln Lhe lasL 12
monLhs.
Around 36 per cenL of respondenLs found work ln manufacLurlng whlle around 11 per cenL
worked ln reLall, 7 per cenL ln consLrucLlon, 6 per cenL ln healLh servlces and [usL 2 per cenL
ln mlnlng and 2 per cenL ln defence.
CLher effecLs of Lhe MlLsublshl closure on surveyed employees lndlcaLe, as earller sLudles
have also demonsLraLed, Lhe need for aLLenLlon Lo be pald Lo a hollsLlc response Lo
downslzlng and closures lnvolvlng a coordlnaLed response from a range of agencles beyond

43
Spoehr, !. 2013, nolJeo wotkets welqb oocettolo fotote os fooJloq tolks cootlooe, 7:30 A8C-1
44
8eer, A., 8aum, l., 1homas, P., Lowry, u., CuLler, C., Zhang, C.!., Zlersch, A., verlLy, l., Macuougall, C. and
newmann, L. 2006. Ao volootloo of tbe lmpoct of ketteocbmeot ot Mltsoblsbl locosloq oo AffecteJ wotkets,
1helr lamllles and CommunlLles: lmpllcaLlons for Puman Servlces ollcles and racLlces, lllnders unlverslLy.


47

lndusLry, employmenL and Lralnlng, lncludlng healLh, communlLy servlces and houslng. 1he
evldence for asslsLance lncludes:
Palf of respondenLs belleved LhaL Lhe loss of employmenL aL MlLsublshl affecLed
Lhelr soclal llfe,
Plgher levels of menLal healLh lssues were reporLed relaLlve Lo Lhe populaLlon as a
whole, and
Pouslng cosLs were a source of worry for around 60 of Lhe respondenLs who soughL
asslsLance wlLh Lhelr houslng.
43

Powever ln Lhe less favourable economlc condlLlons currenLly belng forecasLed for AusLralla
Lhere ls an lncreased rlsk LhaL reduced asslsLance aL Lhls Llme wlll poLenLlally lead Lo
slgnlflcanL hardshlp and large dlslocaLlon. lf CM Polden were Lo cease AusLrallan operaLlons
and close Lhe LllzabeLh planL ln 2016, or earller, Lhe lmmedlaLe lmpacL ls llkely Lo be
slgnlflcanLly greaLer.
lf CM Polden were Lo wlLhdraw Lhelr domesLlc manufacLurlng operaLlons, as lord MoLors
are scheduled Lo do ln 2016, lL would leave 1oyoLa as Lhe sole manufacLurer of cars ln
AusLralla. 1hls would deprlve Lhe lndusLry of Lhe economles of scale lL can aLLaln and furLher
erode the industrys competiveness and subsLanLlally LhreaLen Toyotas long Lerm vlablllLy
and LhaL of Lhe componenL secLor.
J8C E1,+51#0+1'*"$ 94<"/+,
1here wlll be Llmes when parLlcular lndlvlduals, buslnesses, communlLles and lndusLrles wlll
suffer dlslocaLlon, lncludlng Lhrough [ob losses and caplLal belng rendered premaLurely
obsoleLe. 1hese slLuaLlons are mosL llkely Lo occur when change ls concenLraLed ln areas
where Lhere ls llLLle dlverslLy ln lndusLry and hence few oLher employmenL opporLunlLles.
Walsh and ONeil (2011) draw a distinction between regional structural adjustment
asslsLance and reglonal developmenL asslsLance:
SLrucLural ad[usLmenL asslsLance seeks Lo manage Lhe process of change wlLhouL
lnLerferlng ln Lhe allocaLlon of resources.
8eglonal developmenL asslsLance seeks Lo lnfluence Lhe allocaLlon of resources Lo
supporL Lhe prosperlLy, vlLallLy and susLalnablllLy of Lhe reglon.
1hey suggesL LhaL sLrucLural ad[usLmenL ls abouL economlc efflclency, whereas reglonal
developmenL asslsLance encompasses equlLy conslderaLlons and oLher broader soclal and
pollLlcal ob[ecLlves.
As deplcLed ln SecLlon 1.2, Lhe ClLy of layford needs boLh. noL only would Lhls reglon bear
Lhe brunL of Lhe [ob losses, buL Lhe scale of Lhe lndusLry collapse would be wlLhouL

43
lbld

48

precedenL. The regional impact of a closure of GM Holdens Australian operations is
compounded by Lhe hlgh lncldence of unemployment in Adelaides northern suburbs,
parLlcularly ln Lhe clLy of layford whlch has an unemploymenL raLe of 13.3 per cenL.
1he unlverslLles of 8lrmlngham and CovenLry have conducLed research concernlng Lhe Aprll
2003 closure of Lhe MC 8over planL ln Longbrldge ln Lhe WesL Mldlands. 1he closure was
one of Lhe mosL slgnlflcanL ln Lhe uk for 23 years, wlLh Lhe lmmedlaLe loss of 6,300 [obs.
1hls research found LhaL any assessmenL of successful labour markeL ad[usLmenL should also
address Lhe lssue of [ob quallLy. 1hls ls parLlcularly presslng for dlsplaced workers who are
only able Lo obLaln forms of work whlch are lnsecure, or precarlous ln naLure.
Powever, because of Lhe research focus on Lhose workers who remaln unemployed or who
LranslLlon lnLo Lralnlng, Lhe pllghL of Lhese employed workers ls ofLen overlooked. ln Lhls
sense Lhe overrldlng labour markeL pollcy emphasls has been a focus on LranslLlonlng lnLo
any job.
CLher lnLernaLlonal research has looked aL Lhe sorL of [ob lnsecurlLy faced by dlsplaced
workers followlng Lhe closure of a slgnlflcanL reglonal employer.
46

47

48
1hls lnsecurlLy can
lnclude:
Lower lncome levels,
oor proLecLlon agalnsL dlsmlssal,
Lack of sLaLuLory enLlLlemenLs,
unsoclable hours,
An amblguous legal sLaLus,
Lack of Lralnlng opporLunlLles,
LengLhler commuLes Lo Lhe workplace, and
Lack of volce mechanlsms ln Lhe workplace.
1he research has ldenLlfled LhaL Lhese lnsecurlLles lmpose cosLs on Lhe wlder economy and
socleLy Lhrough lower raLes of sklll formaLlon, reduced consumer confldence and famlly
lnsLablllLy.
AL one level, ad[usLmenL for Lhe ex-MC 8over workforce before Lhe recesslon lmpacLed had
been successful, wlLh approxlmaLely 90 per cenL of ex-MC 8over workers havlng obLalned
some form of employmenL ln Aprll 2008: wlLh nearly Lhree-quarLers employed full-Llme, 11

46
WesLergaard !, noble l and Walker A. 1989, Aftet keJooJoocy. 1be xpetleoce of cooomlc losecotlty.
Cambrldge: ollLy ress.
47
1urnbull and Wass v. 2000, keJooJoocy ooJ tbe lotoJox of Iob losecotlty lo neety ooJ 5olmoo I (eJs)
1be losecote wotkfotce. 8ouLledge: Cardlff.
48
ShuLLleworLh l 1yler and McklnsLry u. 2003, keJooJoocy, teoJjostmeot, ooJ employoblllty. wbot coo we
leoto ftom tbe 2000 notlooJ & wolff teJooJoocy? LnvlronmenL and lannlng A., 37:1631---1668.

49

per cenL self-employed and 3 per cenL employed parL-Llme. ln conLrasL, only 3 per cenL were
sLlll unemployed and looklng for work.
Powever, also evldenL were sharp decllnes ln lncome securlLy, wlLh a ma[orlLy of
respondenLs reporLlng a slgnlflcanL decllne ln earnlngs compared Lo when Lhey worked aL
MC8, and furLher LhaL a quarLer of respondenLs reporLed LhaL Lhey were experlenclng
flnanclal dlfflculLles. 1he flndlngs also lndlcaLed a much greaLer dlsperslon of earnlngs. 1he
decllne ln represenLaLlon securlLy reporLed also hlghllghLs Lhe need Lo make sure LhaL
workers have adequaLe redress Lo advlce and advocacy (LradlLlonally provlded by Lhe unlon
movemenL), and LhaL measures are puL ln place Lo avold a repeaL of very sudden planL
closures.
49

8esearch from 8lrmlngham also found LhaL, Lhree years on from Lhe closure, approxlmaLely
60 per cenL of Lhe redundanL workers had mlgraLed Lo Lhe servlce secLor. 8ased on average
lndusLry earnlngs, lL was esLlmaLed LhaL Lhese [obs pald a mean of 3,600 less ($9,600 Auu)
per annum.
30
A glance aL publlshed lndusLry earnlngs ln AusLralla, clrca 2011, revealed a
slmllar faLe ln sLore for AusLrallan auLomoLlve workers lf Lhey were Lo mlgraLe Lo Lhe servlce
secLor aL slmllar raLes.
Accordlng Lo !efferson and resLon, Lhe average weekly ordlnary Llme earnlngs (AWC1L) for
CLher Servlces, a useful caLch-all for Lhe secLors of Lhe economy dlsplaced manufacLurlng
workers ofLen move Lo, are 88.4 per cenL of manufacLurlng.
31
Compared Lo Lhe AWC1L for
manufacLurlng, Lhls LranslaLes lnLo an average wage dlfferenLlal of $7,400 Auua flgure ln
Lhe same order of magnlLude as LhaL found ln 8lrmlngham. 1hls flndlng, among oLhers,
should lead Lhe roducLlvlLy Commlsslon Lo revlew lLs assumpLlons on Lhe moblllLy and
reservaLlon wage of dlsplaced labour, especlally ln ouLer suburbs whlch face enLrenched
dlsadvanLage and geographlc lsolaLlon.
Low pay ls Lhe norm for many who are able Lo galn employmenL followlng redundancy and
structural adjustment. More needs to be done to make work pay and link this to training
and skllls developmenL - and supporLlng manufacLurlng as a provlder of skllled, quallLy [obs.
A downLurn ln economlc condlLlons wlll resulL ln greaLer concerns over Lenure and lncome
securlLy. lor example, successful ad[usLmenL ln 2008 was no guaranLee LhaL a worker would
noL be made redundanL agaln wlLh Lhe onseL of Lhe 2009 economlc downLurn. 1he lack of
employmenL securlLy Lherefore undermlnes oLherwlse successful pollcy responses.

49
8uyLer A, 8alley u and 8enLley, C. 2012, lloot closote ooJ loboot motket ptecotloosoess. oo ooolysls of tbe
stotos of MC kovet wotkets J yeots oftet closote. Su8CL Worklng aper Serles Worklng aper no. 3.
unlverslLy of CovenLry.
30
8alley, u, Chapaln, C and de 8uyLer, A. 2011. mploymeot Ootcomes ooJ lloot closote lo o post-loJosttlol
clty. Ao Aoolysls of tbe loboot Motket 5totos of MC kovet wotkets 1btee eots Oo, urban SLudles, 48,
pp.1393-1612
31
!efferson, 1 and resLon, A. 2012, lobot Motkets ooJ woqes lo Aosttollo lo 2011, !ournal of lndusLrlal
8elaLlons, 34, pp.293-311

30

When deLermlnlng lLs opLlons on asslsLance, Lhe roducLlvlLy Commlsslon ls asked Lo
conslder boLh overall naLlonal economlc welfare and reglonal lmpacLs. 1here needs Lo be an
examlnaLlon of Lhe dlsLrlbuLlonal effecLs of changes.
J8I H%"$$'/"+1'* '( H%,'05/%, "*: >:M0,+4%*+ >,,1,+"*/%
An lmporLanL deLermlnanL of Lhe lmpacL of Lhe labour markeL ad[usLmenL requlred wlLh Lhe
auLomoLlve lndusLry ls Lhe level of occupaLlonal and geographlcal moblllLy of Lhe labour
force. As noLed by Lhe roducLlvlLy Commlsslon ln lLs currenL lnqulry:
8y eooblloq loboot to move to lts best ose octoss Jlffeteot teqloos of Aosttollo (locloJloq
ootet mettopolltoo ooJ ooo-mettopolltoo locotloos), lt coo ollevlote loboot sbottoqes ooJ
teqloool Jlspotltles lo loboot motket cooJltloos, socb os blqb levels of ooemploymeot, ooJ
locteose skllls otlllsotloo, eotoloqs ooJ commoolty wellbeloq.
32

Some of Lhe roducLlvlLy Commlsslons past findings and recommendations with respect to
sLrucLural ad[usLmenL, and Lhe auLomoLlve lndusLry as a speclflc case sLudy, have been
based on Lhe fundamenLal assumpLlon LhaL Lhere are llmlLed resLrlcLlons on Lhe geographlc
and occupaLlonal moblllLy of lndlvlduals.
Whlle lL ls ofLen argued LhaL Lhere ls a sLronger raLlonale for addlLlonal asslsLance where Lhe
ad[usLmenL pressure ls a resulL of pollcy change, Lhe case ls noL clear cuL. urawlng a
dlsLlncLlon beLween markeL-based changes and Lhose resulLlng from governmenL pollcy
ralses a number of equlLy lssues. As noLed by 8oLLernberg:
Mooy kloJs of pbeoomeoo ptoJoce losses. 1bese locloJe oototol Jlsostets, os well os wots,
tbe Jlscovety ot exboostloo of oototol tesootces, tecbooloqlcol Jlscovetles ooJ cbooqes lo
ptefeteoce sets ooJ cbooqes lo pobllc pollcy.
Oo qtoooJs of epolty, lt Joes oot seem wottooteJ to select lsoloteJ pobllc pollcy cbooqes
ftom tbls set os o ttlqqet fot mokloq ttoosfet poymeots. 1be exlsteoce ot loteoslty of
soffetloq ls loJepeoJeot of tbe coose.
33

ln Lhe pasL Lhe roducLlvlLy Commlsslon
34
has advlsed LhaL Lhe generally avallable measures
such as unemploymenL beneflLs and asslsLance Lo flnd alLernaLlve employmenL should be
sufflclenL. Powever, generally avallable asslsLance measures are noL deslgned Lo meeL all
conLlngencles.
ln vlew of Lhe prospecL LhaL Lhe AusLrallan and SouLh AusLrallan economles wlll be
experlenclng below Lrend growLh aL Lhe Llme of lndusLry conLracLlon expecLed Lo flow
wlLhouL AusLrallan CovernmenL co-lnvesLmenL, as well as Lhe relaLlvely hlgh raLe of
unemploymenL and soclo-economlc dlsadvanLage already belng experlenced ln Lhe ClLy of

32
roducLlvlLy Commlsslon, 2013, Ceoqtopblc loboot Moblllty lssoes lopet
33
8oLLernberg, S., 1986, Oo compeosotloo fot losses ooJ pollcy ln Choksl, A. Lconomlc LlberallszaLlon ln
ueveloplng CounLrles, Cxford.
34
roducLlvlLy Commlsslon, 2002, kevlew of tbe Aotomotlve Asslstooce lopolty kepott

31

layford reglon, sole rellance on economy wlde welfare, skllls, and labour ad[usLmenL
programs ls unllkely Lo be sufflclenL Lo address dlsadvanLage ln layford and faclllLaLe Lhe
movemenL of labour, caplLal and land Lo hlgher producLlvlLy uses.
1he roducLlvlLy Commlsslon ls Lherefore asked Lo conslder Lhe need for speclflc ad[usLmenL
asslsLance measures LargeLed aL easlng ad[usLmenL cosLs for employees, buslnesses and
reglons affecLed mosL dlrecLly by slgnlflcanL change wlLhln Lhe lndusLry.
1he need for speclflc sLrucLural ad[usLmenL supporL from Lhe AusLrallan CovernmenL also
needs Lo be consldered agalnsL Lhe backdrop of AusLralla provldlng very low fundlng for
economy wlde labour markeL programs, compared wlLh Lhe CLCu average.
3;<=>? 97@ ,=LI;C ?ZO?EB;D=>? AE IKLA=> QK>a?D O>A<>KQJ KJ K O?>C?EDK<? AF 6.,c 7899

5ootce. Ocu 201J, hLLp://www.oecd.org/employmenL/daLabase
1here ls a sLrong precedenL for AusLrallan CovernmenL funded sLrucLural ad[usLmenL
supporL ln slmllar clrcumsLances. ln 2012 Lhe roducLlvlLy Commlsslon ldenLlfled 13 reglonal
ad[usLmenL funds LhaL had been puL ln place slnce 1997 Lo dlverslfy local economles,
followlng closure or downslzlng of lconlc local employers and ma[or employlng lndusLrles
(see Appendlx 8).
1he SouLh AusLrallan CovernmenL belleves LhaL among Lhose opLlons for Lhe auLomoLlve
lndusLry canvassed by Lhe roducLlvlLy Commlsslon, conslderaLlon should be glven Lo a
comprehenslve package of sLrucLural ad[usLmenL asslsLance measures Lo be lnLroduced ln
Lhe evenL of slgnlflcanL secLor conLracLlon. 1hls would lnclude programs deslgned Lo:
asslsL workers made redundanL by sLrucLural change wlLhln Lhe lndusLry, lncludlng
labour, [ob-search and counselllng, Lralnlng and re-Lralnlng programs, and
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32

asslsL reglons negaLlvely lmpacLed by lndusLry ad[usLmenL Lo flnd new economlcally
susLalnable lndusLrles Lo malnLaln overall levels of employmenL and economlc
wellbelng
lmprove connecLlvlLy from reglons lmpacLed negaLlvely by lndusLry ad[usLmenL Lo
oLher reglons ln order Lo speed ad[usLmenL.


33

O8 )'*/$0,1'*
1he lnLenLlon of Lhls reporL ls Lo demonsLraLe Lhe sLrucLure, lmporLance and evoluLlon of
Lhe auLomoLlve lndusLry Lo SouLh AusLralla and urge Lhe roducLlvlLy Commlsslon Lo
conslder how sLraLeglc supporL could malnLaln a robusL, Lechnologlcally advanced lndusLry
for years Lo come. 1hls submlsslon has ouLllned Lhe speclflc challenges faclng auLomoLlve
manufacLurlng ln SouLh AusLralla and made a case for LargeLed, conLlnued federal
governmenL supporL.
CovernmenL supporL Lo car manufacLurlng ls lower now ln real and proporLlonal Lerms Lhan
ln Lhe pasL. uomesLlc flrms and Lhelr employees have had Lo confronL lncreaslng
compeLlLlve pressures, exacerbaLed by Lhe weakenlng of Larlffs and a sLrengLhenlng
AusLrallan dollar. 8ecause of Lhls, auLomoLlve manufacLurlng has become an lndusLry whlch
provldes hlgh value manufacLurlng [obs whlle conLrlbuLlng more Lhan lLs employmenL share
Lo value added and research and developmenL.
1he SouLh AusLrallan governmenL ls urglng Lhe roducLlvlLy Commlsslon Lo proceed wlLh an
undersLandlng of Lhe beneflLs resulLlng from a domesLlc auLomoLlve lndusLry whlch are hard
Lo capLure wlLh sLaLlc economlc modelllng. SLaLlc comparaLlve CompuLable Ceneral
Lqulllbrlum modelllng aggregaLes economlc lmpacLs aL speclflc polnLs ln Llme and do noL
lndlcaLe Lhe magnlLude of Lhe beneflLs and cosLs, or Lhelr soclal dlmenslon.
8esearch conducLed on Lhe closure of MC 8over ln 8lrmlngham and Lhe llquldaLlon of
AnseLL Alrllnes ln 2001 Leaches dlfflculL lessons: lndusLry closure lmposes dlfflculL economlc
cosLs and sLress on communlLles. Modelllng ls capable of esLlmaLlng Lhe sLaLlc effecLs of Lhe
closure of domesLlc car manufacLurlng buL ls less well sulLed Lo calculaLlng Lhe economlc
and soclal cosLs of long-Lerm lndusLry ad[usLmenL.
AuLomoLlve manufacLurlng has played an lmporLanL, decades-long role ln sLrengLhenlng Lhe
AusLrallan economy. 1he lmporLance of LhaL role ls magnlfled ln SouLh AusLralla, where
manufacLurlng consLlLuLes an above-average share of CS and ls vlLal Lo Lhe economy and
social cohesion of Adelaides northern suburbs.
1he CovernmenL of SouLh AusLralla urges Lhe roducLlvlLy Commlsslon Lo Lake lnLo accounL
Lhe flndlngs of Lhls submlsslon and ln parLlcular conslders Lhe approprlaLe basls for a
declslon by Lhe AusLrallan CovernmenL regardlng supporL for Lhe auLomoLlve lndusLry
should be Lhe use of an economlc evaluaLlon. 1he key quesLlon relaLes Lo Lhe soundness of
Lhe CovernmenL lnvesLmenL declslon and assesslng wheLher Lhe neL presenL value of Lhe
beneflLs from supporLlng Lhe secLor ouLwelgh Lhe neL presenL value of Lhe cosLs of LhaL
supporL, Laklng full accounL of Lhe avolded cosLs assoclaLed wlLh lndusLry closure.


34

><<%*:1. >P 3+"+% A'2%5*4%*+ 9*:0,+56 ?"<<1*@
1he SouLh AusLrallan CovernmenL conducLed a supply chaln mapplng exerclse Lo deLermlne
Lhe slze and concenLraLlon of Lhe auLomoLlve lndusLry ln SouLh AusLralla and Lhe exposure
of assoclaLed suppllers ln Lhe evenL of Lhe wlLhdrawal of CM Polden from Lhe domesLlc
markeL.
1he exerclse found LhaL Lhere are 33 1ler 1 companles (where CM Polden and/or Lhe auLo
industry in general are the firms core business) in SA employing 3,719 people and providing
componenLs and servlces Lo all Lhree CLMs (Crlglnal LqulpmenL ManufacLurers: Polden,
1oyoLa and lord). 1hese 1ler 1 companles have comblned revenue of $1.131 bllllon and
supply Lhe Lhree CLMs wlLh supporL from 1,270 suppllers naLlonally. A furLher 719
companles employlng 28,000 Lo 32,000 people are esLlmaLed Lo supply a wlde range of
servlces and producLs Lo Lhe 1ler 1 companlesLhese can be labelled 1ler 2, 3 or 4
dependlng on Lhelr locaLlon ln Lhe supply chaln.
Information provided by GM Holden indicates that the core supplier base of parts and
components in the manufacturing process amounts to $528 million per annum created by
29 suppllers based around Lhe sLaLe.
Cnly 23 per cenL of Lhese 1ler l companles are sufflclenLly dlverslfled ln Lhelr operaLlons Lo
conLlnue ln Lhe markeL were domesLlc car manufacLurlng Lo ceaselL ls predlcLed LhaL all
719 companles surveyed would be vulnerable, wlLh rlsks ranglng from moderaLe Lo severe.
1he mosL pesslmlsLlc forecasL places 6600 ouL of 7700 l1Ls aL rlsk.
Llsewhere Lhe exerclse found a low level of dlverslflcaLlon and hlgh dependency on Lhe
auLomoLlve lndusLry among Lhe 1ler 1 companles, whlch would expose Lhem Lo greaLer rlsk
ln Lhe evenL of a CM Polden planL closure. Cnly 44 per cenL of SA suppllers have achleved
slgnlflcanL levels of dlverslflcaLlon, suppllers whlch have lnvesLed ln nlche markeLs and hlgh
Lech capablllLy are now beneflLlng.
lndusLry-wlde adopLlon of manufacLurlng Lechnlques whlch respond Lo orders recelved
(just in time) have made automotive and parts manufacturers more vulnerable to
lndusLrlal dlsrupLlon. 1he small slze of Lhe AusLrallan markeL makes lL dlfflculL for parLs
manufacLurers Lo reallse effecLlve economles of scale meanlng flxed cosLs remaln a
sLubbornly hlgh proporLlon of LoLal producLlon cosLs. 1hls problem would be dramaLlcally
exacerbaLed lf CM Polden were Lo wlLhdraw from Lhe AusLrallan markeL.
Cf Lhe 719 companles parLlclpaLlng ln Lhe auLomoLlve supply chaln ln SA, 203 operaLe from
Lhe norLhern suburbs. 1he hlgh percenLage of reLall and dlsLrlbuLlon orlenLed companles ln
Lhe norLhern suburbs are lndlcaLlve of Lhe complex requlremenLs of Lhe secLor. 1he exerclse
lndlcaLes LhaL Lhe norLhern suburbs are llkely Lo susLaln more severe employmenL lmpacLs
Lhan any oLher reglon. 1he employmenL lmpacLs of a fallure of Lhe auLomoLlve supply chaln

33

are esLlmaLed Lo be beLween 20 Lo 90 per cenL of Lhe currenL norLhern suburbs-based
workforce.
1he graph below lllusLraLes Lhe llkely dlsLrlbuLlon of employmenL vulnerablllLy of
auLomoLlve suppllers by posLcode. lL shows LhaL Lhe suburbs aL greaLesL rlsk of employmenL
loss are those in Adelaides outer north, such as Elizabeth (5112), Davoren Park (5113),
SmlLhfleld (3114), Munno ara (3113) and Sallsbury (3106).
1hls graph shows LhaL employmenL ln Lhe auLomoLlve secLor ls concenLraLed ln Lhe norLhern
suburbs of Adelalde, whlch have hlsLorlcally been regarded as socloeconomlcally
dlsadvanLaged, and LhaL ls Lhose dlsadvanLaged suburbs whlch wlll bear Lhe brunL of
lndusLry collapse.
3;<=>? 9:@ (=QL?> AF dALJ KEB >;Ja ;E DH? ?G?ED AF 6% *AIB?E CIAJ=>?

As Lhe Lwo graphs below show, CM Polden domlnaLes Lhe auLomoLlve secLor ln SouLh
AusLralla. ln addlLlon Lo Lhe 1700 workers currenLly employed aL Lhe LllzabeLh slLe, CM

36

Polden ls dlrecLly responslble for 1400 1ler 1 auLomoLlve suppller [obs. 8y Lhls esLlmaLe,
over 3,000 [obs would be losL ln shorL order were Lhe planL Lo close.
3;<=>? 9S@ "4 K=DAQAD;G? J=OOI;?> dALJ LM F;>Q

llgure 13 palnLs a slmllar sLory: CM Polden conLrlbuLes $471 mllllon Lo local suppllers, 38.13
per cenL of Lhe LoLal. lf CM Polden leaves AusLralla, lL would have devasLaLlng consequences
for Lhe auLomoLlve suppller lndusLry ln SouLh AusLralla and Lhe norLhern suburbs of
Adelalde.
3;<=>? 9T@ "4 J=OOI;?> >?G?E=?J LM F;>Q


172
736
1403
"4 K=DAQAD;G? J=OOI;?> dALJ LM
'+%
lord
1oyoLa
CMP
1oLal = 2,313
49
290
471
"4 K=DAQAD;G? J=OOI;?> >?G?E=?J
LM '+%
lord
1oyoLa
CMP
1oLal = $810m

37

><<%*:1. QP >0,+5"$1"* A'2%5*4%*+ 3+50/+05"$ >:M0,+4%*+ K0*:,
,1*/% 7RRS

Program Date
Expected
closure or
downsize
Expected job
displacement
Fundinga
Newcastle Structural 1997 BHP 2800h $10 millionb
Adjustment Fund
Eden Regional Adjustment November Forestry 143 $3.6 million
Package 1999 access; fish
canning
plant
South-West Forests Structural 1999 Reduced unknown $5 million
Adjustment Package forestry
access
Structural Adjustment Fund for May Mitsubishi 1100 $45 million
South Australia (SAFSA) 2004 (Lonsdale) ($40m Aust.
+ $5m SA)
Beaconsfield Community
Fund
May Gold mine 235 $8.3 million
2006 collapse
Port Kembla June BlueScope 250 $5 million
Industry Facilitation Fund 2006 Steel
(PKIFF)
Innovation Investment Fund September Electrolux 500 $30 million
for South Australia (IIFSA) 2006 ($25m Aust.
+ $5m SA)
Scottsdale March Auspine 280 $6 millionc
Industry and Community 2007
Development Fund (SICDF)d
Geelong August Ford 600 $24 million
Investment and Innovation 2007 ($15m Aust.
Fund (GIIF) + $6m Vic.
+ $3m Ford)
South Australian February Mitsubishi 930 $30 million
Innovation and Investment 2008 (Tonsley ($25m Aust.
Fund (SAIIF) Park) + $5m SA)
North East Tasmania August Gunns 135i $3.7 million
Innovation and Investment 2008
Fund (NETIIF)f
5ootce. ltoJoctlvlty commlssloo, 2012