For many decades, manufacturing was the cornerstone of the Australian economy. Iconic images of fast-moving conveyor belts, diverging sparks, and hard hat-wearing employees have filled the national consciousness. Australians have taken pride in locally-made products, seeking them out over imported alternatives, even with a small premium attached.

Now, however, that looks to be changing – and quickly.

The manufacturing sector has dropped from the Australia’s biggest contributor to GDP to its fourth, following mining, finance and insurance, and construction. This week, Toyota announced its decision to pull out of local manufacturing by 2017, following similar declarations from Holden last May and then Ford in December. As a result, Australia will be without any vehicle manufacturing industry – a gap that is very unlikely to be filled in the near future.

To an extent, the circumstances contributing to the decline of the industry were unavoidable. Australia’s remoteness and comparatively small population mean that maintaining a healthy manufacturing sector is intrinsically difficult – economies of scale are not easy to achieve. Some of the factors blamed for pull-outs – such an overwhelmingly high Australian dollar – have altered in recent months. At the time of writing, $1 buys 90 US cents – nowhere near the parity-exceeding levels we saw last year.

manufacturing-workersToyota’s announcement provoked impassioned reactions, with both major political parties attempting to turn the news into a blame game. Some argue that the sector facilitated its own downfall, with criticisms emerging about cushy working conditions and unnecessary salary increases for workers.

However, it is arguable that the escalating media panic over these changes outstrips the reality of the situation.  Members of the public could be forgiven for forgetting that vehicle manufacturing accounts for about 5% of Australia’s total manufacturing jobs, which number almost one million.

That is not to say that these announcements are not incredibly painful for employees of Toyota, Holden an Ford. Thousands of workers are sure to be directly affected, with this number potentially swelling to a much larger figure once the ripple effect of the closures is felt.

Proactive employees of these companies will be looking at education, upskilling and retraining options. Of course a grieving period is understandable.  Following this, though, individuals should look to Australia’s fast-growing industries, successful franchises, and their own unfulfilled ambitions. As they say, every cloud has a silver lining.

Today, that silver lining has become more clear. After the Federal government claimed it would be unable to provide tinned fruit manufacturer with a $25 million assistance package, Victorian Premier Denis Napthine this afternoon announced a $100 million investment in the company. Goodness me, indeed.

 

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