Toyota Announces End Of Australian Manufacturing By 2017: OFFICIAL Photo:

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Mike Stevens | Feb, 10 2014 | 19 Comments

UPDATE 6:22pm AEDT: Quotes from Toyota global boss Akio Toyota, Australian Prime Minister Abbott, Opp Leader Shorten, AMWU, ACTU, Federation of Automotive Products Manufacturers.

Toyota has announced today it will end production in Australia by the end of 2017, joining Ford and Holden in switching to import-only brands.

The company said the decision was based in part on the high Australian dollar's effect on export opportunities, along with the high cost of manufacturing and low economies of scale for Toyota and for its local supplier base.

It added that the pressure of current and future Free Trade Agreements had contributed to the decision, with Australia's open and fragmented automotive market making future production here unviable.

The announcement echoes comments by former Holden Managing Director Mike Devereux, who described Australia's automotive manufacturing industry as a "perfect storm" of poor economic conditions.

The news brings an end to Toyota's 51-year history of Australian production - and effectively spells an end to the local automotive manufacturing industry, with some 2500 Toyota employees to lose their jobs and thousands more at risk with parts and retail companies.

Toyota Australia President and CEO, Max Yasuda addressed the company's workers today.

"While we have been undertaking the enormous task of transforming our business during the past two years, our people have joined us on the same journey, which makes it even more difficult to announce this decision."

"We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia."

"Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts."

"Our focus will now be to work with our employees, suppliers, government and the unions as we transition to a national sales and distribution company. Support services will be available to our employees and we will do everything that we can to minimise the impact of this decision on our employees and suppliers."

Mr Yasuda added that the company will also study the corporate structure of its Australian arm to determine what roles and functions will remain in the switch to import-only operations.

Toyota global president Akio Toyoda joined Mr Yasuda in Melbourne today, where he described the decision as the toughest the company has ever made, but that he is proud of Toyota Australia's history and output.

"I know we did everything that we could to make our business stronger during the last two years, we left no stone unturned," Mr Toyoda said.

"Unfortunately, and despite our best efforts, the challenges posed by factors outside of our control were simply too great to overcome."

Mr Toyoda said that a study of both its international and Australian operations saw the Altona plant come "very close" to winning production of the next-generation Camry.

The company confirmed last year that it loses nearly $3000 on the cost of producing vehicles in Australia, and Mr Toyoda said today that efforts to reduce costs were not successful.

The decision will also mean the shut-down of Toyota Australia's new $330 million engine plant, opened in late 2012.

One more update to the Camry will come out of Toyota Australia however, with a "Big Minor Change" facelift scheduled to enter production later this year.

Last year, Australian Prime Minister Tony Abbott said that he wanted "Toyota to continue" manufacturing vehicles in Australia and had spoken with Mr Yasuda, but he ruled out any further taxpayer funding.

Today, Mr Abbott said that "nothing we say or do can limit the devastation that so many people will feel at this point".

"The important thing to remember is, while some businesses close, other businesses open, while some jobs end, other jobs start. There will be better days in the future."

Industry Minister Ian MacFarlane said the government had been in talks with Toyota on continuing manufacturing in Australia, but today's announcement "has curtailed these discussions".

Mr MacFarlane echoed the Prime Minister's comments, saying that "hundreds of thousands of workers are made redundant every year", but that the Australian economy continues to provide jobs and options for those people.

The Australian Council of Trade Unions estimates that Australia will lose up to 50,000 direct skilled jobs, with an impact on the economy of as much as $21 billion.

(Internationally, the company confirmed last week that it is on track to post a $23.7 billion profit.)

Federal Opposition leader Bill Shorten described the announcement as "an unmitigated disaster. The Australian automotive manufacturing industry has died under the Abbott government, it's a disgrace."

Victorian Premier Denis Napthine said that he learned of the decision directly from Toyota global president Akio Toyoda.

''I am extremely disappointed by this sudden decision and would clearly have preferred to have had the opportunity to work through these issues with Toyota and the federal government,'' Mr Napthine said.

''My thoughts go immediately to Toyota workers and their families as well as workers across the supply chain. The Victorian Coalition government stands ready to do everything we can to support workers and their families.''

Labor industry spokesman Kim Carr said that the Abbott Government has "effectively chased them out of Australia".

‘This is a government that prides itself on its capacity to destroy industries. 2013 was a referendum on the future of the automotive industry. I am truly appalled," Mr Carr said.

"The social and economic implications of this decision for Australian manufacturing are disastrous."

AMWU's Steve Dargavel said that the shockwaves from this announcement - which comes in the wake of similar decisions from Holden and Ford - will be felt throughout the Australian automotive industry and the wider economy.

"It is possible that there is some export opportunities, if there is government support and will, but there will be many more consequences to come from this decision," Mr Dargavel said.

In a statement, AMWU vehicle secretary Dave Smith said "this decision will see thousands of jobs exit Australia - not only at Toyota directly but all the way down the supply chain."

"The magnitude of this decision in the community cannot be underestimated. We are looking at a potential recession all along the south-eastern seaboard," Mr Smith said.

“These are serious injections of foreign capital which we are waving goodbye to across the manufacturing sector. These effects will be felt in road transport, container shipping and all of the services that keep Australian-made cars on the road. There’s not a car industry in the world that doesn’t receive some sort of government support.”

“If you value something, you invest in it. This government is driving jobs and our economy into the ground.”

Speaking with TMR today, Federation of Automotive Products Manufacturers (FAPM) Chief Executive, Richard Reilly, described today's announcement as "devastating".

Mr Reilly said that it is possible for Australian parts suppliers to work on export opportunities with companies overseas, but that it is a difficult prospect.

"The issue generally is that companies need a revenue base to support overseas development," Mr Reilly said.

"With 70-80-90 percent of income coming from domestic sales to Ford, Holden and Toyota, it’s very difficult to build an international program without that revenue base."

The parts industry employs around 18,000 people in Victoria, and 6000 in South Australia. Most, if not all, will likely be out of work by 2017.

Mr Reilly added that it has been difficult for suppliers to prepare for today's announcements, or for those of Holden and Ford last year.

"On the question of preparing, as such, the answer is no. We were fully supportive of Toyota continuing to build cars in Australia, just as we were with Ford and Holden right up until the day they exit manufacturing in Australia."

Toyota joins Ford and Holden in becoming import-only brands in Australia, with both set to end local manufacturing by 2016 and 2017 respectively.

MORE: Holden announces exit
MORE: Ford announces exit
MORE: All Australian manufacturing news


Below: Audio from today's media briefing

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