The closure of car manufacturing could cost Australia nearly 200,000 jobs and $29 billion in lost economic output, a new report predicts.
The report from the National Institute for Economic and Industry Research says nationwide impacts will extend far beyond the core car-making regions of Victoria and South Australia.
Victoria will be hardest hit by the closure of the car plants when first Ford, then General Motors Holden and Toyota stop manufacturing in Australia over the next three years.
The study estimates that up to 100,000 direct and indirect jobs will be lost in Victoria when the plants shut their doors.
Nearly 24,000 jobs will be lost in South Australia.
Source: Closing the Motor Vehicle Industry – The impact in Australia
Surprisingly, Queensland and NSW will be even harder hit than South Australia, according to the modelling, with each of these states losing more than 30,000 jobs through flow-on effects from the end of car making.
“This is a national as well as a regional problem,” says John Spoehr, the executive director of Adelaide University’s Australian Workplace Innovation and Social Research Centre, which commissioned the economic modelling.
The study has based its findings on an assumption that the Australian dollar will fall to 80 US cents against the greenback by 2017, as mining investment peters out, leading to a “modest” recovery in local car production and a 15 per cent rise in employment in the industry.
The forecast hit to the economy would represent about 2 per cent of Australia’s annual economic output.
The institute also modelled another scenario where the Australian dollar fell to 65 cents against the US dollar, leading to a 30 per cent pick-up in local production as the cost of imported cars rose.
In this case, the study estimates there could be a $44 billion hit to gross domestic product and the loss of 270,000 jobs.
“The high Australian dollar has really been a killer for Australian mass manufacturing,” Associate Professor Spoehr told ABC TV’s Four Corners program for its report, The End of the Road.
“It’s had a similar effect on manufacturing to that which has been experienced in the agricultural sector through drought, and I’d regard what we’ve gone through over recent years as exceptional circumstances for manufacturing.”
The report also warns of the further potential for loss of jobs and output from the erosion of trade skills and industrial capacity.
“Additional production losses can be expected due to the undermining of the economics of complex manufacturing in Australia,” the study states.
“The motor vehicle industry is the main conduit for the introduction into Australia of advanced technology and the training of labour in the necessary skills.
“The ending of this conduit will increase the cost for other complex manufacturing industries, no doubt leading to other plant closures.”
However, other leading experts are sceptical about the projections of job losses in the hundreds of thousands and a major hit to the national economy.
“This form of restructuring will have quite profound effects on individual regions and quite narrowly defined regions, but not necessarily have a significant effect on the economy as a whole,” Bill Scales, the former chairman of the Automotive Industry Authority and the Industry Commission, told Four Corners.
“But we can’t ignore the social cost on a regional basis,” Mr Scales added.
“There is no doubt that there will be a substantial number of people in Elizabeth and Geelong and around the Altona region in Victoria that will be severely affected by this change.”