The threat of demise of the Australian auto assembly........

The cost cutting agenda in the wake of globalization does not spare anyone - even industrialised nation like Australia. For a relatively long period, the automotive industry in Australia is heralded as one of the prime movers of Australian economy. But as organizations move forward into an era where cost cuts are being championed, industry players that failed to compete on the basis of pricing would eventually perish.

Such fine example is the the automotive assembly industry where the threat of demise is looming. In Australia, it is becoming impractical or not economically viable to engage in vehicle assembly as a result of higher cost structure. Australians feel that it is more appropriate to merely become importers of cars from countries that could make them cheaper than Australians. This scenario is exactly what happened to the Philippine automotive industry.

This changing landscape was augmented by the government’s policy of reducing trade barriers, which was putting domestic manufacturing under a lot of pressure. Many realized that assembly and manufacturing have to make way for the full imports. For instance, Holden in Australia is expected to streamline its production efficiency by trimming about 1400 jobs, revising its production forecast and transfering its supply base to cost effective GM subsidiaries.

While the benefit to the customers is imminent in term of lower prices, this shifting practice is likely to adversely impact the Australian parts suppliers who had to forgo their businesses to cheaper counterparts in Thailand and China. If only the global giants can continue to drive efficiencies, then car assembly in developed countries like Australia could continue - which is less likely in the foreseeable future.