Australia's future in question
Motor Corp. Australia Ltd. President Ken Asano warns his company may not survive as a local carmaker much beyond 2005 - when tariffs fall to 10% from 15% - unless the local industry becomes more competitive. Australia's productivity is lower and has fewer working days per year than Toyota's U.S. and U.K. plants, he says. Absenteeism is higher, partly due to an older workforce. Toyota's Australian plant takes 20 work hours to make a car against 15 in its U.K. plant and 14 in its U.S. plants. The Australian plant operates 220 days a year compared with 245 in the others. Absenteeism is 13% in Australia, 8% in the U.S. and 3% in the U.K. Mr. Asano also says the Australian dollar now is so weak that exports do not make up for the higher costs of imported parts, and Toyota Australia may not show a profit this year. He has given himself three years to lift productivity, but if the gains cannot be made, he says Toyota no longer will be viable to manufacture vehicles in Australia. The automaker is on target to export 50,000 vehicles in 2001 due to orders from the Middle East. This year's goal is 43,000 units. Toyota last year exported 35,000 vehicles from its Australian production of 91,000 units.
Charges dropped against Russia's AO
Russia's prosecutor general drops tax-evasion charges against AOdue, he says, to insufficient evidence. Authorities in July said AvtoVAZ had not paid taxes on 200,000 cars and had stamped them with the same vehicle identification number. The company disputed the charge, saying its production line was not capable of building 200,000 extra vehicles. At the time, experts agreed the charges were part of Russian President Vladimir Putin's war against oligarchs - businessmen who gained power and wealth following the fall of communism. AvtoVAZ is linked to Boris Berezovsky, one of former-President Boris Yeltsin's allies.
Brazil suspends auto trade pact with Argentina
Brazil, South America's largest economy, last month suspended a fresh auto trade pact, saying Argentina violated the agreement by increasing the percentage of local content on vehicles built in the Mercosur region. The move comes in a year that industry insiders had been predicting to be Brazil's best, following several years of decreased production. An increase in orders at local automotive manufacturers indicates the country could be on track to produce 1.7 million units this year, 25.9% above last year and the third-best result in the country's history. But the recent trade disagreement means Brazil, at least for the time being, has no place to export the bulk of its vehicles. The Mercosur agreement, arrived at in late June, stipulates that 30% of car parts must be local. But a recent Argentine law increased that amount, saying all materials used to build parts - such as steel, rubber and aluminum - must be locally sourced. Without an export market, Brazil's automakers may have to temporarily scale back production plans.
Ghosn meets with Blair over euro troubles
After meeting with British Prime Minister Tony Blair,Motor Co. Ltd. President Carlos Ghosn announces Nissan will wait six months to determine the production base of its new subcompact Micra. Mr. Ghosn and other Nissan executives met with Mr. Blair to discuss the U.K.'s entry into the European Union's euro currency and a government aid package that would ensure the next Micra will be built at Nissan's plant in Sunderland, U.K. At stake is a œ150 million ($100 million) investment. Although the Sunderland plant is one of the most efficient plants in the world, the weakness of the euro against the pound dropped profits to œ23 million ($34.8 million) from œ77 million ($116.5 million) last year. If a suitable economic environment is not met, production could be shifted to eurozone factories in France or Spain. Toyota Motor Corp., meanwhile, has taken a different approach in dealing with the pound/euro disparity. The No.1 Japanese automaker asked its U.K.-based suppliers to use the euro, instead of the pound, in its business dealings - a move aimed at reducing currency risks. The euro has dropped 16% against the pound sterling and some 25% against the yen since it was created.