Toyota Pullout Ends Vehicle Production in Australia

Australia will end its role as a vehicle builder in three years as Toyota stuns the industry with a decision to quit local manufacturing by the end of 2017.

Toyota president and CEO Akio Toyoda traveled to Australia to be with Toyota Australia President and CEO Max Yasuda as he made the announcement to employees at the automaker’s Altona plant, in western Melbourne.

Federal Chamber of Automotive Industries CEO Tony Weber calls it a very sad day for Australia as the country’s most successful manufacturer says it will become a national sales and distribution company.

This means local manufacturing of the Camry, Camry Hybrid and Aurion vehicles, as well as the production of 4-cyl. engines, will cease.

The decision ending 51 years of local production does not come as a surprise. With Ford quitting manufacturing in 2016 and GM Holden following in 2017, the economies of supply made Toyota’s decision almost inevitable, but the timing of the announcement was unexpected.

“The decision was not based on any single factor,” Toyota says in a statement. “The market and economic factors contributing to the decision include the unfavorable Australian dollar that makes exports unviable, high costs of manufacturing and low economies of scale for our vehicle-production and local supplier base.

“Together with one of the most open and fragmented automotive markets in the world and increased competitiveness due to current and future free-trade agreements, it is not viable to continue building cars in Australia.”

Yasuda says it is a devastating decision for the automaker’s 2,500 manufacturing employees and an as-yet undetermined number in Toyota’s corporate divisions who will lose their jobs.

“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,” he says in a statement.

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

Yasuda says Toyota is committed to supporting the industry as it prepares for the end of vehicle manufacturing in Australia. “We will work with our key stakeholders to determine how to provide the best support to our employees, suppliers and local communities during the coming years,” he says.

GM Holden announced its decision in December, following Ford in May, and Prime Minister Tony Abbott said then that Toyota would not be getting any extra government money.

The decision nevertheless is “devastating for me and for the government,” Abbott says, according to a government transcript of an impromptu news conference.

“It’s devastating for (Victoria) Premier Denis Napthine and for the Victorian government as well. I will be talking further with Toyota (and Napthine)…but nothing that we say or do can limit the devastation that so many people will feel at this point.”

Abbott is quick to put a philosophical spin on the decision.

“The important thing is to remember that while some businesses close, other businesses open; while some jobs end, other jobs start, but the challenge for government at all levels is to try to ensure that there are more businesses starting than there are finishing, that there are more jobs being created than there are ending.

“I’d like to reassure the people of Australia that that is the constant focus of the Commonwealth (federal) government: to ensure that we have a strong economy where the number of new jobs outweighs the number of closing jobs. I’m confident that that will continue to be the case.”

But Australian Manufacturing Workers Union National Secretary Paul Bastian says the decision reflects the consequences of the Liberal coalition government’s refusal to support investment in Australia, and a lack of support and respect for Australian workers.

Toyota’s decision pushed an Abbott announcement the same day of a Royal Commission to inquire into alleged financial irregularities associated with the affairs of trade unions out of the headlines.

AMWU National Vehicles Secretary Dave Smith says Toyota’s decision will cost thousands of jobs, not only at the automaker but all the way down the supply chain.

“The magnitude of this decision in the community cannot be underestimated,” Smith says in a statement. “We are looking at a potential recession all along the Southeastern seaboard.

“The government is chasing important and viable operations out of Australia. These are serious injections of foreign capital which we are waving goodbye to across the manufacturing sector.”

Federal Opposition Leader Bill Shorten calls the closure an unmitigated disaster.

“The car industry has died under the Abbott government – it's a disgrace,” he says in an Australian Broadcasting Corp. interview.

Industry Minister Ian Macfarlane tells the ABC he recognizes Toyota had a business decision to make.

“The announcement today by Toyota Australia is an extraordinarily significant day for Australian industry; Australian industry will never be the same,” Macfarlane says.

“I always felt that if we were given the time we could put in place a plan to ensure that Toyota did continue. Its situation was entirely different to that of Holden and Ford – Toyota was exporting more than half its production.”