Opposition leader clears air on auto funding

THE Australian automotive industry has welcomed federal opposition leader Tony Abbott’s declaration that he “fully accepts” the need for government assistance for car manufacturing in this country.

However, the embattled industry still remains concerned about the currency manipulation that is cruelling its sales at home and abroad, an issue neither side of politics seems willing to tackle.

Mr Abbott made it clear in a speech he delivered last week that a Coalition government would support Australian car manufacturing with ongoing taxpayer-funded support, despite routine condemnation of the current Labor government’s policies and a Coalition pledge to cut $500 million from the sector’s assistance budget.

“I accept that at least for the foreseeable future there will be a role for government providing specific support for motor manufacturing industry – I accept that, I fully accept that,” Mr Abbott told an Australian Automotive Aftermarket Association dinner in Sydney last week.

“But I want the industry to be clear, too, that it has a job to respond to the support of government by doing what it can to ensure that Australian-produced cars are more being marketed to the world and not simply being marketed here in Australia.” Despite struggling to find export markets for its Australian-built vehicles, Ford Australia senior management has welcomed Mr Abbott’s comments, which included a direct reference to the Territory SUV – “the thing that breaks my heart is that this great Australian car is virtually only available here in this country”.

President and CEO Bob Graziano told GoAuto this week that he was pleased that all sides of politics, at both a state and federal level, had shown “receptiveness and the understanding of the importance of the industry”.

“I’ve been very consistent in my belief that this is an important industry in terms of what it contributes to the economy here in Australia, and I haven’t changed that position,” he said.

“I still believe automotive adds a lot, whether it’s in technologies, skill development, processes, those things that are transferable into other sectors in Australia.

“It’s another, in my view, key element of the industry, just like mining and services are as well.” Mr Graziano added that the company had received a favourable response to the small allocation of diesel Territory SUVs exported to Thailand last year “so we’ll hopefully be able to build from there”.

Ford’s communications and public affairs director Sinead Phipps also said “it’s really good to see that he (Abbott) appreciates the Territory export programs require a lot of export components, and markets that are willing to receive and sell them at prices that make a lot sense.

“If you look at what happened with Thailand, we sent 100 of them last year, and they sell at a significantly higher price there because of the non-tariff barriers.

“There has to be a market that wants them and is prepared to price them in a way that works. Without that, export programs aren’t viable.” GM Holden, which announced last week it was cutting another 500 jobs and further slowing down its Australian production rate, said it wanted to export more vehicles but indicated that the aggressive currency policies adopted by the US and Japan were putting a dampener on its plans.

“We still are focused on niche export opportunities,” said the company’s director of government relations Matt Hobbs.

“We are going to recommence export of a retail car, the Chevy SS, later this year to the US. It’s the NASCAR race car, and we continue to export the Caprice in its police car format to the US.” However, Mr Hobbs indicated that expected export volumes have been drastically reduced by the currency war being waged by the US with its dollar.

“If the Australian dollar was down at US75c – we’re not saying the Australian government would do this ever, or should do it, we certainly don’t believe that – but if the Australian government was doing what the Japanese government was doing, the level of the dollar would be at US75c and we would be selling 20,000 police cars instead of 3500.” Mr Hobbs pointed out that Brazil, which has an economy very similar to Australia with around 26 per cent of GDP coming from manufacturing, has imposed a floating tariff to compensate for any advantage imported goods may get from the weak US currency.

“The Brazilian government has said it will not allow Brazil to be de-industrialised,” he said.

He also said that Europe, one of the world’s biggest vehicle producers, has a tariff twice the size of Australia’s 5 per cent rate.

The Australian car parts industry also welcomed Mr Abbott’s approach to the industry, in particular his preference for an increase in exports.

“The Federation of Automotive Products Manufacturers was very pleased to hear Mr Abbott committing a Coalition government to specific support for our vehicle manufacturing industry and that the last thing he wants to see is an end to motor manufacturing in Australia,” said FAPM executive director Richard Reilly.

“We call for continued bipartisan policy certainty for the industry, with a focus on fair market access in international markets to Australian-made vehicles.

“The FAPM is totally supportive of the exporting programs of all the manufacturers. By far the easiest way for a supplier to export a component is in an exported Australian vehicle.” But Mr Reilly said he was concerned that Australia was not standing up enough in support of the industry in international trade forums.

“Our government needs to do more to ensure that Australian vehicle manufacturers have clear market access for their vehicles, both on tariffs and non-tariff barriers.

Chief executive of the Federal Chamber of Automotive Industries (FCAI) Tony Weber said: “We welcome Tony Abbott's support for the industry.

“We agree that market access is a key issue, especially when it comes to non-tariff barriers.

“The high Australian dollar is having a serious impact on both domestic and export markets and is therefore a double blow for the local manufacturers, who are focused on increasing competitiveness.

“There needs to be a long-term plan for the future of the automotive industry in Australia.” Toyota is the industry’s largest exporter by far and seconded Mr Abbott’s desire for more exports.

“Our export program is an integral part of our overall business strategy,” said spokesman Beck Angel.

“The fact that we have strong exports is an indication of the high quality and durability of the vehicles we build here in Australia.”