Automotive sector still a $35.1 billion behemoth

AN INDUSTRY survey has shown that the automotive sector of the economy will still be a $35.1 billion giant after the closure of the GM Holden and Toyota manufacturing operations, and around 100 parts-makers, in October this year.

The survey by the Victorian Automobile Chamber of Commerce (VACC) and supported by other state motor trades associations also shows that a deterioration in skilled worker education systems around the country has left the repair and maintenance industry with 27,000 vacancies.

And this skills shortage, which has its origins in the Hawke government’s higher education policies, is expected to rise to 35,000 within 12 months, said Geoff Gwilym, executive director of the VACC.

Mr Gwilym said the survey was commissioned after the Abbott-Turnbull government’s failure to respond to the 2015 Senate inquiry that looked into the future of the automotive industry after the imminent closure of manufacturing.

The Senate inquiry was started after the Labor Party received support from minority party senators, including Nick Xenophon (South Australia).

Releasing the latest survey in Canberra, Senator Xenophon said the report was commissioned because of the industry’s frustration at the government’s failure to act on the inquiry’s recommendations.

“There seems to be an attitude in government that the auto sector will die a slow death with the impending closure of Toyota and Holden’s manufacturing operations in October,” he said.

“This couldn’t be further from the truth. More than 91 per cent of Australian industries are using automotive goods and services (provided) by businesses, many of them family-owned.”

Left: VACC senior research analyst Steve Bletsos

Speaking in Melbourne, Mr Gwilym said that this reliance on the motor industry and its services underscored the importance of the automotive sector.

“What that tells you is you actually can’t run the country if you take auto out,” he said.

“What we are driving home here is, don’t be dismissive of an industry that keeps your country going.”

The survey shows that employment in the automotive sector will settle at about 360,000 people spread across 68,000 businesses after the closure of manufacturing.

But Mr Gwilym said the most disturbing factor thrown up the by the survey was that there is a shortage of skilled mechanics in the industry.

He said there was a misconception amongst politicians that the workers who will lose their jobs when the Holden and Toyota plants close will be able to swap over to the repair and maintenance sector to fill those vacancies.

“These positions cannot be filled by displaced car manufacturing workers. They are generally not trade-qualified,” he said.

“If you were on Trim Line Five at Ford, you are not going to go into the general automotive sector. You can stick trim on a door panel that goes into a car, but you can’t actually repair a car.

“However, people in car manufacturing are highly trained, but it is around quality assurance, quality process, continuous improvement. They are finding jobs, but they are not going into auto.”

Mr Gwilym said the shortage was caused by businesses that were reluctant to take on apprentices. Another factor was the long-term consequences of the Hawke government’s emphasis on higher education at the expense of technical training.

“There is a general nervousness in the market about putting labor on,” Mr Gwilym said. “In my view that is why there is a growth in one-man band operations – low overheads, low risk, I can still make a dollar.

“The tax factors and the business factors in Australia are great for big business and great for micro businesses, but in the middle ground it is difficult. Payroll tax crucifies businesses and they won’t put people on.

“Once they cross the $550,000 turnover threshold, there’s a disincentive to employ more staff.

“There needs to be a national campaign aimed at employers about putting on more apprentices.”

Another long-term factor was that governments, along with universities, have had a single focus on higher education, he said.

“We have sent millions of kids off to university and now we have thousands of double-degree baristas,” he said.

“We are responsible as a nation for telling a whole generation of mums and dads and kids that if you don’t go to uni you’re not smart, and that’s the result.

“Bob Hawke said we needed to be the clever country. Well, Bob, that’s what you did.” The author of the survey, VACC senior research analyst Steve Bletsos, said the shortage was also having an upward effect on wages in the sector.

“Yes it is, and there is an issue of poaching as well. A garage owner in Canberra has been advertising for eight months a mechanic’s position at more than $80,000 a year and he just can’t fill it,” Mr Bletsos said.

“This is a common story. The skill shortage is very severe and something has to be done because it effects productivity, investment and that’s why a lot of businesses are not investing.”

Mr Bletsos heads up the VACC’s research department. He previously worked with Mr Gwilym at Auto Skills Australia and before that worked for 20 years at the Australian Bureau of Statistics.