Can Australia have a sustainable car manufacturing industry?
It's one of the questions being raised after automotive giant Ford announced plans to stop manufacturing vehicles in Australia in 2016.
Ford's decision has also raised concerns about the repercussions for associated supply industries, and the future of hundreds-of-thousands of Australian workers.
Kristina Kukolja reports.
Ford says it's unprofitable to continue manufacturing cars in Australia, after posting hundreds-of-millions-dollars in losses in the past five years.
As a result, 1200 people from its plants in the Victorian city of Geelong, and the Melbourne suburb of Broadmeadows will lose their jobs in three years time.
The Australian Council of Trade Unions warns the decision could jeopardise up to 10-thousand other jobs in related manufacturing industries.
Dr Suresh Palanisamy is an automotive industry expert at Swinburne University in Melbourne, and has previously been involved with Ford and Nissan companies through research.
He says many small and medium businesses making up Australia's manufacturing industry supply the automotive industry, and the repercussions for those linked to Ford will be serious.
"If you 1200 jobs are going then obviously, surely at least multiply it by two or three, so at least 2500 jobs might be supplying to manufacturing like the automotive industry. Surely it'll be two thousand or three thousand jobs in the line who will be supplying to the 1200 people."
The concern surrounding the impact of Ford's closure in Australia on small businesses extends even to the food outlets in close vicinity to its two plants.
Geelong Edols is a fast-food shop that serves Ford workers and staff from supplier businesses in the suburb of Norlane, where the Geelong plant is located.
Edols manager Rosemary says if companies supplying Ford in the area are forced to close down, her shop will lose business.
"If those suppliers aren't used, that reduces their staff and their need to obviously supply Ford, so I guess they'll either close or have to reduce the size of their companies which reduces the people coming through our doors."
Victorian Premier Denis Napthine has vowed to help affected Ford staff find new work, and is meeting with unions and car manufacturing industry representatives.
The federal government has made the same promise.
Ford, for its part, says it will contribute financially to assist workers after the closure, but has not revealed how much it plans to contribute to state and federal efforts.
Andrew McKellar is the former CEO of the Federal Chamber of Automotive Industries, and the current Executive director of the Australian Automotive Association, a body representing motorists.
He says Australia's open and competitive automotive market, and a high Australian dollar, mean that local car manufacturers are struggling to maintain market share -- and Ford is the first to go.
Mr McKellar says any talks between the government and other industry stakeholders should result in a comprehensive review of policy arrangements to ensure the others don't follow.
"We do need to take stock in the wake of this sort of major structural change coming for the industry. We really do need to look at what is required to address the issues of cost, competitiveness, volume, trade prospects, all of those things. And I think what we really need to do is ensure that there is a commitment from the industry, that they have viable investment plans going forward, and that equally the policy arrangements from government are supportive of contiuing to attract that international investment to Australia."
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Prime Minister Julia Gillard has rejected calls for higher tariffs on imported cars to help protect the automotive industry, and says it should work to strengthen exports.
The federal Coalition agrees the remaining major manufacturers GM Holden and Toyota Australia need to expand their exports.
Swinburne University's Dr Suresh Palanisamy believes the automotive industry would benefit from increased government investment.
But he says the only way to ensure it is sustainable in the long-term is to focus on innovation.
"A lot of dollars have been spent in designing new cars so that's basically a big cost involved even before manufacturing. There's a lot of cost involving designing cars. So, if you can get involved in that particular area then a lot of innovation can happen. Obviously there is so much innovation happening in Australia that we can produce cost-effectively in the automotive industry and other sectors also. So, innovation can surely help keep the automotive industry in Australia."
The Australian Automotive Association's Andrew McKellar says it would be very difficult for Australia to attract a new major car manufacturer to its shores.
"To contemplate that we would see another large-scale manufacturer establish operations in Australia, I just don't see the scenario for that occuring. I think it's more a case of what we have in Australia, whether or not those companies can be convinced to re-invest and to continue to develop and produce new models in Australia. I think that's where the focus has got to be. I just don't see a scenario where one would see one of the big global manufacturers relocating large-scale manufacture to Australia."
Prime Minister Gillard has acknowledged Ford's decision to shut down operations in Australia has made some people anxious about the state of the economy.
She says the economy is in transition, as the investment boom in the mining and resources sector winds down -- resulting in job losses.
But Ms Gillard says future economic opportunities for Australia lie in the region, especially in response to the growth of certain Asian economies.
Overall, Ms Gillard says the foundations of Australia's economy are steadfast, despite Ford's decision to leave.
"Even with Ford's decision we can be reassured that the Australian economy is resilient and it has strong fundamentals. Our economy has come out of the global financial crisis strong. We've got economic growth, we've got low inflation, low interest rates, relatively low unemployment, and strong public finances, so the foundation stones of our economy are strong."
