(Transcript from World News Radio)
Following the news there'll be no more cars made in Australia after 2017, politicians, economists and lobby groups are seeking to influence what the Abbott government does next.
The federal opposition is making dire predictions the end of domestic car manufacturing will lead to a economic crisis akin to the Great Depression of the 1930s.
Prime Minister Tony Abbott is optimistic, saying there are better days to come.
But he's taking his time announcing what role, if any, the federal government will play in delivering that brighter future.
Thea Cowie reports.
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Federal Opposition leader Bill Shorten says the collapse of the Australian car industry is just the beginning of the nation's economic decline.
"My fear is though that we haven't even got to the eye of the jobs cyclone and that more bad news job announcements are coming. The Abbott government did nothing to save the car industry. They have no plan to re-train car workers. What are they going to do when the next bit of bad news comes down the road?"
Labor industry spokesman Kim Carr is comparing the situation to the economic depression following the First World War.
But JP Morgan senior economist Ben Jarman says any talk of a recession is exaggerated.
"That wording's pretty strong. The job losses themsleves - given that they're sort of lagged a couple of years in the future - do allow some sort of a period of adjustment. We wouldn't want to downplay the significance of these events for the people involved and they will clearly have a local effect, but the numbers here relative to the scale of the overall economy are still relatively small. Even a 50-thousand number, while it sounds big, again in the context of the monthly swings that we see anyway in the national data, is not hugely significant. It's not necessarily something that will plunge us into automatic recession."
University of Queensland economics professor John Quiggin also disagrees with the dire predictions.
But he says the manufacturing sector's demise makes the Australian economy more vulnerable.
"We're losing a degree of diversity and that in turn probably increases our exposure to the ups and downs of the mineral cycle. That's unfortunate."
JP Morgan's Ben Jarman argues that relying on commodities is not necessarily a bad thing.
"As the RBA (Reserve Bank of Australia) governor said not that long ago, 'You wouldn't tell the Saudis to stop exporting oil. If you've got it you should use it.' So we wouldn't pursue diversification for its own sake but what the message from the car manufacturers and the broader story there makes us ask is 'is there a role for making something at all in the Australian economy?' So should we be an economy which is purely services driven and some mining for exports? While the terms of trade for Australia will be biased lower over time they're going to remain at very elevated levels so the profits that we can make as a nation from this will still be very high so from a purely economic point of view the case to be focussing on this kind of activity remains pretty compelling."
In a bid to preserve jobs and skills, the Australian Manufacturing Workers' Union is calling on the federal government to bring forward navy shipbuilding projects.
There are also calls for government infrastructure projects to help counteract manufacturing job losses.
But AMP chief economist Shane Oliver says the federal government should let the market right itself, rather than intervene again.
"I don't think it's something the government can direct and we've had a long history of government direction not working too well. Obviously it hasn't worked well in the auto industry, otherwise it wouldn't be collapsing like it is. But I think the areas where we do have an opportunity are areas of manufacturing for example which benefit from the fact we have a highly educated workforce - medical related areas, specialised manufacturing for example we have a bit of a name in building luxury boats, prefabricated homes or luxury trailer homes."
The federal government is also being lobbied to axe tariffs on imported vehicles.
The Australian Automobile Association argues that if the tariffs were designed to help protect the local industry then there's no longer any justification for them.
Removing tariffs would be expected to reduce the average cost of an imported new car by two-thousand dollars.
But it would also deliver a one-billion-dollar blow to the government's already embattled budget bottom-line.
Small Business Minister Bruce Billson is justifying the tariffs' ongoing importance.
"There will still be vehicle assembling for a number of years and we don't want to make immediate changes that would compromise that ongoing work as transition plans are put in place. Secondly you don't give away tariff reductions without getting something in return. Some of those economies that would benefit from even lower tariffs on motor vehicles are also economies where we'd like our components to be able to enter into those economies so they're part of those vehicles."
Regardless of the chorus of requests and advice coming from all directions, the Coalition looks unlikely to be hurried.
The government is waiting on a series of reports to develop a long-term plan for manufacturing, most of them not expected until the middle of the year.
