Toyota Motor Corporation has today announced that its Australian subsidiary is to cease manufacturing vehicles and engines by the end of 2017. A statement quoting the company’s president Akio Toyoda cites market competition, a strong Australian dollar and the forecast reduction in Australian automative manufacturing as key factors behind the decision. The future of Toyota’s Australian research and development capacity is at this stage unclear, with a downsizing of its operation under consideration according to Toyota.
Industry Minister Ian MacFarlane has this afternoon described the announcement as “extraordinarily significant,” further saying “Australian industry will never be the same again.”
Toyota Australia has its origins in the most ambitious capital works project in this country’s history, the Snowy Mountains Hydro Electric Scheme, when construction company Theiss imported LandCruisers to work on construction in the alpine terrain. Soon after they began selling the vehicles retail. By the 1960s Toyota began manufacturing vehicles and engines in Australia through subsidiaries, one of which incorporated the assets of the Australian arm of British Leyland, the automative behemoth that through a lack of competitiveness and innovation would not live to see the 21st century. It seems for similar reasons, Toyota Australia is now to meet the same fate.
Today’s announcement by Toyota is not so much breaking news as a long awaited confirmation of the inevitable. Australia’s automotive industry has long been moribund, kept alive only by the life support provided by government subsidies. There have been fleeting instances of optimism; Holden’s new Commodore met with acclaim in the US market (where it is sold under the Chevrolet brand) and in recent weeks Toyota Australia itself announced new exports of 4 cylinder engines to Thailand and Malaysia. When Ford announced its departure, followed by Holden though, Toyota’s decision was essentially sealed. One manufacturer cannot provide the scale needed to keep the cogs of an industry turning.
This is a sad day for a lot of hard working people, both the thousands employed directly by the automative manufacturers, and the many more employed in the industry’s supply chain. But given the circumstances that have been allowed to prevail, it is none the less the right outcome.
The question is did it have to end this way?
The automative companies maintain research and development capabilities in Australia, and we know that their work is respected and influential in their respective companies overseas. Yet when one looks at the automative products manufactured locally, there’s not a lot that says Australian innovation, or sets the Australian industry apart from others. Models have been largely copies of overseas designs, tweaked for local conditions. Though these tweaks are sometimes substantial, it remains a matter of replication and adaptation.
In Palo Alto, California, Tesla Motors has in a decade built a profitable company employing over 6000. They’ve combined 21st century design and innovative marketing to create a niche product that is compelling and unique in the marketplace. Unsurprisingly both Daimler and Toyota own small shares in Tesla and licence their technology, while General Motors has cited Tesla as an inspiration for its own vehicle development, specifically the range extending Chevrolet Vault.
Had local talent and significant subsidies instead been directed at unique innovation and setting Australia apart, rather than being fixated on industry life support, I can’t help but wonder whether Australia could today have a healthier, unique, more innovative industry that inspires rather than replicates, and though small, aims for the higher value end of the market. If the US motoring press are willing to praise a Commodore with a Chevrolet badge, surely they would have praised a Tesla-like model had we developed it?
Toyota Motor Corporation’s Official Statement (external site)
Toyota Australia’s engine export announcement (external site)