Transcript Inaugural Global Supply Chain and Automotive Conference 22

Society for Australian Industry & Employment
“The Future of Industry in Australia”
6 June 2006
Presentation by
Mr Peter Upton
Chief Executive
Federation of Automotive Products Manufacturers
“The Future of Industry in Australia”
Overview
- Global
- Local
“The Future of Industry in Australia”
Manufacturing in Australia
• Manufacturing’s share of Australia’s GDP now
11% v 20% 30 years ago.
• Employment now 10% v 18% same period.
• Terms of trade = 101 in 1975, now 122 (low of
77 in 1986).
• ToT is ratio of prices paid for exports to prices paid
for imports.
“The Future of Industry in Australia”
World Manufacturing
• What has happened elsewhere?
• 7-8 in every 10 new jobs since WWII created in
services in developed countries including
Australia.
• Manufacturing productivity has soared.
• Services paradox - much less productivity gain.
• Wages in services sector often better
(but at moment mining is best, followed by
finance/insurance, utilities, H & CS,
education - manufacturing is 11th).
“The Future of Industry in Australia”
• About Australian auto manufacturing …
• Making 380k PMV here in 1990, roughly the
same build through to 2005.
• But now exporting 1 in 3 built - few 1990
exports.
• Import share of Australian new vehicle sales
up from 25% to 75% from 1990-2005.
• Industry policy: auto industry still has the
highest level of government assistance.
“The Future of Industry in Australia”
So should we worry - does all this matter?
“The Future of Industry in Australia”
• Government customers in Australia bought
81% locally made in 2005 - comparable with
other manufacturing countries (but was 90%
in 1999).
• Private retail buyers purchased only 12%
locally made in 2005: this compares poorly
with a variety of other producing countries.
• Over 80% of locally made vehicles sold here
are sold into fleets: again, this compares
poorly.
“The Future of Industry in Australia”
• The dynamics …
• Overcapacity; so everyone tries export.
• Emerging markets - not just costs, but where
the growth is.
• Australia: Commodity $; small, mature, ultracompetitive, low growth market
• Globalisation - build (and source) where sold.
• Take it as given - we want to keep the
automotive industry.
• It’s a “foundation” manufacturing industry.
• So what to do?
“The Future of Industry in Australia”
•
•
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Support R & D
Manage and improve relationships
Government procurement
Train more - and more relevantly
Consider outsourcing for some inputs
Expand volume - exports, overseas
opportunities
• Debate