Sunday, 21 April 2013

Aussie dollar poison II - the car industry

As noted previously Aussie manufacturing is in crisis thanks to resurgent China trade, capital flows and the currency war causing a high exchange rate.  In addition to the Economist, many in the media and politics have been despairing about the future of the country's at risk car industry.  It was all kicked off by news of Holden's cuts and comments from ex-Ford chairman Jack Nasser at an industry function.  As noted elsewhere the industry in Australia has seen a mix of union skullduggery, inconsistent policy, poor consumer interaction and small scale.  Nasser said:

....''As soon as you have a reduction in the scale of domestic manufacturing - let's assume one of the three decide to exit Australia in terms of manufacturing - then you end up potentially with a sub-scale supplier infrastructure. And once that happens, I think it's a domino effect.''He then neatly spelled out the challenges facing the car industry: ''You've got an exchange rate that's at . . . a 30-year high, you've got higher costs in Australia, you've got excess capacity in the automotive industry worldwide, you've got a very weak currency in Japan, and you've got a weak Euro. And when you put that mix together it's very difficult then to expect a relatively small but talented Australian automotive industry work its way.'' (here).

Doesn't bode well for the future.

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