Future of Australian car industry depends a lot on the exchange rate

It’s been clear for a long time – well, all the time since Mitsubishi shut down in early 2008 – that Ford was the next Mitsubishi, so today’s plant closures aren’t that unexpected. Once again, as I more-or-less observed in a brief grab on ABC News tonight, it seems obvious there isn’t much point assisting an industry that is fundamentally unviable in Australia. Just how long the remaining manufacturers survive depends a lot on what happens to the exchange rate. If it falls down to, say, the 70-80 US cents range in the next few years, they might be able to survive into the 2020s, although they’d still need Government assistance, I expect.

I’ve previously presented my views on car industry assistance policy in a number of posts and in an article in Policy magazine. For example, see:

Holden chief’s weird call for independent review of car industry

Farmers miss out when Govt gives $275M handout to Holden

Carr’s car cash and Australia’s reform malaise

Coincidentally, I’ve just had a new article published in Policy magazine, this time on Government assistance to the film industry. The article isn’t available online, so I encourage you to buy a copy of Policy at the newsagent.

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2 Responses to Future of Australian car industry depends a lot on the exchange rate

  1. Pete Faulkner says:

    While the news is a tragedy for the workers and families, it is worth remembering that manufacturing accounts for just 8% of jobs in Australia and some 10% of those are in car manufacturing. Why this fixation on auto jobs? Are we as a country happy to spend millions supporting other falling companies and of not, why Ford our Holden?

  2. Gene Tunny says:

    Good points, Pete. Broadly speaking, no industry should receive special treatment.

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