Dominant Reasons for the Collapse of Car Industry - Essay Example

ssаy arguing what you think соuld be thе dominant rеаsоns for thе соllарsе of this industry, раying раrtiсulаr аttеntiоn to thе rоlе of unions Name Subject Professor Date Еssаy arguing what you think соuld be thе dominant rеаsоns for thе соllарsе of this industry, раying раrtiсulаr аttеntiоn to thе rоlе of unions Introduction For a long period of time, the car industry in Australia has been big and quite significant to the nation’s economy. It is an industry that has employed various local and international personnel in different positions. However, the industry has now collapsed for various reasons. For instance, companies such as Holden, Nissan, Ford, Toyota and Mitsubishi no longer have a manufacturing presence in Australia, an aspect that is quite depressing for the industry and the economy at large. Different strategies have been put forth with an aim of keeping the industry alive but unfortunately, they have failed [1]. While some think that the unions have been a major cause of the collapse of the industry, others have put forth other reasons for the same and the blame game continues. This piece of paper will give a critical discussion of the collapse of the car industry in Australia and various aspects associated with it. Much emphasis will however be given to dominant reasons for the collapse of the industry, paying particular attention to the role of unions. Other issues that will be highlighted include statistical information about the car industries in Australia, recent car workers’ pay and condition, and domestic and international demand for cars. Rеаsоns for thе соllарsе of this industry Various reasons could have contributed to the collapse of the car industry in Australia. This section of the paper will examine various aspects that will in one way or the other enhance our understanding of what led to the collapse of the industry. The car industry in Australia has shut down after almost a century of car making. In a span of about one year, different car companies have announced their exit from the industry and done so. For instance, Holden could be the last to exit after Toyota and General Motors. Various car companies have played significant roles and contributions to the industry and their fall out therefore means affecting the industry in a negative manner. Toyota has been Australia’s largest car manufacturer over the last 10 years. It is also ranked as the biggest automotive exporter. On the other hand, Ford is Australia’s oldest car manufacturer and shut most of its factories last year [4] Workers’ pay and condition greatly influence the operation of organizations and industries at large. Over the decades, the car industry in Australia has been a source of livelihood for many since it has employed different generations of workers. However, as a result of facing different challenges, the car industry has had to result to various means aimed at cutting cost and surviving. In some instances, cutting pay for the workers has been seen as the way forward. For instance, Holden had to ask its workers at it Adelaide plant to heed to a pay cut as a way of slashing its labour costs and avoid risking the organization’s manufacturing arm leaving Australia. The move was founded on the fact that Australia is one of the most expensive countries in which to build cars. In the US, there was a pay cut for workers in a bid for the car industry to survive. This happened when the Australia pay rates significantly grew [1]. While a cut in pay implies poor living standards for the workers, a rise in the wages and salaries translates to better living standards. Proper working conditions also enhance performance and productivity and the vice versa is true. Demand for cars is determined by various factors and price is one of them. Australia has been importing cars since the rest of the world has a comparative advantage when it comes to producing them. Comparative advantage generates international trade which in turn affects the price of a car as well as the quantities produced and bought. The price of a car is determined in the world market as opposed to the Australian domestic market. World demand and world supply determines the world price of a car. Most of the car companies are global in nature and operate in different parts of the planet [4]. For this reason, despite the fact that most of them have collapsed with regard to operation in Australia, they are still doing well in other parts of the world. A good example is the strong domestic and international demand that continues in South Africa for Ford Ranger [3]. Based on the above information, various issues can be pin pointed to have led to the collapse of the car industry in Australia. It is however certain that the end of the industry was inevitable and hence the failure of different strategies aimed at saving it. The role of unions in the collapse of the car manufacturing industry in Australia cannot be overlooked. For instance, Toyota warned unions on its future. According [5], Toyota stated that the future of its operations in Melbourne was under threat in case a cost-cutting deal would be rejected by unions. Also, Holden was to close its car plant at Adelaide. A no vote on the side of the union is a negative force on a company and the industry at large as it puts the ability of the manufacturing companies at risk with respect to the continuous building of cars in Australia. Acceptance of the deal offered by Toyota by the employees and lack of negative interference by the union would have gone a long way in making the general situation better. According to Toyota, a vote against the industrial package that was proposed would mean risking local operations and hence, the acceptance was greatly needed. Nonetheless, it is worth noting that the Australian Manufacturing Workers Union (AMWU) encouraged a no vote, hence negatively affecting Toyota’s efforts. This is more so since the company was doing all it could to secure the future of its workers and expected support from the union. The workers’ acceptance of company’s request to transform work practices that are opposed by the union meant voting for their job. For instance, the condition that stipulated 21 days off over Christmas instead of the 10 days stated by the company would significantly affect the company by putting exports to the Middle East at risk [5]. Unions could affect the decisions taken by workers in an industry. In a negative manner, the unions could make it impossible for the workers to agree on some terms and conditions as stipulated by an organization. In case the conditions were meant at saving the company from a fall for instance with regard to cost cutting, then the company is likely to fall. It seems that to a large extent, labour unions interference with the operations of the car manufacturing companies through the workers led to a fail in the industry. This is more so since the unions could not understand or pay attention to what the companies’ experienced at different times. Unions have been blamed for the fall of Toyota and other car companies. Labour industrial laws is said to have forced an end to Toyota car making. Reforms that are backed by union stifled debate on working conditions, which could have provided a fair chance for the company’s survival [5]. Better work conditions and higher wages that are demanded by the unions also affect the operations of the companies in a negative manner. Despite the fact that unions are a major reason for the collapse of the car industry in Australia, there are also other causes and the fall cannot be blamed on a single factor. For instance, high manufacturing costs, low economies of scale and high dollar are some of the factors that negatively affected the operations of the companies in the industry hence contributing to its fall in one way or the other. The Australian market is too small such that the industry is not in a position to fully exploit economies of scale. The signing of trade agreements and lowering of import tariffs are also factors that in one way or the other have contributed to the fall of the car manufacturing industry in Australia and the economy at large. Conclusion From the above discussion, it is apparent that various happenings have been witnessed within the car industry in Australia. This is more so especially with regard to its collapse as different car manufacturing companies fall off from the industry. For a long period, there has been blame game as to what has led to the collapse of the industry. Despite the fact that various strategies have been put place in an effort to solve the issues and keep the industry alive, they have eventually failed. One of the elements that have been attributed to the fall is the involvement of trade unions. There are however other reasons for instance high dollar and high manufacturing costs. References [1] I.M. Amber, and J.A., Badenhorst-Weiss, 2010. “Strategic supply chain framework for the automotive industry,” African Journal of Business Management, 4(10), p.2110. [2] B. Brandl, and F. Traxler, 2011. “Labour relations, economic governance and the crisis: turning the tide again?” Labor History, 52(1), pp.1-22. [3] Ford. 2017. Strong domestic and international demand continues for ford ranger. Available:https://www.at.ford.com/en/homepage/news-and-clipsheet/news/2017/4/strong-domestic-and-international-demand-continues-for-ford-rang.html[May 2, 2017] [4] D. McTaggart, C. Findlay, and M. Parkin. Economics. 7th ed. AU: Pearson Higher Education, 2015. [5]S. Maher and P. Akerman. (2013). Toyota’s warning to unions on future [Online]. Available: http://www.theaustralian.com.au/national-affairs/toyotas-warning-to-unions-on-future/news-story/432edb4fae04430932eaa50a7a84994d[May 2, 2017] Read More