Toyota to close its factory by 2017 raises concerns

Toyota Motor Corporation is a Japanese automotive manufacturer with its headquarter in Toyota, Aichi, Japan. The company has its factories in many countries across the world for the manufacturing of its automobiles.

One such very important country is Australia. Toyota had set its factories and plants in the year 1963 in Australia and has been manufacturing automobiles for Toyota for over half a century.

Recently, Toyota announced to cease production by 2017 in Australia. Toyota has joined Ford and Holden to close its Australian Factory after the its car assembling operations are said to lose an estimated $1.75 billion over the past 10 years — despite an injection of about $1.2 billion in taxpayer dollars over that period.

The high rates of labour strong Australian dollar and low import tariffs have said to cripple the Camry factory in Altona on the western outskirts of Melbourne. Together with the Holden and Ford closures, the closing of the factories will leave tens of thousands of jobs in the balance in the automotive component sector, which has an employment of more than 30,000 workers.

Toyota said it would become a national sales and distribution company. This implied that all the local manufacturing of the Camry, Camry Hybrid and Aurion vehicles, also the production of four cylinder engines, is foreseen to end by 2016-2017.

The exit of Toyota from Australia after more than half a century has resulted in a huge set back to the Prime Minister Tony Abbott and his conservative government, which is extremely seeking to manage a slowdown in the $1.5 trillion economy as a decade-long mining investment boom slows.

Toyota said in a statement: “The decision was not based on any single factor. The market and economic factors contributing to the decision include the unfavourable Australian dollar that makes exports unviable, high costs of manufacturing and low economies of scale for our vehicle production and local supplier base.”

The decision has hit the local economy hard, affecting many local businesses and community groups who are supported by Toyota. This decision marks the end of local vehicle manufacturing in Australia and will impact tens of thousands of workers across Victoria and the entire country.

Approximately 2,500 jobs are going to be affected when the plant stops building cars in 2017, the workers are highly disappointed with the government. Union leaders were seen more vocal in their criticism of the government’s handling of the auto industry’s woes.

In contrast to the situation, global automakers have been building new factories and ramping up capacity in countries like Indonesia, where low cost and the burgeoning middle class increasingly make it an attractive base for production.

But the important question is, will Abbott’s government take any measures to ease up the situation and to secure the future of the employers of these factories?