1. Federation of Automotive Products Manufacturers
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

2. “The Future of Industry in Australia”
Overview
- Global
- Local

3. “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.

4. “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).

5. “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
Industry policy: auto industry still has the highest level of government assistance.

6. “The Future of Industry in Australia”
So should we worry - does all this matter?

7. “The Future of Industry in Australia”
Government customers in Australia bought 81% locally made in 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.

8. “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, ultra-competitive, 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?

9. “The Future of Industry in Australia”
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