Australia Gave Car Makers About $2 Billion A Year And Now Their Exit Will Rock A 45,000-Person Industry

A Holden worker leaving the Elizabeth manufacturing plant, which will cease operations by 2017 / Getty

The Australian Government has given car makers a total of $30 billion in assistance in the 15 years to 2012 but it looks like the industry is meeting its end.

A Government-commissioned Productivity Commission inquiry today reported that government assistance had failed to “secure future motor vehicle production in Australia”, with two of Australia’s three car makers due to shut their plants by 2017.

Only Toyota remains and it too is considering if it can survive high costs and falling demand.

The end of Australian car making will impact not only the 4,500 workers directly employed in Holden and Ford factories, but also more than 40,000 others employed in the manufacture of trucks, buses, and components.

A further 225,000 people are employed in related businesses that the commission says will not be “significantly influenced” by car makers’ exit, including those working in the repair, maintenance and wholesaling of motor vehicles and parts.

The Productivity Commission said there were 3 truck manufacturers and 15 bus manufacturers throughout Australia, as well as a “complex logistical supply chain” of about 160 businesses involved in engineering, design, tooling and manufacturing of car parts, plus another 260 businesses that made components and accessories for the aftermarket.

All in all, the Government has provided about $30 billion in assistance to the car industry between 1997 and 2012, with annual assistance dropping from about $3 billion in 1996-97 to about $1.1 billion in 2011-12.

“The automotive manufacturing industry is heavily assisted,” the commission reported. “In 2011-12 the effective rate of assistance — that is, the value of assistance as a proportion of the particular industry’s unassisted value added — for the automotive industry was almost 10%.

“This was substantially higher than for industries such as mining (0.3%) and the broader manufacturing sector (around 4% inclusive of the automotive manufacturing industry).

“This assistance has not secured future motor vehicle production in Australia.”

The commission is due to make its recommendations to the Government by January 31, and provide a final report by March 31 next year.

Now read: Now Australia Wants Money From Holden For A $100 Million Worker Assistance Package

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.