Toyota Yanks Australian Ops Amid a Harsh Business Environment
It seems that Australia’s economic conditions are proving increasingly difficult for businesses to thrive in, as Ford (NYSE:F), General Motors (NYSE:GM), and now Toyota (NYSE:TM) are ceasing their production operations in the country due to a convergence of high manufacturing costs, an elevated Australian dollar, and low economies of scale, Bloomberg is reporting. Ford and GM cited similar reasons last year when they made identical announcements.
Toyota reportedly has about 2,500 employees in the region, and has been manufacturing cars there since 1963. Trade tariffs have fallen, and combined with the small scale of local plants and an Australian dollar that rose nearly 50 percent against the U.S. dollar between 2009 to 2012, consumers favor cheaper imported vehicles, Bloomberg says.
Ford will exit Australia by October of 2016, and GM’s Holden division will be vacating the following year. “Once Ford and Holden went, it was always going to be hard for the last one to survive,” Stephen Walters, JPMorgan Chase’s chief economist in Australia told Bloomberg. “There will be spillover effects in terms of employment lost in the car industry itself and related industries.”