Car Industry Economy Essay

804 words - 4 pages

Should the Australian Government provide money to car manufacturers to prevent them from moving their operations overseas? Discuss, drawing on contemporary debates about this issue in the news media.

Introduction
Car manufacturing in Australia was one of the strongest sector in the Australian economy. Within the past few months and ongoing weeks, there are several news being published that the Australian car manufacturing sector has become so small that that each car company is relying on the survival of the other.
In relation to the debates and media news, this essay demonstrates, as to whether the Government should provide funds to car manufactures to prevent them operating overseas. ...view middle of the document...

All of these factors share at least some responsibility for the industry’s demise. Successive governments from both sides of politics created the economics environment that Australia now finds itself: a nation with high wages, low import tariffs and a strong currency.
These factors make it impossible to profitability export cars, especially when Australia is surrounded by Asia Pacific countries that don’t need Australian made vehicles because they are making their own with a lower labour cost in comparison to Australia. If only Australia could sell cars into the massive Europe and American Market, there would be a chance to pull up. But, Due to unfavourable exchange rates and the overcapacity of car factories overseas and not enough local customers, it’s a hurdle for the car manufactures to survive. As a result, Holden, Ford and Toyota is being backed into a corner, leaving many buyers and workers in dilemma. Car manufactures moving their operations overseas, means loss of thousands of jobs, which increases the unemployment rate in Australia, a negative effect of billions of dollars in export income and investments and benefits in research and development.
Moreover, the Abbott government and car manufactures dispute is heading down the lane. Each one is blaming the other for the apprehensive situation. One of the News stated that “If the Coalition government had agreed to increase car funding, it would merely have delayed the shutdown...

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