AAAA News

The AAAA Welcomes Interim Recommendations from Senate Inquiry into the Future of Automotive Manufacturing

On 20th August the Senate Inquiry into the future of Automotive Manufacturing released its interim report which includes a range of recommendations relating to the future of the Automotive Transformation Scheme (ATS). The major recommendations are as follows:

• The current level of ATS funding needs to be maintained through to 2021 as previously legislated.
• The ATS should be redefined into a broader, automotive-related advanced manufacturing, engineering and design program that is intended to maintain skills and industrial capabilities and mitigate the loss of jobs by supporting supply chain diversification, new manufacturing investment and new opportunities for growth and investment throughout the whole of the automotive industry.
• The object of the ATS should be updated to better reflect the current situation within industry and the need for targeted support for diversification and transformation activities, particularly in the automotive manufacturing supply chain. The new object should specify that the ATS is designed for the promotion and growth of advanced automotive industries in Australia, including: manufacturing components and materials; developing and commercialising new automotive technologies; and engineering and design for both domestic and offshore customers when that work is performed in Australia.
• The definition of automotive services should be amended so that the concept of eligible automotive services is broader than passenger motor vehicles and light commercial vehicles (and covers all modes of mobility);

The AAAA welcomes these recommendations which are in line with our submissions to the Inquiry in February and May this year and if implemented would open the scheme up to support a wide range of AAAA members in their R&D, engineering and manufacturing activities.

In our submission we argued that if the full growth potential of the $5 billion per annum aftermarket manufacturing segment is realised, it can absorb some of the excess capacity, skills and knowledge that become available as the shutdown of the Australian domestic passenger vehicle sector plays out.

The argument that the car industry does not have a future and therefore there is no reason to continue formal automotive structural adjustment ignores the economic loss that will occur in any restructure process. The automotive industry is facing a tsunami of job losses over the next two years and labour and capital will not flow smoothly to other productive areas of the economy without Government intervention.

A realignment of program support, as recommended by the Senate Committee, would enable the aftermarket to be more effective at absorbing displaced OE resources. A re-orientated incentive structure for the entire automotive manufacturing sector will, on the one hand, encourage diversification by the OE segment into the aftermarket and other advanced manufacturing sectors, and on the other hand, position the aftermarket for growth, so that the resources of the OE segment can flow more easily into the sustainable and growing aftermarket segment.

We commend the insight of the Committee and in particular the work of Senators Carr, Muir, Madigan and Xenophon . There is an iceberg looming on the horizon and we hope that common sense prevails and the Federal Government acts on these recommendations before it’s too late.