Forget Ford: Automotive industry faces “perfect storm” with 450 small businesses a year closing

The focus on the closure of Ford’s Australian manufacturing arm is obscuring the problems facing the broader automotive industry, according to the Australian Motor Industry Federation.

In a speech to the National Press Club yesterday, AMIF chief executive Richard Dudley warned the industry is facing a “perfect storm”, where every sector of the motor industry is being hit by rapid changes.

Dudley warned 450 businesses a year are closing in sectors such as car retailing, service and maintenance sectors, and says the number is rising.

“2700 people left car and car component manufacturing in 2011-12, but more than 13,000 people left the automotive service and repair sectors over the same period,” Dudley told the press club.

“For too long, successive governments have failed to recognise that the domestic automotive industry does not begin and end with vehicle and component manufacturing.”

The AMIF is calling for a white paper to develop comprehensive, evidence-based policy to guide and sustain the medium and long-term future of the Australian automotive industry.

Following his speech, Dudley told SmartCompany there were a “whole myriad” of issues at work and the government needed to properly understand the interdependencies in the motor industry.

He points to recent research which shows a shortage of 19,000 skilled mechanics in Australia now.

“We have an ageing demographic as a lot of the servicers and recyclers are owned or operated by people who are getting close to the end of their careers. There are the technological changes that are occurring in the industry and the impact of globalisation and changing workforce skill requirements,” he says.

“All of those factors are combining to create the changes.”

Dudley says successive governments have failed to recognise that the domestic automotive industry does not begin and end with vehicle and component manufacturing. He says a new approach is needed that includes the other 75% of the industry which employs 320,000 Australians in 100,000 businesses.

“Whilst we have sympathy for the issues impacting car and car component manufacturers, they represent only 25% of the industry out there,” he says.

“The rest of the industry is taken for granted, like the motor vehicle sellers, new and used car dealers, independent mechanical service providers, motor body repairers and a myriad of other specialisations.”

Dudley warns without action there will be “catastrophic” consequences for the entire industry.