Toyota (NYSE: TM) Announces Decision to Quit Manufacturing Cars in Australia

Toyota, NYSE, Ford, CEO, AustraliaToyota (NYSE: TM) made official its decision to quit manufacturing cars in Melbourne three years from now. This decision has put in jeopardy several billion dollars of foreign investments, thousands of local jobs and a near complete shutdown of the Australian car manufacturing industry. The official announcement was made by Max Yasuda, president of Toyota Australia, on Monday afternoon at the Altona manufacturing plant, amidst a small army of security personnel. This puts Toyota third in line after Ford (NYSE: F) and Holden, to call it quits in Australia.

President Max Yasuda’s statement

While addressing his employees, Max Yasuda said the company has decided to limit its operations in Australia to sales and distribution only, and would stop building cars at its Australian factories beyond 2017. He said the company found manufacturing cars in Australia unsustainable because the Australian dollar has made exports unfeasible. He included high manufacturing costs and the Australian government’s incentives like the free trade agreements as other reasons that are at the base of the company’s decision.

Yasuda was accompanied by Akio Toyoda, President and CEO, Toyota Motor Corporation, who said that the decision was not an easy one for the company since its Australian employees have dedicated their lives to the company for more than 50 years.

The Australia car manufacturing industry is essentially dead

Toyota will no longer offer new four-cylinder engines as well as the local Australian-manufactured vehicles from the Aurion, Camry and Camry Hybrid series by December 2017. And apart from the unavailability of models, a major concern is the implication the news has for more than 2,500 employees. While CEO Toyoda assured his company would offer support and assistance to employees and “do everything” they can to reduce the impact of the layoff, Toyota’s withdrawal from the market marks the end of the industry as we know it.

Apart from the 2,500 employees directly related to the manufacturing process, a total of 50,000 jobs are feared to be lost since Ford and General Motors (NYSE: GM) have already announced the shutdown of their manufacturing plants in Australia. The news comes in as another trouble maker for Prime Minister Tony Abbott who had sworn in with the pledge to improve confidence in the Australian economy. Unemployment rates in the nation are already at a 10-year high along with the waning of the nation’s mining boom. What the government plans for those losing jobs is yet to be seen. 

 

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