House of Representatives Committees

Contents

Foreword
Membership of the Committee
Terms of reference
List of abbreviations
List of recommendations

Chapter 1 Introduction
Chapter 2 The global automotive industry - an industry in transition
Chapter 3 The Australian automotive components industry
Chapter 4 Skills needs and labour adjustment measures
Chapter 5 Driving the industry’s future
Appendix A - List of submissions
Appendix B - List of exhibits
Appendix C - List of hearings and witnesses
Appendix D - MVP employment and production snapshot

Foreword

A strong automotive industry is often cited as the basis of most developed nations’ economic prosperity.  The employment opportunities, technological advances, skills development, engineering and educational qualifications directly required in the industry give it a prominence that few can emulate.  Importantly the automotive supply chain, as well as the aftermarket industries, are all too often dependent on a prosperous local automotive manufacturing base. 

Australia has a long history in the manufacture of cars and car parts.  The conventional wisdom that we need a thriving local industry is being challenged. Global automotive and automotive component production are undergoing the most significant shifts of their history. The contraction in the number of motor vehicle producers, the growth in wholly imported vehicles and the move to offshore component manufacturing are all cited as some of the challenges to overcome if we are to have a continuing automotive component manufacturing industry.

The pressures on the Australian automotive component manufacturing industry are intense. In response, there is a need to reassess and adjust: the market focus; leadership needs; labour and training programs; innovation and investment incentives; and the forward vision of the industry.

With these challenges in mind, the Committee considered this inquiry was timely for the industry and represented an important opportunity to tackle the range of issues in a holistic manner. Any inquiry into the automotive component sector must as a natural extension also review aspects of the automotive manufacturing sector itself. The two are inextricably linked, both in a policy setting and also in financial viability. While the Committee sought input from vehicle and components manufacturers, to its surprise and disappointment, some key industry peak bodies displayed a lack of interest in contributing to the inquiry and some component manufacturers were reluctant to participate, citing fears of retribution or loss of contracts.

These are internal cultural and leadership issues which the industry itself must address if it is to confront global changes in a unified and coherent manner. While the industry is facing significant challenges, the Committee is firmly of the view that an economically viable and globally competitive future is within its reach. A number of local automotive component manufacturers are successfully meeting these challenges.

This report assists the industry to set its own direction and proposes a number of recommendations that will strengthen Government policy and support to the automotive component industry.
 
The Committee investigated the training practices and skills needs of the industry. Recommendations are made to address the need for greater industry representation on training issues across the supply chain. The high degree of on the job training taking place within the industry is recognised and options for formal skills recognition are proposed.

Innovative training models aimed at engaging young people with the industry are explored. Recruitment practices suffer because of an unfair public perception that jobs are ‘greasy’. Therefore, any initiatives aimed at removing this perception and promoting careers in the industry to students, teachers and parents are valuable.
While some parts of the industry are facing recruitment difficulties, other parts are being challenged by the impact of redundancies. There is a need for innovative strategies that allow the industry to work cohesively to find solutions to these workforce challenges, including the ability to retain these often sought after skills within the industry.

Large scale redundancies have unfortunately been a feature of the automotive industry, locally and internationally, in recent years. Labour adjustment programs are therefore examined and recommendations are included in the report aimed at ensuring that these programs take into account all affected sectors of the industry.

A focus on training, recruitment and labour adjustment programs address the immediate needs of the industry. There is also a need to focus on how to best position the Australian automotive components manufacturing industry to ensure its ongoing competitive viability and success in the global marketplace.

A series of recommendations are made that will focus investment incentives on establishing a clear niche market position of the industry. They focus on enhancing R&D assistance measures to ensure that Australia retains a share of the lucrative innovation and design market.

The Australian automotive components manufacturing industry has a long and vibrant history in Australia. While there are challenges to be met in light of a new global marketplace, the industry has shown itself to be innovative, dynamic and capable of meeting change.

This report contributes to that future by articulating a path for a renewed vision that establishes respective responsibilities for industry and Government. It is hoped that a joint commitment to this vision will enable the Australian automotive components manufacturing industry to successfully shift gear and establish its competitive niche on the global market.

Mr Phillip Barresi MP
Chair

Membership of the Committee

Chair Mr Phillip Barresi MP  
Deputy Chair Mr Brendan O’Connor MP  
Members

Mr Mark Baker MP

Ms Jill Hall MP

 

Mr Chris Hayes MP

Mr Stuart Henry MP

 

Mrs Margaret May MP

Hon Roger Price MP

 

Mr Don Randall MP

Mr Ross Vasta MP

Committee Secretariat

Secretary Dr Anna Dacre
InquirySecretary Ms Siobhán Leyne
Research Officer Ms Loes Slattery
Administrative Officers Mr Daniel Miletic

Terms of Reference

Inquiry into employment in the automotive component manufacturing sector

On 6 December 2005 the Minister for Employment and Workplace Relations requested the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation inquire into and report on employment opportunities and challenges in the Australian automotive component manufacturing sector with a focus on the following issues:

List of abbreviations

AAAA

Australian Automotive Aftermarket Association

ABS

Australian Bureau of Statistics

ACE

Automotive Centre of Excellence

ACIRRT

Australian Centre for Industrial Relations Research and Training

ACIS

Automotive Competitiveness and Investment Scheme

ACP

Automotive Component Producers

ADCA

Australian Die Casting Association

AISG

Automotive Industry Strategic Group

AMTP

Automotive Machine Tooling Producers

AMWU

Australian Manufacturing Workers Union

APEC

Asia Pacific  Economic Cooperation

ASP

Automotive Service Providers

ATA

Automotive Training Australia

BIC

Bus Industry Confederation

CRC

Cooperative Research Centre

DEST

Department of Education, Science and Training

DEWR

Department of Employment and Workplace Relations

DITR

Department of Industry, Tourism and Resources

EBA

Enterprise Bargaining Agreement

ETM

Extensively/ Elaborately Transformed Manufactures

FAPM

Federation of Automotive Product Manufacturers

FCAI

Federal Chamber of Automotive Industries

FTA

Free Trade Agreement

GSM

General Skilled Migration

LAP

Labour Adjustment Programme

MMAL

Mitsubishi Motors Australia Ltd

MODL

Migration Occupations on Demand List

MTA

Motor Trades Association

MVP

Motor Vehicle Producer

NAMIG

Northern Advanced Manufacturing Industry Group

NEIS

New Enterprise Incentive Scheme

NSSS

National Skills Shortages Strategy

OEM

Original Equipment Manufacturer

R&D

Research and Development

RS&R

Retail, Service and Repair

RSMS

Regional Sponsored Migration Scheme

SAFSA

Structural Adjustment Fund for South Australia

UK

United Kingdom

VACC

Victorian Automobile Chamber of Commerce

WTO

World Trade Organisation

List of recommendations

3 The Australian automotive components industry

Recommendation 1

The Committee recommends that the Australian Bureau of Statistics publish disaggregated data on the automotive industry to the level of the automotive component manufacturing sector.

Recommendation 2

The Committee recommends that, as a matter of priority, the Department of Education, Science and Training clarify the position of Automotive Training Australia and Manufacturing Skills Australia in representing the needs of the automotive components industry.
The Committee further recommends that the Department of Education, Science and Training review the status of Automotive Training Australia giving consideration to:

Recommendation 3

The Committee recommends that the Australian Government Minister for Vocational and Technical Education, raise as a matter of priority at the next Ministerial Council on Vocational and Technical Education the issue of skills and training within the automotive components manufacturing industry in order to establish a unified and coordinated approach across all levels of government to the skills and training needs of the industry.

Recommendation 4

The Committee recommends that the Department of Education, Science and Training ensures that the automotive industry manufacturing training packages review take into account:

Recommendation 5

The Committee recommends that the Australian Government pilot the ‘Concept 2 Creation’ Program as developed by the Northern Advanced Manufacturing Industry Group in other areas of concentrated manufacturing employment and consider mechanisms to ensure access to ongoing funding for these programs.

Recommendation 6

The Committee recommends that the Australian Government support the consolidation of existing training resources to enable the establishment of a centralised teaching foundry to service the casting industries.

4 Skills needs and labour adjustment measures

Recommendation 7

The Committee recommends that the Australian Government include automotive engineering as a national priority area for higher education fee concession schemes.

Recommendation 8

The Committee recommends that the Australian Government investigate options to encourage the retention of local and foreign-born engineering graduates within Australia, including measures to facilitate entry into the workforce in areas of skills shortages.

Recommendation 9

The Committee recommends that the Australian Government support the establishment of an automotive component manufacturing leaders forum to develop strategies aimed at improving recruitment and overcoming stereotypes surrounding the image of the industry.

Recommendation 10

The Committee recommends that the Australian Government commission a national study on the post-redundancy outcomes for workers in the automotive industry which takes into account:

Recommendation 11

The Committee recommends that the Australian Government develop a general labour adjustment program for the automotive component industry that focuses on:

5 Driving the industry’s future

Recommendation 12

The Committee recommends that the Australian Government review R&D assistance available to automotive component manufacturers to assess whether it is commensurate with incentives offered internationally.

Recommendation 13

The Committee recommends that the Australian Government extend R&D assistance to work undertaken by Australian based automotive component manufacturing subsidiaries of multinational companies where it can be demonstrated that the work is to be undertaken in Australia to benefit Australian products.

Recommendation 14

The Committee recommends that the Australian Government commit to progressing, in partnership with industry, the stage two development of the Automotive Centre of Excellence in Melbourne. This may necessitate some Government start-up funding and addition to coordination support.

Recommendation 15

The Committee recommends that the Australian Government support the development of automotive component industry specific trade facilitation to ensure that Australian component manufacturers are able to access foreign markets.

Recommendation 16

The Committee recommends that the Australian Government, in partnership with industry, renew and communicate its vision for the automotive component industry that sets out the priority issues and measures to establish Australia as a niche market for innovation and investment.

Recommendation 17

The Committee recommends that the Australian Government reintroduce reporting on the level of local components in locally manufactured vehicles, consistent with World Trade Organisation obligations.

Recommendation 18

The Committee recommends that the Australian Government review of Automotive Competitiveness and Investment Scheme in 2008 consider:

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