Automotive industry tipped to emerge “lean and capable” following auto manufacturing exit

Australia’s automotive sector has been tipped to overcome the closure of its manufacturing division and emerge stronger than ever, according to an industry expert.

A new report from Auto Skills Australia found small businesses were struggling to survive due to financial pressures. However, the ones that survive will be better, more capable businesses.

Small businesses with less than 20 staff account for 94% of the sector, and sole proprietors and partnerships have fared worst.

But chief executive of Auto Skills Australia Geoff Gwilym told SmartCompany it’s important people remember the industry is still growing, and there will continue to be work for the sector.

“The industry is growing on average by 400,000 vehicles on the road each year and the industry needs to be capable of servicing and maintaining this growing fleet,” he says.

“There won’t be a collapse of the industry. It will be leaner, but it will also be more progressive and better positioned for the future of the sector. We foresee a lean, capable and modern industry going forward.”

While tens of thousands of jobs are expected to be lost as a result of the closure of Ford, Holden and Toyota in Australia by 2017, in 2012/13 net employment actually increased in the automotive sector.

Over the entire industry there were an additional 4,132 jobs added, as car repair and wholesale retailers performed well.

The sector is also suffering from a skills shortage of 21,175 workers across key areas of the car industry.

Gwilym says the auto manufacturing segment of the sector only comprises 13% of the industry and workers who lose their jobs as a result of Ford, Holden and Toyota manufacturing plants closing will be able to be absorbed within the sector.

“At the moment growth in the non-manufacturing side of the industry is outpacing any decline,” he says.

“It depends where they are in the age cycle of their employment, but a number of young workers will be able to transition to other areas of the industry. Workers who are getting on in age will probably look at retirement and others will transition directly into auto-service businesses.”

The industry’s contribution to Australia’s gross domestic product remained stable at 2.6%, equating to $38.4 billion.

In the next 12 months Auto Skills Australia found most businesses were expecting mild growth, as trading conditions have been variable.

The report found subdued levels of consumer expenditure on vehicle repairs, servicing and maintenance had already resulted in considerable downsizing and leaner operations for many companies.

Gwilym says the small businesses which survive the tough economic times will have upgraded their workshops and facilities and be “quite progressive in the industry”.

“There already are many innovative small businesses in this respect and it’s the ones which don’t keep up with investment in new equipment and up-skilling requirements which will fall by the wayside,” he says.

This article first appeared on SmartCompany.