Holden departure 'no surprise'
Innovation leading to differentiated products is the key to ensuring a viable industry, Charles Sturt University (CSU) Professor of Economics Kishor Sharma has said, as state and federal leaders continue to discuss the uncertain future of car manufacturing in Australia.
Earlier this year, Professor Kishor Sharma from the School of Accounting and Finance at CSU, said propping up the Australian car manufacturing sector with public funds was a waste of taxpayers' money, recommending instead that the money be spent on supporting workers who lose their jobs.
"The only way to make the Australian manufacturing sector viable is through reforms in the labour market and infrastructure sector to reduce cost of production," he said.
"In addition, we need to be innovative in making new design cars for higher niche of the market in Australia and overseas. Producing standard cars in Australia is just not viable given the higher cost structure."
Professor Sharma said the fact Holden followed Ford's decision to withdraw from manufacturing cars in Australia by 2016, does not come as a surprise.
On the fate of the only remaining local car manufacturer Toyota, Professor Sharma said: "The government should carefully think and design incentives in such a way that the industry has motivation to invest in designing differentiated, rather than standard, products which can be marketed in both Australia and overseas.
"This means we need to invest more resources in research and development."
Professor Sharma said car manufacturers are owned by multi-national, foreign companies with the capacity to produce parts in countries like Thailand and Vietnam where wages are up to 70 per cent cheaper than those in Australia.
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