Recession Feared With Death of Australia's Car Industry; Unemployment Rate Climbs to 10-Year High
By Reissa Su | February 14, 2014 1:26 PM EST
In May 2013, Ford Motors said it would stop manufacturing cars in Australia. In December, Holden by General Motors followed suit. Toyota has sealed the fate of Australia's car industry by closing its assembly plants by the end of 2017. The last announcement has triggered fears of recession in Australia.
In a statement, Toyota said it was "heartbreaking" for the company to stop making cars in the southern state of Victoria, but the company blamed the strong Australian dollar for the increasing costs and weak international competitiveness. As a result, the company's profits were slowly eaten away.
Some 2,500 Australians will lose their jobs soon, but the final blow to the local car industry will have a bigger impact to the economy. The threat of large-scale unemployment is looming even in the automotive component supply sector.
According to trade unions, Toyota's decision to pull out will leave 50,000 Australians without jobs and take away AU$21 billion from the economy. However, economists fear that the death of Australia's car industry could wipe out 200,000 jobs including "downstream" sectors like logistics, transport and other business sectors. Academics believe these sectors will need to adapt or face eventual decline.
The associate professor and executive director of the Australian Workplace, Innovation and Social Research Centre at the University of Adelaide, John Spoehr, said Australia is beginning to experience some of the worst economic conditions faced by the UK and some parts of Europe.
Professor Spoehr warned the withdrawal of Toyota could leave Victoria and South Australia on the brink of recession. He told BBC that the death of the car industry in Australia will dislocate a great number of people.
Opposition Leader Bill Shorten has criticised Prime Minister Tony Abbott and said he will be remembered for the death of Australia's car industry. Mr Shorten called the Coalition government as a "job-killing government."
Mr Abbott defended himself and argued that he can't be blamed for the death of an industry already in decline years before.
Meanwhile, Australia's unemployment rate has climbed to 6 per cent - a record-high in 10 years. According to the Bureau of Statistics, 3,700 Australians lost their jobs in January which pushed the unemployment rate up to 6 per cent. The last time Australia had the same rate was in July 2003.
To contact the editor, e-mail:
Most Popular Slideshows
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
- Malaysia Airlines MH17: Vital Black Boxes Finally Land in Hands of Malaysian Authorities, Rebels Announce Ceasefire (PHOTOS/VIDEOS)
Join the Conversation
- China Military PLA Drills Affect Flights, Hundreds Cancelled
- Malaysia Airlines MH17: EU Feared Won't Ever Enforce Sanctions on Russia; All Talk, No Force
- U.S. Flights to Israel Now Lifted, Flights To and From Tel Aviv Resume – FAA
- Reserve Bank of New Zealand Raises Interest Rates Due to 'Unsustainable' Kiwi
- Embattled Malaysia Airlines Could Run Out of Cash 2015; Diverts Plane Over Another War Zone After MH17 Crash
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Moto 360 Price Speculations, Key Features, Strategic Release Date, Design: A Watch That is More Than Just Time
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air
- Upcoming iPad Mini 3 Could be 30% Thinner and Likely be Called iPad Mini Air; Apple Q3 Results Show 9% Decrease in iPad Sales
- Sony Xperia M2 vs. Moto G – Specifications, Features and Price Showdown