Despite Australia’s vehicle assembly sector wrapping up business, a new report has recorded a skills shortage across the automotive industry. Steven Impey investigates.
The close of Australia’s automotive assembly sector has arrived, with Toyota’s Altona manufacturing branch in Melbourne closing its doors for the very last time.
With it, the ticker tape will finally fall on an almost century old industry that, at its height during the 1970s, once turned over almost half a million cars annually and employed more than 80,000 people.
Following the closures of Holden and Toyota factories this year, analysts have projected a 13,000 reduction to the automotive workforce, of which 7,000 are related to car manufacturing directly and a further 6,000 spread across the supply of tier one and tier two components.
Nevertheless, the industry as a whole is lacking numbers, according to a report released by the Victorian Automobile Chamber of Commerce (VACC), which has recorded an estimated skills shortage of 27,000 in the automotive arena – a figure it predicts will rise to 35,000 by next year.
“I feel there has been a lot of misinformation out there in the public arena about the automotive industry in terms of its size and its scope,” said Steve Bletsos, VACC’s senior research analyst, who helped compile the report.
“What this report tries to do is capture the industry in its entirety – it is comprised of many different sectors and we want to educate people about the industry.”
This may come as a surprise to many, especially to those who have followed the fall of an institution.
Despite this, there is said to be room for optimism for the industry, which is seeing a spike in servicing and maintenance roles as the manufacturing of consumer vehicles has moved offshore.
“It is timely – considering the car manufacturing activities are winding up – to present the industry in its current state and where it is heading,” Bletsos said.
“The automotive sector is far broader than people may realise and I dare say people will be surprised to hear the breadth of the [automotive] industry as a whole.
“We wanted to put together a report that captures that level of detail for government and industry stakeholders more broadly.”
According to VACC report, Directions in Australia’s automotive industry: An industry report 2017, there is still opportunity for skilled workers in the industry, which employs more than 379,000 people and contributes $37 billion to the national economy.
Some will lack the right qualifications to transition seamlessly. However, there appears to be room for growth in an industry that has been touted as dead in the water.
“There will still be a manufacturing sector, which will be largely confined to the manufacturing of specialist vehicles, buses, trucks and trailers, including components to supply those jobs which require similar skillsets,” Bletsos continued.
“It is actually quite a buoyant sector at the moment and is holding up employment levels in manufacturing currently.”
In June, senator Kim Carr addressed a summit at Parliament House in Canberra, which focused on the future of Australian manufacturing.
During the proceedings, the shadow industry minister insisted Australia can revive its automotive industry – but warned it will look very different.
“We still have many top tier suppliers and, whatever happens, there will be thousands of companies who will continue to employ workers [in the automotive sector],” he said.
“What we won’t be doing is making fully-produced vehicles, but we do have a significant number of manufacturers [making] a major contribution to the supply chain.”
Digitalising the workforce
During Siemens’ Digitalize 2017 conference in Sydney last month, managing director for the Advanced Manufacturing Growth Centre, Jens Goennemann, concurred that the sector is changing.
“With the car industry closing down its assembly sector, that of course affects a lot of people and shouldn’t be underestimated. There is definitely a personal and social impact,” he said.
“When I came to Australia 10 years ago, there were four family-owned assemblies in Australia. Suppliers now work on global supply chains and one of the things Australia is doing well now is developing highly sophisticated parts.”
During the conference, Manufacturers’ Monthly spoke with Siemens’ head of digital enterprise, Chris Vains, on what the future could hold for the industry now Australia is no longer a major player in the assembly of vehicles.
The event, hosted at the Sheraton Hotel, focused on the role digitalising Australia’s workforce will have on the industry globally and, while there were discussions around the technology that could make for more intelligent transport, it is not yet clear who will take the lead on its manufacturing.
“In Australia, we still have a lot of engineering expertise that is being utilised in the automotive industry,” Vains said. “If we take Ford for example, they are still doing a major amount of engineering and design of plants from Australia to be rolled out across Asia, so that is an important thing.”
For example, Queensland manufacturer PWR also has a hand in the automotive sector by delivering cooling components for radiators in Red Bull’s Formula One racing car and is a recognised player in the car industry.
“While these vehicles become smarter, the advantage of that digitalisation right down to the diagnostics of vehicles – the right information for the service structure in Australia – is going to be much more enabled,” Vains added.
“Who can say that, in the next handful of years, a bright idea for a new vehicle format doesn’t pop up from Australia? We, as an industry, are quite adaptive and ingenious in coming up with ideas.”
Tesla’s electric vehicle technology has played a major role in the disruption of advanced transport, with many of the big businesses also contributing to GPS technology necessary if Australia is to one day commercialise autonomous road travel.
The next Tesla could be born in an Australian factory, Vains said, although added that it will have to be “niche and particular”.
“It won’t necessarily be something mass-produced but it will be the right vehicle for the right application,” Vains said.
“We have a lot of technology to support that and a lot of history in the Australian automotive market. Therefore, there is a lot of value that we can add to a company if they were to start up again.
“However, I can’t see it being like the old days where we have two or three major manufacturers churning out mass-produced vehicles. It is going to be more bespoke than that.”
Areas of opportunity
Away from car manufacturing, Australia’s shipbuilding capabilities could create an environment that allows Australian manufacturing to adapt, Vains explained.
That would theoretically include the composition of digital shipyards, new technology, and possibly the transition of people available from the previous automotive industry who can transfer their skills into new industries.
In July this year, the federal government announced it is rolling out a further $100 million to support the nation’s advanced manufacturing sector.
In light of this, Industry minister Arthur Sinodinos spoke of the important part manufacturing still plays in the Australian economy.
He stated that the funding would be focused towards small and medium businesses in addition to the $155 million Growth Fund, which is aiding regions affected by the closure of automotive manufacturers.
In Geelong and Melbourne, Australia’s oldest car maker, Ford, closed its plants in October last year. Incidentally, Siemens, in a Geelong sketchbook, illustrated the technological opportunities for the city, specifically around sectors for energy, agro-tourism, 3D printing and smart transport.
The VACC’s report has also received support from the political realm, with senator Nick Xenophon addressing some of its findings in Parliament, on which Bletsos said they will hold government to account in the coming months.
“We feel there is a need, particularly in the political sphere, to [increase] the knowledge of our industry,” Bletsos continued.
“We get a lot of inquiries at the VACC – specifically for data – and what we have found is that, while the manufacturing side is a very small proportion of the automotive industry, around 96 per cent is linked to the service, repair and sale of vehicles.
“That’s where the opportunities lie and where we see the skills shortages are. Our industry modelling shows that the shortages are quite severe and that businesses are really in need for skills, particularly mechanical repairers and those in diagnostics and programming, considering the technological sophistication of motor vehicles these days.”
According to Bletsos, that is something the industry is still coming to terms with: a new identity and direction surrounded by a fresh set of issues that need to be articulated within government.
“The easiest sectors [for former car manufacturers] to transfer into are bus, truck and trailers,” he said. “In terms of transitioning into the services and repairs sector, that isn’t happening because you need trade qualifications in order to be able to repair vehicles.”
As it stands, Bletsos said the government lacks policy to encourage that transition – unlike other countries such as the UK, Japan and the US, which actively incentivise the sale and uptake of electric vehicles.
“We have found that most workers who have left the car manufacturing sector have gone into other industries rather than automotive repair and maintenance,” he said.
“With the development of electric and autonomous vehicles over the coming decade, that will present an opportunity because electric vehicles don’t have anywhere near the same level of components as petrol vehicles do.
“Therefore, manufacturing would be easier and cheaper in a way – perhaps allowing Australia to import electric components and manufacture their own vehicles in the future.”