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Toyota future decided by June next year

Joshua Dowling

21 Nov 2013 • 3 min read

Toyota Australia’s manufacturing future will be decided in "the first half of 2014", giving the company little time to achieve drastic cost-reduction targets, a move which threatens to grind the entire industry to a halt.

The revelation comes as Toyota admitted for the first time that Holden’s factory closure would make it more difficult to maintain its Australian operations.

"If Holden were to leave it would be very difficult [to achieve cost savings from parts suppliers]," the executive director of sales and marketing at Toyota Australia, Tony Cramb, told Australian media at the Tokyo motor show. "I’m not saying it’s impossible, I’m just saying it makes it far more difficult.

"If Holden goes … it would be more difficult for suppliers [to cut their production costs].

A day earlier, the global CEO of Toyota, Akio Toyoda, and the executive vice president and member of the board of Toyota, Nobuyori Kodaira, told Australian media in Tokyo that supplier costs were key to the survival of the Altona factory.

Toyota’s June 2014 deadline, revealed overnight, is earlier than had previously been forecast.

It means Holden and Toyota could announce factory shutdowns within months, and bring an end to more than 90 years of automotive manufacturing in Australia.

"The next-generation Camry decision gets made in 2014, probably in the first half of 2014," said Mr Cramb.

"We have to show them [Toyota Japan] the plan that they are convinced we can achieve in order to become globally competitive [compared to other Toyota factories which also make the Camry]."

Mr Cramb was referring to an ambitious target to slash $3800 -- or about 15 per cent -- from the manufacturing cost of each Camry it builds, a target widely regarded by industry insiders as too high to meet.

It now seems the livelihoods of 2200 factory workers employed on the Toyota production line in Altona on the outskirts of Melbourne are under the same cloud as the 1700 factory workers employed on the Holden production line in Elizabeth near Adelaide.

In addition, the jobs of about 6000 workers in South Australia and 18,000 workers in Victoria, who are employed at parts suppliers, are also in grave danger.

Toyota and Holden are facing critical internal deadlines set by their parent companies, which are in the process of allocating investment in factories to build new generation cars beyond 2016.

The lead times are so long because it takes at least three years to ramp-up production of all-new models.

A day earlier, Mr Kodaira said: "In Australia currently we are having a difficult situation. Because this is a business we need to have economic viability.

"In order to continue the manufacturing there, we are cooperating with our suppliers on activities such as rationalisation and also cost reduction. We definitely think those activities are necessary."

Mr Toyoda, the great grandson of company founder Sakichi Toyoda, said: "We have a very long history in operating in Australia. So going forward, working closely with our suppliers in Australia, we would like to aim at achieving sustainable growth."

Last month Toyota Australia said it was well progressed with a five-year plan to save $3800 in the production cost of each car, or about $400 million each year.

But the next round of cost-savings over the next three years are proving difficult to achieve, the company said.

Toyota Australia’s Altona facility on the outskirts of Melbourne is one of nine factories where the Camry is made, including two in North America and one each in Japan, China, Russia, Thailand, Taiwan and Vietnam.

This reporter is on Twitter: @JoshuaDowling


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