Bloomberg News

Toyota Australia to Cut 350 Jobs as Car Output Declines 21%

February 01, 2012

(Updates with comment from analyst in fourth paragraph.)

Jan. 23 (Bloomberg) -- Toyota Motor Corp.’s Australian division, the country’s largest car exporter, will cut more than a 10th of the employees at its assembly plant following a 21 percent decline in annual production in 2011.

Max Yasuda, president of the Australian unit, said 350 people face compulsory redundancy at the Altona plant in the southern state of Victoria. The factory, one of three car assembly lines in the country, employs 3,350 of Toyota’s total Australia workforce of 4,683 people.

“It is not possible to maintain our workforce at its current size,” Yasuda said in a statement, citing Australia’s strong currency, costs and declining export demand. “The reality is that our volumes are down. What we assumed was a temporary circumstance has turned into a permanent situation.”

Compulsory redundancies are rare at the Toyota City, Japan- based company, and any move toward more flexible employment practices would be a positive for the carmaker, said Christopher Richter, an analyst at CLSA Ltd. in Tokyo.

“If low profitability is a criterion, then they should be looking at laying off people in Japan,” said Richter, who rates Toyota shares “buy.” “Let’s hope this is the vanguard of things to come elsewhere in the Toyota organization.”

Toyota shares declined 0.3 percent to 2,720 yen at the close in Tokyo trading, while the benchmark Nikkei 225 Stock Average was little changed.

Exporters Struggle

Australia’s export industry has suffered from a 17 percent rise of the local currency against the U.S. dollar in the past two years, making products less competitive in overseas markets. BlueScope Steel Ltd., the country’s largest steel producer, last August shuttered its export division, while Australian wine exports fell to a 10-year low in 2011.

Toyota Australia’s production has fallen 36 percent since 2007, according to the e-mailed statement. The unit shipped 83,000 cars worth A$1.5 billion ($1.6 billion) in 2010, the majority to the Middle East, the largest importer of Australian- made cars, according to the company’s website. Production from the Altona plant dipped 21 percent last year alone, to 94,000 vehicles from 119,000 in 2010, Glenn Campbell, a Melbourne-based spokesman for the carmaker, said by telephone today.

“The persistently high dollar has created very challenging conditions for Australian manufacturers,” said Ian Chalmers, chief executive officer for the Federal Chamber of Automotive Industries, an industry body. “Imported car affordability is at its best in 35 years, so it’s great news for consumers but extremely tough for manufacturers.”

‘Winds the Clock’

The Australian Manufacturing Workers’ Union, which represents workers at the Altona plant, said it would seek talks with Toyota early next week.

“Saying it’s going to be all compulsory really winds the clock back,” said Ian Jones, federal secretary of the vehicles division at the labor union. “Normally we would expect that the first step in any of these things is to see who actually wants to leave.”

Australia’s government and opposition are currently in dispute over support for the industry, with the opposition insisting on trimming A$500 million from a A$1.5 billion assistance fund due to run until 2015.

A 2008 report by the government’s Productivity Commission estimated the net government subsidy for Australia’s automotive industry was A$1.1 billion, or A$23,500 per worker, during 2007. Since then, tariffs on imported cars have been cut to 5 percent from 10 percent, and a A$3.3 billion, 10-year assistance package for the industry has been introduced.

“The enormously competitive situation for automotive globally highlights more than ever the need to support our local automotive industry,” Kim Carr, Australia’s manufacturing minister, said in an e-mailed statement.

--Editors: Suresh Seshadri, Dave McCombs

-0- Jan/23/2012 09:27 GMT

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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