Automotive component makers shrug off Toyota job cuts, but acknowledge industry pressures on SMEs

Manufacturers of automotive parts say the latest job cuts announced by Toyota will not affects business, but admit production is still trending downwards and small businesses are under pressure.

The declarations come after Toyota announced yesterday it would slash 350 jobs at its Victorian manufacturing plant in Altona, just days after Canberra was caught up in a debate over assistance to the car industry.

The government has reacted by reiterating its support for the manufacturing industry, although Victorian premier Ted Baillieu has said he does not believe the cuts could have been avoided.

Richard Reilly, chief executive of the Federation of Automotive Products Manufacturers, told SmartCompany this morning the decision wouldn’t affect SME suppliers.

“From the supply chain perspective, Toyota is indicating production will rise slightly in 2012, so for the flow-on effects to smaller companies…production is still going to increase. I’m separating the jobs and the supply in this case.”

However, Reilly says the industry is still doing it tough.

“I’d like them to be making more. Production has been going down over the last five or six years and suppliers have been reduced,” he says.

“The industry is doing it very tough at the moment with the high dollar hurting our exporters. It’s a global industry as well, and we’re competing against suppliers that are working on components across the world.”

Although Reilly says the Australian plants are producing world-class cars, he acknowledges the industry is facing an environment that has seen volumes reduce over the past five or six years.

“We certainly hope that stabilises.”

The industry is calling for assistance from government. Greg Evans, director of economics and industry policy at the Australian Chamber of Commerce and Industry, says the economic circumstances facing the industry are incredibly difficult.

“Our view is that in this environment, policy needs to be directed at reducing cost pressures on business, which includes lowering the overall tax burden and reducing government charges.”

The government has already pledged several million towards the car industry, including a $34 million payout for Ford. But it has faced harsh criticism due to Toyota’s announcement – criticisms which manufacturing minister Kim Carr addressed this morning.

“We do not operate on the basis of a bailout – this is a media creation,” he told ABC Radio this morning.

“We work with companies to transform the industry, to attract new investment, to improve productivity, to build innovation, to develop new products and new processes.”

Automotive component makers say Toyota job cuts no worry, but acknowledge industry pressures on SMEs