Toyota Motor Corp will pull out of the Australian market by 2017 end, the company announced Monday.
The exit will mark the end of 65 years of Toyota in Australia and will affect at least 2,500 jobs. The decision comes after fellow U.S. automobile giants General Motors-Holden and Ford Motor announced their departure from the country by 2017 and October 2016, respectively.
Toyota cited several reasons for their pull out including a strong Australian dollar and competitive market. "We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia," Toyota Australia president, Max Yasuda, said in a statement.
The Japanese auto giant's withdrawal will be a major setback for Prime Minister Tony Abott's government. The labor and the unions blamed the Abbott government for refusing to provide any assistance to the car-manufacturers. This will lead to major political tensions in the country over the job losses. Furthermore, Australia is also struggling to cope with a slowdown in the mining industry.
Union leaders heavily criticised the way the government handled the problems of the automobile industry. "The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy," said Australia Council of Trade Unions (ACTU) Secretary David Oliver, reports Reuters.
"They've (the government) done absolutely nothing to keep Toyota in this country," he said adding that A$21 billion ($18.80 billion) would be washed off from the economy and feared some areas might also go into recession.
Toyota had previously stated that to survive in the Australian market it needed to reduce labor costs and cut production cost per car by $3,800 by 2018. "Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts," Yasuda said.
Prime Minister Abott said that the announcement was "devastating." However, he said new jobs will be created to assist Victoria and South Australia to pull through the job losses. "I am not in any way trying to avoid my own responsibility, but that responsibility is fundamentally to ensure we have a strong economy with taxes as low as possible, regulation as light as possible and productivity as high as possible," Abott said, reports The Guardian.
Australia's auto industry, which has nearly 150 companies, received billions of dollars in subsidies from the government so far. However, a recent national commission recommended the financial support should be withdrawn and that car companies should cut costs instead, reports BBC.
The government data shows that over 45,000 people were employed directly in the car and parts-making sectors, reports Reuters.
