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Shape our future to 2025, car industry expert says

End of the line: South Australian parts manufacturer will cease production.

Deloitte partner says car-parts makers need to take control of their own future

9 Aug 2013

AUSTRALIA’S beleaguered car-parts industry needs clear government policy extending for more than a decade to help it steer its future, a key industry analyst has warned.

Damon Cantwell, a manufacturing partner at worldwide financial services group Deloitte Touche Tohmatsu, told a meeting of car industry leaders in Melbourne this week that they should be looking as far ahead as 2025.

Mr Cantwell told the AutoCRC Sustainable Manufacturing conference that there were things that car-parts makers could start and do now to help them shape out their future in a world that could have no government support.

He said the first thing components makers should consider was what would happen if a Coalition government took control of the nation’s purse strings.

The Coalition has committed to launching a Productivity Commission review into public funding for the Australian car-making industry if it is elected in September’s poll.

It has also promised to cut $500 million from the Automotive Transformation Scheme, a factor that Mr Cantwell said should be carefully monitored by the industry.

“The best you can do is if you take a scenario where there is a change of government, the Coalition has said it will take $500 million out of the ATS (Automotive Transformation Scheme that helps car-parts makers less reliant on the car industry) program,” Mr Cantwell said.

“If I was in an industry body the first thing I would be agitating for would be to say that we need to make sure that that $500 million includes the underspend -- there's an underspend in ATS at the moment because (things) have been quiet for some time, because companies haven't been investing as much.

“That for me would be absolute priority number one – that it is not $500 million (taken out of the ATS) over the underspend,” he said.

Mr Cantwell said another option was for the industry to be proactive about what it could control over time.

“We're gearing up for a productivity commission inquiry that will look at how $1 billion between 2015 and 2020 is best spent in the industry,” he said.

“So I'd be well and truly preparing, either as an individual organisation or through an industry association, to have my say about here's how that is best provided.

“And I think one of the key things that we need to consider is no matter what happens now, we are bidding on contracts that extend beyond 2020. So we're getting into the territory where there is zero government assistance that they can factor into that.

“So I think one of the big things through that PC (Productivity Commission) inquiry is that you need it to be brief, you don't need it to be 12-18 months, and we need to look at policy settings out to 2025.”

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