28 July 2008; Results from the latest Australian Industry Group-Deloitte National CEO survey highlight an ongoing restructuring of the auto components industry as it responds to the impacts of globalisation in the world’s automotive industry and other factors including the high dollar, rising costs and climate change related issues.

These pressures have led to auto parts makers increasing efforts to search for overseas markets and greater integration in the global supply chain, particularly through closer liaison with customers and suppliers. There has also been a greater focus on operational improvement, particularly through a strong focus on lean manufacturing and the creation of new products and services. In addition, and mirroring developments in overseas competitors, firms in the sector are focussing on organisational innovation.

The survey, Driving on Innovation and Competitiveness, also shows that skill shortages are continuing to bite and is constraining innovation, with no less than 81.5% of respondents indicating that a shortage of skilled labour is affecting them to some extent. Our survey also reports the growing importance of environmental issues with increased interest in green products and in environmentally sustainable processes.

The survey involved the CEOs of 150 companies (98 producing automotive components and 52 who had exited component production and were now making other goods) employing 12,500 people and representing sales revenue of around $4.9 billion.

Ai Group Chief Executive Heather Ridout said the survey provides an important snapshot of the pressures on the industry ahead of the Federal Government’s Bracks Review of the sector due to be presented to the Government this week.

“The study shows an industry responding to intensifying global pressures. The impact of the higher dollar in particular has resulted in a loss of competitiveness, higher import penetration, weaker export returns and lower margins.

“Restructuring in the sector is understandably intense, with a remarkable 52 of the Tier two firms surveyed indicating that they no longer supplied to the auto parts industry. 

Heather Ridout
Chief Executive
Australian Industry Group
Ph: +61 (0) 2 9466 5504
Mobile: 0419 257 361

Tony Melville
Director Public Affairs & Govt Relations
Australian Industry Group
Ph: +61 (0) 2 6233 0700
Mobile: 0419 190 347

Tom Imbesi
Deloitte
Lead Manufacturing Partner
Ph: +61 (0) 3 9208 7329