Motor Vehicle Workers in Australia Face a Bumpy Road

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The end of automobile production in Australia has left thousands of workers out in the cold. These workers are now forced to find opportunities elsewhere, seeking roles across a variety of different sectors.

Key points:
  1. Australian employment in motor vehicle manufacturing has fallen 42% since 2006, largely reflecting factory closures by companies such as Ford and Holden.
  2. At least three-quarters of motor vehicle factory workers no longer work for a motor vehicle producer, according to Indeed resume information.
  3. These displaced workers are searching for a wide variety of jobs, with three-quarters of clicks outside production roles. Driving jobs and the mining sector feature prominently.

When General Motors closed its Holden factory in the South Australian suburb of Elizabeth in October, it ended more than a century of homegrown motor vehicle production. The decline of Australia’s motor vehicle industry was long and tortuous, taking place over several decades, but the end arrived swiftly and without fanfare.

The Holden closure occurred only weeks after Toyota shutdown its factory and just twelve months after Ford closed shop, ending automotive production in Australia. The concentration of job losses in a specific sector–particularly among workers with similar skill-sets–has fueled concerns about the job prospects of these employees.

An analysis of Indeed job search and resume data provides information about what has happened to workers who lost their jobs when  these factories closed. Focusing on Ford, Holden and Toyota, plus Mitsubishi, which shut its plant in 2008, we found the following:

  • Motor vehicle manufacturing employment has tumbled 42% since 2006, even though household and business demand for automobiles remains high.
  • At least three-quarters of motor vehicle manufacturing workers who have posted resumes on Indeed are no longer working for an auto producer.
  • Many former motor vehicle factory workers are searching for jobs as drivers–mainly trucks and taxis–and machinery operators. Three-quarters of clicks by these workers in 2017 were for non-production roles.  
  • Most of the roles former motor vehicle manufacturing workers click on have low education requirements, but a range of salaries. This suggests that the economic situations of these workers may end up varying.
  • Earlier research, based on Mitsubishi workers, found that workers who lose motor vehicle production jobs can expect a period of relatively high unemployment, lower wages and reduced job security.
What are former motor vehicle workers doing now?

Using Indeed resume data, we can track what workers with previous experience in the motor vehicle industry are doing now. To accomplish that, we identified resumes of workers who specialised in manufacturing, engineering, installation or warehousing at Ford, Holden, Toyota or Mitsubishi.

At least three-quarters of these workers are no longer employed by a motor vehicle producer. That number will surely increase as workers who lost jobs following Holden and Toyota factory shutdowns update their resumes and start hunting for new positions.

When searching for new opportunities, around three-quarters of job clicks on Indeed by  displaced motor vehicle workers were for non-production roles. This might seem high, but it reflects the harsh economic reality these workers face: opportunities in manufacturing are limited and conditions are unlikely to improve.  For better or worse, their future lies elsewhere.

These job seekers gravitate toward roles with similar entry requirements to their previous work in the motor vehicle industry. Most of these positions don’t require a university degree and  some require similar skill sets to automotive jobs.  

Production roles account for the two of the three occupations with the highest number of clicks, but there is great variety across jobs and industries. Truck drivers, taxi drivers and machinery operators are popular choices, accounting for five of the top 15 occupations for clicks. The jobs these workers click on include a range of high and low paying roles, suggesting their economic futures could diverge considerably.

Mitsubishi: a case study

Past experience offers insights into the prospects of former motor vehicle industry workers. Mitsubishi ceased production in Australia in March 2008, almost a decade before its major competitors. Academic research into the job market experiences of those workers was neatly summarised by the Productivity Commission (p. 184).

Three facts jump out from this research. First, displaced auto workers clearly lost  job security. Just  a third of previously full-time Mitsubishi employees were working full time 12 to 18 months after retrenchment. Second, 72% of workers surveyed were earning less than they were making at Mitsubishi. Third, it took two-and-a-half years before the unemployment rate among these workers returned to near the national average. Their unemployment rate was 23% after six months, 14% after 18 months and 5.7% after 30 months.

Compared with the period when Mitsubishi closed, a key difference today is that the job picture is much brighter for displaced workers. Mitsubishi ceased production in the early stages of the global financial crisis, while Toyota and General Motors shut down during a record year for employment growth.

How did we get here?

The motor vehicle industry was long regarded as the crown jewel of Australian manufacturing. We were once a major player, ranking as the 10th largest global motor vehicle producer in 1970. But, by 2016, Australia had slid to 32nd as high domestic costs, lower tariffs and a surge in  low-cost production in China, India and Southeast Asia put Australian producers in a precarious position.

A 2012 KPMG study noted that Australia was the second-most-expensive country for manufacturing components, had the highest transportation and utility costs, and the third highest total labour costs. In a highly competitive global industry, Australian producers were at a distinct disadvantage. Depreciation of the Australian dollar improved the Australian motor vehicle industry’s competitiveness, but ultimately was too little and too late.

In the past, workers who lost jobs because of factory shutdowns would have moved to competitors or component suppliers. But, with local motor vehicle production shut and with limited opportunity for component exports, such jobs are few and far between. The Productivity Commission estimated that 160 businesses in Australia were involved in engineering, design, tooling and manufacturing of automotive components. With their major customers now gone, there are surely fewer today.

The industry’s demise in Australia doesn’t reflect lack of demand for automobiles. In 2016-17, Australians purchased a record 1.18 million motor vehicles and the appetite for new wheels has held up surprisingly well in the face of persistently low wage growth.

Employment trends  reflect the diverging fortunes of the motor vehicle retail and manufacturing sectors.  Employment for manufacturing workers, including component manufacturing, has declined 42% since 2006. However, over the same period, motor vehicle retail employment has risen almost 12%.

Unfortunately, automotive manufacturing workers can’t easily switch to the retail side of the industry.  The skills needed to sell a car are very different from those needed to assemble one.

Thus, when auto production came under threat, production workers had limited scope to move internally. Thousands of them were forced to seek opportunities elsewhere. It’s unlikely we’ll see a wave of displaced auto workers becoming sales workers, but there is already a large migration  to a wide range of new jobs  with varying economic prospects.

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