This is the crux of the issue:
"It is not the only reason the car industry is in trouble, but it is the main reason. It is not the only reason Qantas is in trouble, but it is a big reason. Australia's currency has risen more than that of any other developed country. Our economic culture allowed our currency to escalate so high as to make our producers uncompetitive, and neither the government nor the Reserve Bank did anything about it. An anonymous minister tells us the next generation of Holdens will be built in South Korea, and shipped here duty-free under the new free trade agreement. That makes sense: former Holden chief Mike Devereux told us a Commodore could be produced for $3750 less there than here. Korea takes manufacturing seriously.
Their economics is a practical toolkit, not a theology. While our dollar soared 91 per cent, the Koreans let the won edge up just 6 per cent. While Australia's cost base more than doubled between 2002 and 2012, Korea's cost base held its ground. Is it any wonder that by 2012, manufacturing production had almost doubled in Korea, yet was back to 2002 levels in Australia?
Cheap imports cut local manufacturers' market share from 25 per cent in 2005 to 10 per cent. Falling sales mean rising unit costs for suppliers. In hindsight, Ford's decision in May to end manufacturing in 2016, and the Coalition's decision to slash support, were the funeral bells for the industry. Toyota and most component makers will follow.
Read more: http://www.smh.com.au/federal-politics/political-opinion/pms-decision-on-cars-means-hard-times-ahead-20131209-2z1kt.html#ixzz2n8cxIXET"
It's very simple really. Holden and Ford built large cars. The public was increasingly buying small cars and SUVs. It is as simple as that. Small cars and SUVs are more economical to import. Unfortunately the above article neglects to mention the failure of the local car makers to adapt to changing buyer demand, but otherwise the main points are spot on and are representative of the Australian manufacturing industry in general.
It's a sad day for Australia, that's for sure.