Death of local car makers is 'inevitable'

The end of car manufacturing in Australia appears to be inevitable, according to the Australian who rose from the Melbourne suburbs to become the global chief executive of the Ford Motor Company.

BHP Billiton chairman Jac Nasser, who ran Ford in the US from 1998-2001, said he was disappointed Australians were not more patriotic about maintaining a local car manufacturing industry.

When speaking after Holden's announcement this week that 500 jobs would go in South Australia and Victoria, Mr Nasser challenged the perception that Australia's car making industry had enjoyed large amounts of financial support from state and federal governments.

"When you compare the incentives that the automotive industry has received with others, I don't know whether that is the appropriate conclusion."

Holden has estimated it has received more than $2 billion worth of taxpayers' funds over the past 12 years, and rival car makers Toyota and Ford have also benefited from government handouts.

Mr Nasser lamented that Australians were not "emotionally connected" to the car industry.

"I'm disappointed in some of the rhetoric that I hear, where it's clear that the general feeling in Australia is that they're not patriotic around their automotive industry. In most countries around the world, they are emotional about their automotive industry," he said.

Contraction of the industry has been blamed on the strength of the Australian dollar and fierce competition from overseas rivals who enjoy lower costs on wages, power and raw materials. Some manufacturers have called for industry to get access to cheap gas by government decree, but large resources companies such as Santos and BHP have fought such a market intervention.

Mr Nasser said as recently as two years ago he was confident the car industry could survive in Australia, but had become more pessimistic since then.

"The signs aren't good, and particularly when the car industry is reducing the number of engineers they have in the workforce. That's a leading indicator of a reduction in future programs and future technology," he said.

Mr Nasser said the full exit of just one of those car companies - Ford, Toyota and Holden - from Australia could trigger the demise of the entire industry.

"Let's assume one of the three decide to exit Australia in terms of manufacturing, then you end up potentially with a sub-scale supplier infrastructure and, once that happens, I think it's a domino effect," he said. "It would be a very sad day for Australia but unfortunately it looks like it could be inevitable."