Optimal Advisory

M&A Advisory

  • Home
  • Insights
  • Deal Room
    • Businesses Wanted for Active Buyers
    • Businesses For Sale
  • Newsletters
  • About Us
    • Our Team
    • Client Testimonials
    • Industry Activities
    • Capabilities
    • Our Expertise
  • Contact

Automotive Component Manufacturing in Australia – what is your strategy?

Automotive Industry Consulting

What is the future of automotive component manufacturing in Australia, why is Australian manufacturing losing ground as recently reported by the Boston Consulting Group (Sirkin et al August 2014*)?

  • Why is US manufacturing more competitive than it was a few years ago?
  • Why is the UK the lowest cost producer in Western Europe?
  • Why is Mexico now cheaper than China?
  • Why is Australia in the same category as France, Belgium, Italy and Switzerland?

Competitive Manufacturing Strategy

The Boston Consulting Group analysed the competitiveness of countries based on four key dimensions: manufacturing wages, labour productivity, energy costs and exchange rates. No matter where you are located, based on these factors most companies should be looking to re-evaluate their sourcing and manufacturing strategies to remain globally competitive.

Can a company wait for the government to do something about the automotive industry? Do Australian companies need hand-outs and subsidies to be competitive? The automotive industry is facing huge changes and consequential challenges. Owners can rue poor government policy over decades, poor decisions by car manufacturers in terms of products and production programs, labour productivity, the exchange rate and many other factors affecting the industry.

The key question is what is your company doing about it, what is your company changing to be competitive in the global market? The automotive industry is a global industry and how are Australian companies looking to compete on a global basis. What is your competitive advantage? How can you execute on a world stage.

In many instances once a company looses customers such as Ford or Holden in two or three years’ time, it is the end of the road. The company will have little if any value and what value is left is auction value of equipment for which there will not be many buyers! This will happen to a number of companies. Multinationals will however walk away to compete in other markets but locally owned business will have little place to go unless they embark on a focussed strategy to participate in the global market.

To achieve success internationally, requires:

  • World class production facility and cost base – there are successful examples of this in Australia where companies will continue to manufacture competitively and profitably and export to a global customer base at global volumes.
  • A product or technology which provides a competitive low manufacturing cost advantage or royalty stream for products produced elsewhere by others
  • Critical mass. This will require local industry consolidation to establish companies which can overcome the loss of the local markets but aggregates technology, products and staff and which can then compete effectively in a global market.

What is your strategy for a successful future in automotive component manufacturing in Australia ?

*August 19, 2014 by Harold L. Sirkin, Michael Zinser, and Justin Rose

Share this:

  • Email
  • Print
  • Twitter
  • Facebook
  • LinkedIn

Related

Author: Jonathan Seddon 01/09/2014 Filed Under: Motivational, Strategy Tagged With: automotive, manufacturing, strategy, technology

Comments

  1. Simon Wilson says

    02/10/2014 at 11:39 am

    Good article to focus minds towards action: the question is who will be forward thinking enough to actually develop and act on plans and who will be there at the end still rearranging deck chairs?

    Reply

Your comments are important, please leave a reply ... Cancel reply

Subscribe to our Quarterly Newsletter
M&A Insights and Recent M&A Deals
 

Contact
Jonathan Seddon: +61 418 597 120

Simon Wilson: +61 425 833 631
email: info@gotoOptimal.com.au
 
  • Deal Room
  • Our Capabilities
  • Executive
  • Our Team
  • Newsletters
  • Contact Us

Copyright © 2025 Optimal Business Advisory | www.gotoOptimal.com.au

7 Important Questions on How to Sell a Business

    Your Name (required)

    Your Last name (required)

    Your Email (required)

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.