1
Swedish Trade Council in Australia
2006
THE AUTOMOTIVE INDUSTRY
AUSTRALIA
Fact Pack
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CONTENT
Overview Australian Manufacturing Industry
Australian Automotive Industry
Australian Construction Equipment Industry
Recommendations
References
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0 100 200 300 400
Printing andpublishing
Petroleum, coal,chemical
Metal products
Machinery andequipment
Food, beverageand tobacco
THE MANUFACTURING INDUSTRY IN AUSTRALIA IS SOMEWHAT LARGER THAN THE SWEDISH MANUFACTURING INDUSTRY- manufacturing in general is a very fragmented industry
• The total turnover of the Australian manufacturing industry is SEK 1,701 billion
− the Swedish manufacturing industry’s turnover is SEK 1,357 billion
• There are approximately 140,000 companies within the manufacturing industry in Australia
− 1 million employees
• The machine and equipment manufacturing is the second largest industry within manufacturing
• The average cost for an industry worker in Australia is SEK 152 per hour
5 largest manufacturing industries in Australia
Billion SEK
The automotive industry amounts 8% of the total manufacturing industry
Source: Australian Bureau of Statistics
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CONTENT
Overview Australian Manufacturing Industry
Australian Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Australian Construction Equipment Industry
Recommendations
References
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THE AUSTRALIAN PRODUCTION OF CARS AND COMMERCIAL VEHICLES TOTALS SEK 150 BILLION- relatively constant over the last 5 years
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005
Domestic Export
Vehicles and engines
SEK 90 billionMotor vehicle body
SEK 13 billion
Components and accessories
SEK 47 billion
billion SEK Production cars and commercial vehicles industry in Australia
Export share of production 15 % in 2005
Source: IBIS industry reports; Key Automotive Statistics 2004 (Dept of Industry Tourism and Resources)
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ALMOST 400,000 VEHICLES ARE PRODUCED IN AUSTRALIA- over 75% of these are passenger cars
VEHICLE MANUFACTURERSVEHICLE MANUFACTURERS
2 manufacturers GM Holden Ford
LIGHT TRUCKS(41 000 vehicles)LIGHT TRUCKS(41 000 vehicles)
8-9 manufacturers Custom Coaches Volgren Australia 6-7 minor body
manufacturers
BUSES(900 vehicles)
BUSES(900 vehicles)
HEAVY TRUCKS(6 800 vehicles*)
HEAVY TRUCKS(6 800 vehicles*)
3 manufacturers Volvo Truck / Mack Kenworth Iveco / International
Trailer manufacturers Maxitrans Barker Krueger Vawdrey SX Trailers Haulmark
COMMERCIAL VEHICLES (48 700 vehicles)COMMERCIAL VEHICLES (48 700 vehicles)
PASSENGER CARS(340 000 vehicles**)
PASSENGER CARS(340 000 vehicles**)
4 manufacturers GM Holden Ford Toyota Mitsubishi
Source: Internet; Interviews
*excl. Trailers (6000)**incl. SUVs, excl. Utes
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Overview Australian Manufacturing Industry
Australian Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Australian Construction Equipment Industry
Recommendations
References
CONTENT
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AROUND 340 000 CARS ARE PRODUCED IN AUSTRALIA EACH YEAR - Majority are larger cars
The Australian car production is concentrated on larger cars
A strong economy led to an increase in 2003-2004, but recently there has been a slight drop in production due to
Strong Australian dollar favouring import Higher petrol prices favouring smaller imported
cars New free-trade agreements with Thailand and the
US, making import tariff free from these markets General tariffs on imported cars has dropped
from 15 % to 10 % in 2005 and are scheduled to drop from 10 % to 5 % in 2010.
0
100 000
200 000
300 000
400 000
2001 2002 2003 2004 2005
Passenger Car Production in Australia Development the last 5 years
Vehicles
9Source: Internet; Interviews
Manufacturer Employees
Business Purchase decisions
GM Holden 8,200 Passenger cars HQ, Melbourne (VIC), Australia
Ford 5,000 Passenger cars HQ, Melbourne (VIC), Australia
Toyota 4,500 Passenger cars HQ, Melbourne (VIC), Australia
Mitsubishi 2,000 Passenger cars HQ, Adelaide (SA), Australia
THERE ARE FOUR PASSENGER CAR PRODUCERS IN AUSTRALIA- Purchase decisions are dominantly made at country headquarters
Pass
enge
r Car
s
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VICTORIA AND SOUTH AUSTRALIA MAIN HUBS FOR CAR PRODUCTION
Source: Internet; Interviews
Manufacturer Plant Models and focus
Production volume*
GM Holden Elisabeth, (Adelaide, SA)
Port Melbourne, (Melbourne, VIC)
Caprice,Statesman,CommodoreEngines
125,000
315,000 (engines)
Ford Broadmedows, (Melbourne, VIC)
Falcon (incl Fairlane)Territory
85,000
Toyota Melbourne (VIC) Camry 100,000
Mitsubishi Tonsley Park, (Adelaide, SA)
380 30,000
Bold = Country head office
Melbourne (VIC)•Ford•GM Holden•Toyota
*round off real production
Adelaide (SA)•GM Holden•Mitsubishi
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5-7 years ago, the Australian OEMs sourced almost exclusively within Australia Since then, especially Ford and GM-Holden have increased their global sourcing dramatically
Currently 80% of content are sourced locally, this is expected to decrease even further to 55% over the coming five years
Toyota and Mitsubishi are still more focused on working with local suppliers
Strong government
support
Strong government
support
Increased import and
export
Increased import and
export
Increased global
sourcing
Increased global
sourcing
A stronger Australian dollar, free trade agreements as well as general reduction of tariffs on cars (from 15% to 10% in 2005 and down to 5% in 2010) has led to more competition from imported cars
As a response, Australian OEMs have significantly increase its export, from 5 bn SEK in 1996 to almost 20 bn SEK in 2005
To support the domestic industry, the Australian automotive producers has received more than 10 bn SEK of assistance from the government over the past three financial years
THE PASSENGER CAR INDUSTRY IS SUPPORTED BY THE AUSTRALIAN GOVERNMENT
Trends within the Australian passenger car industry
Source: Internet; Interviews
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CONTENT
Overview Australian Manufacturing Industry
Australian Automotive Industry
Passenger Cars
Commercial Vehicles
Suppliers
Australian Construction Equipment Industry
Recommendations
References
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STRONG INCREASE IN PRODUCTION OF COMMERCIAL VEHICLES OVER LAST FIVE YEARS
Commercial Vehicle Production in Australia Development the last 5 years
Vehicles The commercial vehicle production in Australia is dominated by light trucks (mainly so called utes)
Often purchased by smaller business owners due to versatility and favorable tax treatment
A strong economy has led to a substantial increase in demand over the last five years for these
Demand for heavy trucks have also increased significantly due to the strong economy and high levels of business investments
All local manufacturers of heavy trucks have increased production as a result0
10000
20000
30000
40000
50000
60000
2001 2002 2003 2004 2005
Light Trucks Heavy Trucks Buses
Source: Internet; Interviews
14Source: Internet; Interviews
PURCHASE DECISIONS ARE MADE AT COUNTRY HEADQUARTERS ALSO FOR COMMERCIAL VEHICLES MANUFACTURERS
Com
mer
cial
veh
icle
s
Manufacturer Employees Business Purchase decisions
Volvo Trucks / Mack 1,300 Heavy Trucks HQ, Brisbane (QLD), Australia
Kenworth 750 Heavy Trucks HQ, Melbourne (VIC), Australia
IVECO / International
450 Heavy Trucks HQ, Melbourne (VIC), Australia
Custom Coaches 480 Busses HQ, Sydney (NSW), Australia
Volgren Australia 250 Busses HQ, Melbourne (VIC), Australia
GM Holden 8,200 Light Trucks/Utes HQ, Melbourne (VIC), Australia
Ford 5,000 Light Trucks/Utes HQ, Melbourne (VIC), Australia
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THERE ARE 10 COMMERCIAL VEHICLE MANUFACTURING PLANTS IN AUSTRALIA-Victoria main hub for commercial vehicle production
Source: Internet; Interviews
Manufacturer Plant Models and focus
Production volume*
Volvo Trucks / Mack
Brisbane (QLD) Heavy Trucks, 11 Volvo models, 11 Mack models
2,650
Kenworth Bayswater, (Melbourne, VIC)
Heavy Trucks, 9 models
2,500
IVECO / International
Dandenong, (Melbourne, VIC)
Heavy Trucks, 5 models
1,650
Custom Coaches Sydney (NSW), Adelaide (SA), Gold Coast (QLD)
Busses, 7 models
230
Volgren Australia Melbourne (VIC), Perth (WA)
Busses, 5 models
200
GM Holden Elisabeth, (Adelaide, SA)
Light Trucks / Utes, 4 models
20,000
Ford Broadmedows, (Melbourne, VIC)
Light Trucks / Utes, 1 main model
21,000
Bold = Country head office
*round off real production
Melbourne (VIC)•Ford•IVECO•Kenwoth•Volgren
Perth (WA)•Volgren
Brisbane (QLD)•Volvo
Gold Coast (QLD)•Custom Coaches
Sydney (NSW)•Custom Coaches
Adelaide (SA)•Custom Coaches•GM Holden
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Australia’s demand for freight is predicted to double over the coming 15 years Road transport expected to account for majority of this increase The domestic production (as well as import) of light and heavy commercial vehicles is expected to see stable volumes as a resultHigh freight
transport demand
High freight transport demand
High level of customizationHigh level of
customization
Commercial vehicles in Australia are subject to high levels of customisation The Australian market has unique applications, and some of the harshest conditions in the world for commercial
vehicles
Increased global
sourcing
Increased global
sourcing
The strong trend of global sourcing is affecting also the commercial vehicle industry in Australia and is significantly reducing local content in these vehicles
COMMERCIAL VEHICLE INDUSTRY IN AUSTRALIA EXPECTED TO CONTINUE TO BE STRONG
Trends within the Australian commercial vehicle industry
Source: Internet; Interviews
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Overview Australian Manufacturing Industry
Australian Automotive Industry
Passenger Cars and Commercial Vehicles
Commercial Vehicles
Suppliers
Australian Construction Equipment Industry
Recommendations
References
CONTENT
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THERE ARE ABOUT 200 TIER 1 AND TIER 2 AUTOMOTIVE SUPPLIERS IN AUSTRALIA
There are over 200 companies focusing on supplying the automotive industry in Australia
In addition there are several hundred companies that have automotive companies as customers, but are not focused on this group
There is a very high concentration of automotive suppliers in Victoria, followed by South Australia
Mirroring the location of the OEMs
Most companies have less than 100 employees and are family owned
Low High
Geographical concentration of automotive suppliers
Australian automotive suppliers
Source: Internet; Interviews
Perth Sydney
AdelaideMelbourne
Brisbane
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80% OF THE PARTS IN AN AUSTRALIAN MADE CAR ARE MANUFACTURED LOCALLY
Source: FAPM, IBIS industry report
Cables, bus systems, embedded systems
Australian Arrow Bosch SiemensVDO
Power train, exhaust systems, engine parts
Automotive Components Limited
ION Automotive Nylex
Cockpit, seats, dash-board, air conditioning
Air International Group
Nylex SiemensVDO Autoliv
T1 SUPPLIERST1 SUPPLIERS
Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear
Body, glass, lighting Hella Pilkington Schefenacker
Suspension, brakes, axles, steering, tyres
Air International Group
Arrowcrest Group Bridgestone Dana FMP Group ION Automotive PBR Australia
20Source: FAPM
Manufacturer Employees Business Purchase decisionsAir International Group 1,400 Air conditioning, steering systems and seats HQ, Edinburgh (Adelaide, SA)
Arrowcrest Group 800 Steering gear systems and wheels HQ, Woodwille North (Adelaide, SA)
Australian Arrow 715 Electronic components HQ, Carrum Downs (Melbourne, VIC)
Autoliv Australia 450 Seat belts, air bags HQ Campbellfield (Melourne, VIC)
Automotive Components Limited 1,000 Engine components HQ, Dandenong (Melbourne, VIC)
Bosch 1,790 Electrical Eq. HQ, Germany
Bridgestone Australia 1,600 Tyres HQ, Clayton (Adelaide, SA)
Dana 1,400 Running gear Country HQ, Fairfiled (Sydney, NSW)
FMP Group 450 Friction material HQ, Ballarat (Melbourne, VIC)
Hella 600 Lighting eq. and plastic moulding Country HQ, Mentone (Melbourne, VIC)
ION Automotive 2,800 Powertrain and driveline solutions HQ, Richmond (Melbourne, VIC)
Nylex 800 Interior trim and fuel tank manufacturers HQ, Somerton (Melbourne, VIC)
PBR Australia 900 Brake system solutions HQ, East Bentleigh (Melbourne, VIC)
Pilkington 1,600 Glass components HQ, England
Schefenacker 940 Mirrors and lighting systems Country HQ, Lonsdale (Adelaide, SA)
Siemens VDO 350 Electronic and interior components Country HQ, Heidelberg Heights (Melbourne, VIC)
AMONG T1 SUPPLIERS MOST PURCHASE DECISIONS ARE MADE IN AUSTRALIA
Top
15 T
1 Su
pplie
rs
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THE T1 SUPPLIERS ARE LOCATED NEAR THE VEHICLE OEMs-main hub in Victoria
Sydney (NSW)•Dana
Melbourne (VIC)• FMP Group • Australian Arrow • Bosch• Automotive
Components Ltd• PBR Australia• Siemens VDO• Hella • Pilkington• ION Automotive• Nylex• Autoliv
Adelaide (SA)•Bridgestone•Air International Group•Schefenacker•Arrowcrest Group
Bold = Head office
Source: FAPM
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RELATIVELY SMALL NUMBER OF LARGER T2 SUPPLIERS IN AUSTRALIA
Source: FAPM
Cables, bus systems, embedded systems
Tyco Electronics Forgecast
Australia
Power train, exhaust systems, engines
Forgecast Australia OneSteel Orrcon Operations Diver Consolidated
Industries GUD Automotive Numetric
Manufacturing Arrowcrest Group
Cockpit, seats, dash-board, air conditioning
Nylex Diver Consolidated
Industries Forgecast Australia RMAX
T2 SUPPLIERST2 SUPPLIERS
Electrical systemsElectrical systems Interior equipmentInterior equipment PropulsionPropulsion BodyBody Running gearRunning gear
Body, roof, glass, doors, lighting etc.
OneSteel BlueScope Steel Nylex Forgecast Australia Orrcon Operations RMAX Diver Consolidated
Industries
Suspension, brakes, axles, steering, tires
OneSteel CMI Operations Numetric
Manufacturing Forgecast Australia Diver Consolidated
Industries
23Source: FAPM
Manufacturer Employees
Business Purchase decisions
Arrowcrest Group 600 Engine component parts HQ, Woodwille North (Adelaide, SA)
BlueScope Steel 2,800 Flat steel products HQ, Port Kembla (Wollongong, NSW)
CMI Operations 650 Suspension and brake components
HQ, Flemington (Melbourne, VIC)
Diver Consolidated Industries n/a Metallic fasteners HQ, Melbourne (VIC)
Forgecast Australia n/a Non-ferrous forgings HQ, Melbourne (VIC)
GUD Automotive n/a Filters HQ, Tottenham (Melbourne, VIC)
Numetric Manufacturing n/a Cast and extruded components
HQ, Adelaide (SA)
Nylex 800 Plastic moulding HQ, Sommerton (Melbourne, VIC)
OneSteel 500 Steel pipe and tube HQ, Sydney (NSW)
Orrcon Operations 500 Steel tube HQ, Salisbury (Brisbane, QLD)
Tyco Electronics n/a Passive electrical and electronics connectors
HQ, Brunnswick (Melbourne, VIC)
RMAX n/a Rigid Cellular Plastics HQ, Maribyrnong (Melbourne, VIC)
ALSO AMONG T2 SUPPLIERS ALMOST ALL PURCHASE DECISIONS ARE MADE IN AUSTRALIA
Top
12 T
2 Su
pplie
rs
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THE T2 SUPPLIERS ARE LOCATED NEAR THE T1 SUPPLIERS- again, main hub is in Victoria
Source: FAPM
Bold = Head office
Adelaide (SA)•Arrowcrest Group•Numetric Manufacturing
Sydney (NSW)•OneSteel
Melbourne (VIC)•CMI Operations •Diver Consolidated Industires •Forgecast Australia•GUD Automotive •Tyco Electronics•RMAX•Nylex
Wollongong (NSW)•BlueScope Steel
Brisbane (QLD)•Orrcon Operations
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OEMs are continually pressuring their suppliers for lower prices, using global suppliers as benchmarks 3-8% annual reduction in prices expected for the coming two years
Increased focus on R&D
and Engineering
Increased focus on R&D
and Engineering
Outsourcing Outsourcing
Price reductions
Price reductions
To maintain profitability, most suppliers are outsourcing production of basic or semi-processed input, mainly overseas to low cost countries
80% of suppliers expect to increase outsourcing in the coming two years
To compete with supplier from low cost countries, Australian suppliers are increasing its focus on value added activities like engineering and R&D to better meet the demand of the OEMs and add additional value to their products
Trends within the Australian automotive supplier industry
THE AUSTRALIAN AUTOMOTIVE SUPPLIERS ARE CHALLENGED BY CONSTANT DEMANDS FOR PRICE REDUCTIONS FROM THE OEMS
Source: Internet; Interviews
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Overview Australian Manufacturing Industry
Australian Automotive Industry
Passenger Cars and Commercial Vehicles
Commercial Vehicles
Suppliers
Australian Construction Equipment Industry
Recommendations
References
CONTENT
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THE AUSTRALIAN PRODUCTION OF MINING AND CONSTRUCTION MACHINERY EQUIPMENT TOTALS ABOUT SEK 10,2 BILLION
0
2
4
6
8
10
12
2001 2002 2003 2004 2005
Domestic Export
Earth engaging eq.
SEK 3,8 billion
Wholesale salesSEK 2,8 billion
Concrete & asphalt mixersSEK 0,64 billion
billion SEK Production Mining and Construction Machinery Equipment in Australia
However, no production of construction equipment vehicles exist in Australia
Source: IBIS industry reports
Other specialised eq.SEK 1,8 billion
Services, repairs, adjustments SEK 1,3 billion
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CONTENT
Overview Australian Manufacturing Industry
Australian Automotive Industry
Australian Construction Equipment Industry
Recommendations
References
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RECOMMENDATIONS FOR MAKING BUSINESS WITH THE AUSTRALIAN AUTOMOTIVE INDUSTRY
Recommendations for making business with the Australian automotive industry
3.3.
2.2.
1.1.
Country specific
3.3.
2.2.
1.1.
Industry specific
Australia is an easy country to do business in – English is spoken and the business culture is very similar to northern Europe’s
Respect should be have for the geographical distance and time differenceLocal support and/or presence in one form or another often a prerequisite for success
Australia is more hierarchical in it’s decision making than Sweden – establishing contacts on the right level is essential
Although purchasing decisions generally are made locally, global connections with the OEM parent companies are more or less a prerequisite for successfully winning business with them in Australia (e.g. GM in US, Toyota in Japan)
Given Australia’s geographical isolation, although local production is no longer necessary for local success, local engineering and warehousing capabilities is still seen a major advantage from the OEM and T1 suppliers perspective
The geographical isolation also creates a need for efficient supply chain management to be able to compete effectively (e.g. understand long lead time sourcing, operate HUB concepts to reduce transport costs)
Source: Internet; Interviews
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Overview Australian industry
Australian Automotive industry
Recommendations
References
CONTENT
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STC AUSTRALIA CAN SUPPORT SWEDISH AUTOMOTIVE SUPPLIERS IN MANY WAYS
Examples of services STC Australia provides
Tailor made market research to provide answers to the most important questions the Swedish company needs to understand when entering or expanding on the Australian market
Market AnalysisMarket
Analysis
Partner searchPartner search Identification and qualification of potential Australian partners (e.g.an agent or distributor) for the Swedish
supplier, utilising STC’s extensive network and experience from similar assignments
Customer RoadshowCustomer Roadshow
STC identifies the most important customers on the Australian market and contacts these to create an interest for the Swedish supplier. A roadshow is planned where the Swedish suppliers visits the customers with the highest potential to initiate concrete business discussions
Aquisition screeningAquisition screening
Screening of the Australian market to identify potential acquisition candidates and compiles profiles on these. STC also often assists in initial negotiations and operational due diligence.
Company establishment
Company establishment
STC handles all the administrative and legal requirements for setting-up a local subsidiary, including contacts with the authorities. Once the company is up and running, STC can also handle the ongoing administrative and financial issues, as well as provide hands-on business support
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STC HAS HELPED SEVERAL SWEDISH COMPANIES TO DO BUSINESS WITH THE AUSTRALIAN AUTOMOTIVE INDUSTRY
COMPANY PROFILE
One of the world’s leading suppliers of trucks, buses, construction equipment and power systems for marine and industrial use,
One of the world’s leading producers of heavy trucks, buses and industrial and marine engines..
Examples of previous STC Australia clients within the automotive industry