Economics of Toyota Group Samples for Students †MyAssignmenthelp.com

Question: Discuss aabout the Economics of Toyota Group Production. Answer: Essence of the Article According to the ABC News More than 2,500 Jobs to go as Toyota announces end to Altona Production article high costs of production and unfavorable economies of scale have largely contributed to the closure of Toyota Group production lines.Consequently,worker layoffs from 4000 to 1300 will be effected by the company in Melbourne.Further,the company assures its consumers of high-quality automobiles.Also,the article explores the uncertainties facing the laid off workers from automotive manufacturing plants and the support programs being availed to car industry workers in preparation for the transition to other occupation. Some laid off workers from the car manufacturing industry remained unemployed for long time whereas others are employed full time and partime in other Australian sectors. The author of the article is interested in the current state of the Toyota Company as it prepares to exit the car manufacture industry. In addition, the author expounds on the effects of the winding up operations of the Toyota Group on its existing employees. It explores the consequences of winding up of the Altona Production line on its workers and what the Toyota Company is doing to aid its workers who soon to be rendered unemployed are following its production winding up in Altona.Generally, the manufacturing production levels in the car industry in Australia has declined over the years due to high production costs, small market size, appreciation of the Australian dollar and low economies of scale. Economic Analysis. Predominantly, high production costs is uneconomical, burdensome and expensive for most manufacturing firms thus the reason why most car manufacturers are winding up operations in Australia to low production cost economies(Valadkhani,2016)Noteworthy, Australia s has the highest manufacturing cost of production structure among the worlds top 25 exporting countries according to the Boston Consulting Group (Elaine, 2014).Primarily, high production costs are fuelled by the high cost of raw materials ,infrastructure and wages thereby an increase in all these factors contributes to production costs for car suppliers. Further, high Australian dollar appreciation has contributed to high production cost since its the exchange rate (Vas, 2014) Further, the high production cost is blamed on the small market size and low economies of scale. Usually, high economies of scale are likely to sustain low production costs thus maximizing profits for most manufacturers.However,low economies of scale are likely to subject car suppliers to high manufacturing costs which in the long run cut on the profits of manufacturers thus leading to winding up of operations.Also,high cost of labor has contributed to high production and operating costs for car manufacturers thereby cutting in on the manufacturers profits through high wages demanded by unions and high operating costs thereby driving the manufacturing industry to a decline(Valadkhani,2016) Primarily, Eastern European countries and Asian economies ,particularly,China,is considered to have low production costs thus the high production levels.Usually,low-cost production areas are likely to experience high investment levels due to maximum profits possibilities and vice versa(Elaine,2014)Further ,profit maximization is the main reason for most car manufacturing firms which is unattainable given high costs of production currently crippling the Australian car manufacturing industry.Also,the high appreciation of the Australian dollar and cheaper imports has contributed to high production cost in manufacturing(Toner Stilwell,2014)The appreciation of the dollar has increased thereby making production and labor cost to be high thus reducing the profit margin for most car manufacturers. Further, the unemployment levels are likely to rise following up the winding up of car manufacturers in Australia. Notably, Mitsubishi, Ford, and Holden are winding up their operations in Australia. The Australian Bureau of Statistics attributes 1m jobs to the car manufacturing industry which is roughly 8.5 per cent of the Australian task force (Valadkhani, 2016) Following the layoffs, theres high chance of long term unemployment and unfavorable job conditions for the retrenched workers. Notably, Holden s worker intends to lay off 2300 in South Australia and between 700 to 800 in Melbourne(Dowling,2015)However, some laid-off workers are likely to be fully and partly employed. Consequently, following closure of Ford manufacturers, research and development is a possibility for them through the retention of its production development and testing institution(Valadkhani,2016)Ideally, intensive investment into research and development plus innovation into the car manufacturing would help restore jobs, promote efficiency, productivity sustainability and quality in the car manufacture industry globally.Notably,innovation makes manufacturing firms more competitive(Toner Stilwell,2014) thus the need for the Australian Manufacturing industry to embrace its scientific capacity. An increase in innovation budget by manufacturing firms will increase efficiency, productivity, quality and output levels. Recommendations In addition, tariff and free trade arrangements have partly contributed to high production costs of Australias car industry thus the need for more government regulation and policies to protect the local manufacturers in Australia to spur manufacturing industry growth.Further,there's need for government funding and subsidies to its automotive industry(Dowling,2015)Implementation of labor cost-reducing policies will lower production costs through middle salaries and improve worker efficiency.Also,low cost of raw materials due to abundance availability will go a long way in reducing production costs(Mulligan , n.d)Further, reduction of overhead costs by car manufacturers will help maximize the profits and yield low production costs. Also, collaboration among Australian manufacturers will double their economies of scale and reduce theres production scale and in turn free up some funds for innovation through research and development initiatives(Foley and McLean,2016)Also, manufacturers international integration in the supply chain will help grow Australian small market due to its advanced technological and research industry(Foley and McLean,2016)Further innovative manufacturing like carbon revolution will boost mass supply and cultivate innovation culture in manufacturing industry. In my view, I think substantive investment into the research and development sector of the manufacturing industry will bring about efficiency and cost effectiveness while creating employment opportunities. Also, collaboration and partnerships among car manufacturers in Australia will boost low production rates due to large capital availability and propel research and development initiatives by the collaborated manufacturers. Partnerships are likely to stir expansion of firms thus developing large economies of scale which is beneficial for all individual car manufacturers.Moreover,implementation of low labor and raw materials costs will reduce the current high production costs for car suppliers thereby maximizing their profit.Largely,the implementation of technological techniques and practices will boost efficiency and productivity of automotive in Australia. References ABC News. (2017)More than 2500 jobs to go as Toyota announces to end Altona Production, (2017).ABC News.[Online]Available at https://www.abc.net.au/news/2017-01-31/toyota-set-to-close-in-melbourne-in-october/8227698[Accessed 16 May 2017] Dowling, J. (2015) Who killed the car Industry? The Sydney Morning Herald.[Online]Available at https://www.smh.com.au/business/the-economy/who-killed-the-car-industry-20151112-gkx1c8.html[Accessed 16 May 2017] Elaine. (2014)Australia has the highest manufacturing cost structure among largest goods-Exporting countries: Study .Australian Manufacturing.[Online]Available athttps://www.australianmanufacturing.com.au/15915/australia-has-the-highest-manufacturing-cost-structure-among-largest-goods-exporting-countries-study[Accessed 16 May 2017] Foley, C, and McLean, K.(2016)The Australian Manufacturing Industry is not dying, It's evolving: CSIRO Study. The Conversation.[Online]Available at https://theconversation.com/the-australian-manufacturing-industry-is-not-dying-its-evolving-csiro-study-69398[Accessed 16 May 2017] Mulligan.(n.d)Ideas for Cost-Reduction in Manufacturing .Small Business.[Online]Available at https://smallbusiness.chron.com/ideas-costreduction-manufacturing-59401.html[Accessed 16 May 2017] Toner, P, and Stilwell, F. (2014)Why does Australia need Manufacturing Industry? Australian Options Magazine. [Online]Available at Http://www.australian-options.org.au/2014/02/why-does-australia-need-manufacturing-industry/[Accessed 16 May 2017] Valadkhani, A. (2016) Collapse of Australian Car Manufacturing Will Harm RD in other sectors: Study. The Conversation.[Online]Available at https://theconversation.com/collapse-of-australian-car-manufacturing-will-harm-randd-in-other-sectors-study-66984[Accessed 16 May 2017] Valadkhani, A. (2016) Collapse of Australian Car Manufacturing Industry .Swinburne University. [Online]Available at https://www.swinburne.edu.au/news/latest-news/2016/10/collapse-of-australian-car-manufacturing-industry-.php[Accessed 16 May 2017