Australia glazes idled motor-vehicle factories’ reprisal

Three years since Adelaide’s General Motors factories produced its last vehicle, lawmakers are looking to start manufacturing cars due to the COVID 19.

Australia has been overly reliant on Asia for essential goods, including cars, refrigerators, and toasters. However, due to the rising coronavirus cases in the country, causing an economic downfall, it has been forced to revisit the idled factories, including motor vehicle manufacturers.

A factor contributing to this realization is the recent development of its relationship with China, which has worsened, causing a lack of essential supplies in the country.

The effect of COVID-19 to manufacturers

For some companies, COVID-19 has proven that globalization has extreme benefits, including cheap labor and lower tariffs. Still, also, these benefits are limited when the economy of the entire world is on the down-low.

Due to such reasons, a lot of companies are seriously contemplating bringing back onshore, even if it requires extra costs. Experts believe that this would increase the employment rate massively and would be a beneficial solution to the crumbling economy.

Although it is highly unlikely that the citizens of Australia will buy locally produced and manufactured essential items, the government puts the said case as a forward plan that would gain long term support from industrialists, encouraging more entrepreneurs.

Here’s what experts suggest

Experts suggest that this action plan might result in a gainful recovery, in the long run, making up to 15-20% of the total GDP.

Furthermore, business moguls suggest that such reforms will reduce extensive energy costs and a complete cut-out of the red tape for investment, driving up the stocks by a considerable margin.

Some startups like H2X have already initiated the process while looking into manufacturing hydrogen cars in a smelting town, Port Kembla, which is situated 100 kilometers towards the South of Sydney.

The startup looks to employ 100 people by the end of 2020, which is expected to increase by the year 2025. It is likely to use up 80% of local raw materials.

The manufacturing sector of Australia was expanded immediately after World War II, due to critical shortages in essential items. Tariffs heavily protected the market, and most Australians consumed local products.

However, the massive change by the end of the century is due to the open-door policies applied and market globalization. All production was shifted offshore to cut down costs and embrace the low tariff rates.

In 2019, manufacturers were accountable for merely five percent of the GDP.

Image courtesy of Taras Vyshnya/Shutterstock

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