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Victoria presents secret plan to rescue Toyota jobs

Date

Mark Hawthorne and James Massola

EXCLUSIVE

The Victorian government has presented its secret plan to save Toyota's local manufacturing operations at a crucial meeting with federal Industry Minister Ian Macfarlane and Trade Minister Andrew Robb this week.

Victoria wants the federal government to make a ''significant contribution'' to Toyota to ensure the car maker builds the next-generation Camry in Melbourne beyond 2017. According to industry sources, the cost of retooling alone could top $300 million.

Toyota headquarters in Japan will announce its decision on Australian manufacturing this year, with local management wanting a decision by June.

Premier Denis Napthine cancelled annual leave over Christmas for staff at two government departments, asking them to work through the summer on a plan. The resulting 91-page report was presented by state Manufacturing Minister David Hodgett to the Victorian Manufacturing and Industry Economic Review panel, at a meeting behind closed doors at Treasury Place on Wednesday. Mr Macfarlane is chairman of that committee, which also contains Mr Robb, high-profile businessman Frank Costa and former Victorian cabinet minister Mark Birrell.

The full report, which will not be handed over to Mr Macfarlane until later next week, calls for a ''strong commitment by the Commonwealth to support investment to expand Toyota's operations, including for the next-generation vehicle, and to attract a new model for production''. According to it, ''it is envisaged that a substantial [federal] government contribution will be needed to secure these investments''.

Mr Macfarlane is said to have been impressed by the Victorian pitch to save Toyota, the biggest of Australia's three local car makers.

In an exclusive interview with Fairfax Media, he insisted Toyota had a future making cars in Australia but warned unions and the company's 2500 manufacturing workers to ''think about their futures'' and help cut costs or face that the company could quit Australia. Mr Macfarlane warned that up to 30,000 jobs could go if the car company went.

On Friday, Treasurer Joe Hockey accused the manufacturing workers union of being at 'war' with Toyota and threatening the viability of Australia's last car maker in Australia.

Mr Hockey said Australians had to start living within their means and said the country could no longer rely on China to be the ''sole champion of Australian growth''.


''The union, the AMWU, is at war with Toyota, they are creating the conditions that make it extraordinarily difficult for Toyota to continue producing cars in Australia,'' he told ABC radio.

Mr Hockey said wages negotiations were a matter for individual employers and their employees, ''but the fact is we are all going have to do what we can to make Australia more competitive. Obviously we have to do more to reduce our cost base''.

The Industry Minister, who spent Tuesday and Wednesday in Melbourne, brushed off suggestions he was a lone voice in the cabinet arguing for car industry assistance.

Earlier this month, Mr Robb warned his Coalition colleagues and companies lobbying for government subsidies to embrace industry change and economic restructuring, a view that is widely held by economic dries in the Liberal Party room and federal cabinet who opposed spending more money to keep Holden in Australia.

One Liberal MP, who asked not to be named, said Mr Macfarlane was ''out on a limb'' and that he and Mr Hockey had very different views on industry assistance. But Mr Macfarlane insisted he was ''as dry as any of them''.

''The issue is not whether Toyota is viable but can we get them to the point where they can compete with [Toyota operations in] Kentucky and Thailand,'' he said. He left open the possibility of further industry assistance from the federal Automotive Transformation Scheme, which has an estimated $1.38 billion left in it through until 2015, but said he would wait for the Productivity Commission to hand down its final report on the sector on March 31 before making a decision on co-investment.

Mr Macfarlane said the company was doing everything it could to keep making cars in Australia, but he said the single biggest threat facing the car company was a Federal Court case over changes to workers' conditions.

''All I can do is plead with employees on the shop floor to think about their futures and the need for competitive work practices. I'm not comparing them to an assembly line in Thailand, I'm talking about the Toyota plant in Kentucky - that's the one that threatens us [Australian exports] in the Middle East,'' he said.

''The unions need to show leadership, the priority should be preservation of jobs, not maintaining archaic conditions in the award.''

Toyota is attempting to slash labour costs by $17 million by altering workers' entitlements that allow four hours paid time off to donate blood, cutting Sunday penalty rates from 2.5 times to twice the normal rate as well as changing provisions that allow workers to take sick leave without a medical certificate. The Federal Court blocked the company's attempts to reduce the 27 proposed changes to pay and conditions but it has appealed the ruling.

The national secretary of the manufacturing union's vehicle division, Dave Smith, said the union could find common ground with the company on some measures.

''Some of what they want we could get through quickly, but some of it is nonsense. For example, their desire to cut shop stewards' training leave, they want less than what the award provides for.''

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