"Manufacturing is difficult"

Last year, combined exports of Completely Built-Up vehicles from Australia totaled approximately 140,000 units -- a 10,000-unit improvement on the year before.

This year is expected to run ahead of the 2007 figure, with Holden's G8 about to add potentially tens of thousands to that number (more here) and Toyota is forecasting an extra 5000 units this year, on top of the 95,000 sent OS in 2007.

So at least two locally based manufacturers are doing well with their export programs, but it's not all beer and skittles.

In conversation with Toyota and the FCAI this week, we learned quite a bit about the background to the country's improving automotive export prospects.

Holden and Toyota have taken two very different paths to secure export earnings.

Holden initially faced the challenge of having the GM world accept a uniquely Australian design in global markets, with virtually no shared content other than drivetrain components. Having made the sale though, Holden is in a strong position without any immediate likelihood of losing its export business.

For GM to place the business of building the Pontiac G8 or the GCC markets' Chevrolet Lumina and Caprice elsewhere would require considerable expense and re-tooling in the alternate plant(s).

Toyota, on the other hand, still faced an uphill battle to sell its Camry and Aurion as export market winners, but it wasn't the design -- a known quantity -- that needed to be sold to TMC, it was Altona's ability to meet global benchmarks.

In that respect, Toyota Australia remains on a knife's edge. Camry is built in eight different plants around the world, now that Russian and Chinese factories are on line and the Camry could be built in any one of those and exported to TMCA's Gulf Countries hinterland.

Dave Buttner, TMCA's Senior Executive Director for Sales and Marketing, has been with the company for a long time. He recalls the opening of the plant at Altona in June 1994, "the first new manufacturing facility in the southern hemisphere in thirty years".

"To establish a manufacturing plant in this country -- at that time -- to support purely domestic market sales, we would never have to got to first base.

"At the time we established the plant, it had a design capacity of a hundred thousand units."

In listening to Buttner speak -- with passion as he does -- it's almost a spiritual experience, with the preacher promoting successful automotive manufacture as the highest end to which any individual or company can aspire.

It was Buttner who said "Manufacturing is difficult". That deceptively simple observation doesn't just mean that it is physically demanding for production line workers or that it's a complex amalgam of production technology working in unison.

His belief is that manufacturing is conceptually difficult, because it places demands on a company to accommodate a plethora of -- frequently conflicting -- needs of all kinds, both from within the company and from external sources. And the line between success and failure is often a fine one.

He says that TMC's gamble to allow the construction of a greenfields site at Altona, west of Melbourne, was always "very much predicated" on strong export potential. In 2007, the plant produced 130,000 units -- including 95,000 for export -- a significantly greater figure than the original 100,000-unit design capacity.

Despite the performance of the plant and both domestic and export sales of Camry and Aurion, Buttner considers that the mix between domestic and export sales are currently skewed too far towards exports.

That's a situation that is changing for the better though. 2007 domestic sales show that the products from Altona had shifted up a gear to the tune of a 43 per cent improvement on the previous decade's average monthly production.

In effect, there are 718 more units of Camry and Aurion produced locally for the domestic market each month, than the average monthly production from Altona during the previous decade.

Toyota -- both TMCA of course, and TMC, surprisingly -- are keen to see both export and domestic production remain in Australia, but it has to be viable.

Toyota prefers to site manufacturing plants within the communities that will be buying the cars as well as building them, according to Buttner. There are various reasons for this.

On a purely practical level, there's the "commitment" to the plant from the local community. On a more philosophical level, there's a sort of corporate obligation felt by Toyota to "support the community and the economy in which you have the plants".

"And that is a genuine heart-felt Toyota desire" says Buttner, "but, at the same time, it has to be viable."

It pays to have the workers on side obviously, since the commitment to sophisticated local manufacturing runs deep in employees who are proud of the indigenous motor industry and their part within it.

They're also Toyota's best time and motion engineers. Their consultancy on improved efficiencies cost the company nothing, but yield the sort of benefits that help TMCA to overcome the challenge of competition from other Toyota factories throughout the world, often based in nations where the cost of labour is considerably lower than in Australia.

To quote from Buttner: "we don't talk in the context of 'how are we going vis-à-vis Holden or Ford?', we talk 'how are we going in the context of other plants in the region, that would dearly love to maximise their volume and productivity through their manufacturing facility?'"

"The car market throughout South-East Asia has dropped. There are other plants that build Camry, that have excess capacity. So the thing that we have to do to be viably manufacturing the product, is to ensure that we are achieving global benchmarks in our sphere of influence."

Lean manufacturing -- with help from Toyota's supplier partners -- and high-efficiency production is helping TMCA to achieve those benchmarks. But what are the broader benefits of automotive exports?

For one thing, it keeps the local manufacturing industry alive, with all the attendant social benefits that go with full employment.

Secondly, a country with a technologically sophisticated, but continuously improving automotive industry arguably enjoys a greater sense of self-belief.

And finally, it's worth bucks.

During the press conference, Toyota's Chairman Emeritus and President of the FCAI, John Conomos, emphatically remarked: "[Critics] never take into account the fact that the export earnings alone in this country, in a couple of years, would more than offset the taxpayers' contributions to support the industry ($7.8 billion)".

"Export earnings from this company alone, plus our friends at Holden, would more than offset, much more than offset the contribution they're making."

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