The automotive industry lies at the heart of Australia's production engineering capability.
Australia has a strong and competitive automotive manufacturing base, and includes over two hundred specialist automotive component firms with a wide range of expertise in a wide range of technologies and materials.
The automotive industry provides the base-load demand to justify the installation of production facilities in other industries. The high quality demands it makes of its suppliers have had significant spill-over benefits to many industries including steel, chemicals and plastics.
The automotive industry in Australia is the single largest consumer of products from the rubber and related products sector, the second largest consumer of basic iron and steel products and the third largest consumer of paints.
The value of vehicles produced in Australia in 2002 was $7.9 billion - parts sales were valued at $7.7 billion (in 2002). Automotive manufacturing accounts for about 7% of total manufacturing turnover and 5% per cent of manufacturing value added.
Local content in Australian made cars is about 80%. In the last twenty years the number of design capable suppliers in Australia has reduced as rationalisation has led to one or a few suppliers in each major product area.
There are about 200 Australian firms supplying components to the automotive industry. The vehicle assemblers have also undergone massive rationalisation and increasing global integration. Globalisation provides both threats and opportunities for the Australian industry.
Many of the functions and operations of the vehicle assemblers have been passed on to the components industry. An intensely competitive environment means that car companies and suppliers must work more closely. Still more work need to be done with Government to improve the pace of microeconomic reform.
Motor vehicles draw upon the services of a wide range of industrial groups. Cars are made from plastics, rubber, glass, leather, textiles, paint, sealants, wood, and range of metals from aluminium to zinc.
But the production of cars and the cars themselves also require increasing amounts of input from such software based products as those that self tune the engine, or enable a computer controlled system that automatically adjusts the ride level of your car depending on load and driving conditions.
It is sometimes difficult to conceive the complexity of the chain of supply leading to a vehicle appearing on a showroom floor. Adding value through manufacturing is an important factor in wealth generation.
Next time you get into an Australian made car, consider that just about every part you see and most that you don't were made by a component manufacturer here in Australia.