Calls to bring automotive manufacturing back to Australia are growing in the wake of COVID-19, with Indian-Australian billionaire businessman Vivek Sehgal the latest to voice his opinion on the matter.

Mr Seghal, co-founder and chairman of Motherson Group, an auto parts manufacturer with 272 factories around the world including facilities in Adelaide, Bendigo and Melbourne, has urged the Federal Government to invest in bringing back local manufacturing as they look to re-start the economy following COVID-19.

“Nothing employs like an automotive industry, from the steel through to the financing,” said Mr Seghal. “I think the Australian government might look very differently at this now.

“The economic cost of COVID is going to be so huge, suddenly arguments about $500 or $1000 extra for a car are of no relevance. They should re-do their sums, look at the flow-on jobs and innovation and invite some car companies back.”

Mr Seghal’s comments come as a new manufacturing taskforce was recently established to steer Australia into new areas of high-value goods production.

This taskforce, a part of the COVID-19 Coordination Commission announced earlier in April will be led by former Dow Chemical chief Andrew Liveris, with Mr Seghal keen to contribute to the taskforce where possible.

The taskforce has already outlined numerous priority areas they intend to focus on: Health, defence, cyber security, gas and renewable energy, water and food. However, there is no indication that automotive manufacturing will be considered, which according to Mr Seghal would be a big mistake.

“Our factories in China and Korea have re-opened and they’re going crazy,” said Mr Seghal.

“Even in Wuhan people have been making a beeline for the dealerships, because they want personal transport now, not public transport or ride-share, and the low petrol prices are helping.

“Luckily, it’s only two-and-a-half years since the last car factory closed in Australia, so the people are still there, the spirit is still there. Australians are very strong lateral thinkers and we could do this.”

Mr Seghal pointed to his own company, which has so far avoided the worst of the COVID-19 impact due to its tight control over supply chain, as an example of how local manufacturing could have benefited Australia during the pandemic.

Motherson Group doesn’t allow any one component, country or customer to comprise more than 15 per cent of turnover, instead supporting local industries to manufacture what is required locally.

“People used to laugh at us – like they laughed at the Australian car industry, I suppose – and say come on, why are you making parts for fuel pumps in Germany when you could in China this much cheaper.

“If we made everything in China, this quarter might have killed us.”

Due to this policy, Motherson Group’s Bendigo facility, which produces rubber compounds has run at 130 per cent capacity during the pandemic as it completes orders for customers whose regular overseas supplier was forced into lockdown. 

Source: Australian Financial Review | Auto parts billionaire says bring car making back

22 April 2020