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Minister Costa on the Automotive Transport and Logistics Industry
10 December 2008
Wagga Business presents a comprehensive and in-depth analysis about the Automotive and Transport Logistics industries in Wagga Wagga. We highlight the positive growth of the industry, its importance to the city and the region and how it plays a key role in bringing economic development and prosperity to Wagga. We dsicuss current issues and concerns facing this industry.
Wagga Business interviewed NSW Minister for Regional Development Philip Costa to get his perspectives on the state of the industry.
1) What are the Department’s priorities, plans/projects relative to the Riverina’s Automotive, Transport and Logistics Industries?
A) Transport and Logistics –
NSW Minister for Regional Development, Phil Costa said the NSW Government recognises that the transport and logistics industry is both a large source of employment and critical to the attractiveness of investment in NSW.
“For this reason, the logistics sector is one of the State’s five innovation focus areas, along with financial services, manufacturing, resources and the creative industries.
“We are explicitly focusing our attention on industries that have the greatest potential to benefit the economy through innovative practices. Work to support innovation in these industries is backed up by activities being undertaken to address investment and growth in regional economies.”
Mr Costa said the Department of State and Regional Development recently released the Riverina Regional Business Growth Plan which outlines actions designed to address barriers to business investment and stimulate economic growth.
“The plan focuses on strategies to be developed across various government departments. This includes infrastructure initiatives that support the transport and logistics industry in the Riverina.
“An opportunity identified for the Riverina is to develop a transport and logistics hub in Wagga Wagga. Road, rail, gas and electricity infrastructure would support the development of this hub.”
The plan notes that the existing Bomen Industrial Park is nearing capacity at the same time as there is increased demand for industrial land in Wagga Wagga.
A high priority initiative being considered to address this issue is further development of the Bomen site to include intermodal transport facilities at Bomen Industrial Park. DSRD is working closely with Wagga Wagga City Council on planning developments for Bomen Industrial Park.
The Department of State and Regional Development has also established an economic development cluster within the Riverina Murray Regional Coordination Management Group (RCMG). DSRD will also lead an Employment Lands Taskforce, with both groups considering these developments as high priorities.
Automotive – the automotive industry comes under the Department’s activities to support manufacturing in NSW. DSRD works with various industry associations for automotive component and after market manufacturers including the Federation of Automotive Parts Manufacturers and the After Market Association.
Mr Costa said individual businesses also have the opportunity to take part in independent markets visits supported by the Department.
“Businesses in the automotive industry may also be eligible for assistance under the various regional development programs that support investment and jobs growth.”
An example of assistance through one these programs: Wagga Wagga business, Australian Transmission Components (ATC) has been assisted through the Regional Business Development Scheme. This scheme assists eligible businesses from domestic and offshore locations to expand in or relocate to regional NSW.
ATC assembles car transmission repair kits, and markets them to retail and wholesale customers.
2) How has the Automotive and Transport industry grown in the last few years? What milestones have been achieved in the industry if any?
A) Transport and logistics represent between 9.6% and 14.5% of Australia’s GDP. The Australian Logistics Council measured the economic returns in freight and logistics chains in Australia at $1.5 billion for each percentage increase in efficiency.
In NSW, Australia’s largest regional economy, transport and logistics has an estimated value of $34.3 billion. The sector also employs around 176,000 people in NSW – that’s over 5% of the NSW workforce.
The 2005 Australian Bureau of Statistics Innovation Survey rated the transport and storage sector as having the 6th highest percentage of innovative businesses in NSW. 35% of companies in this sector reported engaging in some kind of innovative activity.
Importantly, the sector connects and supports every community in the State, and touches every product before it is consumed. In fact, the efficiency of the sector has a direct impact on the cost of living. For example, distribution and logistics make up around 20% of fruit and vegetable retail prices, and 17% of the price for a loaf of bread.
The total freight task for NSW draws heavily on the infrastructure, people and produce of regional NSW. 63% of the volume of freight moving around NSW starts and ends in this State. A further 15% of freight in NSW is for export overseas.
And the task for the logistics sector is growing - by 2020 the land freight task in NSW is forecast to double.
Automotive/manufacturing - Manufacturing is the second largest industry in NSW, accounting for 14% of Gross State Product and more than 30% of national manufacturing output. It also accounts for a quarter of the State's total exports.
NSW accounts for half of Australia's iron and steel manufacturing, aircraft manufacturing industry and electronic equipment manufacturing. The State has a highly developed and diverse manufacturing industry with major national and global operators.
Automotive components manufacturers include US Group Dana, which exports axle sets to Ford and Mazda in Thailand, and Broens Industries whose client base includes Mercedes Benz and General Motors Holden.
Australian Bureau of Statistics info (2004) - The automotive industry is one of Australia’s key manufacturing sectors and an important source of employment, and research and development. The Australian automotive industry consists of four motor vehicle producers - Ford, Holden, Mitsubishi and Toyota - which produce large passenger motor vehicles (PMV) and variants, light commercial vehicles and sports utility vehicles. The four motor vehicle producers are based in Victoria and South Australia.
Australian vehicle production is supported by a supply chain with the capacity to design and manufacture the full range of parts and components. There are over 200 automobile component firms, around 500 small firms providing tooling to vehicle and component producers, and a number of other firms that provide specialist automobile services.
3) What are the most important issues being faced by this Industry in the Riverina? How are these issues being addressed by the Department of State and Regional Development?
A) “The challenges being faced by the manufacturing and transport and logistics industries are fairly common across the State – workforce skills, infrastructure, environment and regulations,” Mr Costa said.
“Amidst these challenges, and given the enormous importance of these industries to the State, the NSW Government is taking a fresh look at what is needed and achievable.”
Transport and Logistics
The Department commissioned a report on the current position and challenges of the logistics sector in NSW.
“DSRD has been working behind the scenes to support innovation in logistics through the NSW Innovation Council,” Mr Costa said.
“This report, done in conjunction with the NSW Freight and Logistics Council (FALCONSW) was completed earlier this year. The research indicates that innovation in this sector can be created around new or improved processes, capabilities, products and services, infrastructure, and supply chains.
“The NSW Government’s role in this will be to help stimulate investment in innovation.
“We’re currently consulting with industry representatives in regional areas and asking for their input into a study that will benchmark significant supply chains in NSW.
“This study will look at four strategically important supply chains – grain, steel, food and beverages, and construction materials. The Riverina is involved in this study with a forum was held on Friday 14 November in Wagga Wagga.
“One aim of this work is to understand how we can reduce government related costs in each supply chain by up to 10%. We’re also looking at ways to support the industry adjust to a carbon constrained economy.”
“With the sector facing high levels of competition in the global marketplace, NSW is continuing to focus on the production of high-end goods and improving processes,” Mr Costa said.
“The State’s robust knowledge infrastructure, combined with its strengths in design, logistics and ICT, will support the ongoing development of such value-added manufacturing processes.”
Innovation in the manufacturing sector is created around new or improved products and services, capabilities and processes, and supply chains.
The Department is providing input into the operations of the federally funded Enterprise Connect Centre for Manufacturing which is expected to be established in NSW. This centre will provide a range of business services and ongoing mentoring to help firms access new ideas, knowledge and technology.
Building the Country Package – Local Infrastructure Support Fund:
The NSW Government recognises that investment leads to much needed jobs growth in country areas. If we want businesses to invest in these areas we must make sure the infrastructure is there to support their investment.
The $52 million Local Infrastructure Support Fund will support infrastructure projects that are directly linked to economic development opportunities.
“Through this fund we will help smooth the way for businesses to grow in or relocate to the bush. The fund will help to off-set the costs of developing specific infrastructure projects that directly influence a business investment project. It will also leverage funds contributed by businesses and local councils,” Mr Costa said.
“It will help fund small capital works projects that can make or break a business’ decision to expand or relocate. Infrastructure projects often attract other businesses to invest in the area, driving economic growth and new jobs for the local community.
“This fund complements the NSW Government’s existing regional programs which focus on offsetting individual business costs,” he said.
The fund will support the common infrastructure needs of a group of existing or prospective businesses. It provides for lower level, highly responsive intervention to remove barriers to investment on specific projects. This fund will apply from 1 January, 2009.
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