Toyota Australia has axed 350 employees at its Altona plant in Melbourne, blaming the decision on current market conditions that include a high Australian dollar.

The move to cut staff at the plant where it builds Camry and Aurion models for both local and overseas markets coincides with intense debate about the future of the local car manufacturing industry after local politicians met with the parent companies of Ford Australia and Holden in Detroit recently to secure co-investment arrangements.

The compulsory redundancies were announced late this afternoon by Toyota Australia president and CEO Max Yasuda during his annual president's address to staff. The Australian Manufacturing Workers Union will begin negotiating redundancy packages with Toyota for the 350 jobs that comprise about 10 per cent of the car maker's Altona workforce.

Toyota Australia axes 350 jobs

"It is unfortunate that we have to take this action and we will ensure affected employees are supported during this process," said Yasuda in a media statement. "In consideration of current and anticipated market conditions this action is necessary. It is not possible to maintain our workforce at its current size.

"Toyota Australia is facing severe operating conditions resulting in unsustainable financial returns due to factors including the strong Australian currency, reduced cost competitiveness and volume decline, especially in export markets."

A high Australian dollar makes it harder for local car manufacturers to establish viable export programs, though Toyota's export numbers to the Middle East had already started to dwindle since the global financial crisis.

Local sales of the Camry and related V6-powered model, the Aurion, have also struggled. Combined sales fell by almost a quarter compared with 2010 results, with Camry/Aurion sales falling by 8694 units to 28,084.

"The reality is that our volumes are down," said Yasuda. "What we assumed was a temporary circumstance has truend into a permanent situation. This drop of 36 per cent in just four years shows the scale of our challenges."

Yasuda says manufacturing remains a "vital element of our overall operations in Australia" and the company is taking measures to it can be a successful builder of cars for both local and export markets.

South Australian Premier Jay Weatherill admitted to Australia media on his return from meeting GM executives, together with Manufacturing Minister Kim Carr, in Detroit earlier this month that job cuts at Holden's South Australian manufacturing operations were likely to help ensure the car maker's longer-term survival.

Ford Australia, which cut 240 jobs in July 2011 after axing 800 employees in 2008, was recently granted a $34 million contribution from the Federal Government, as part of a total $103m co-investment, to keep the Falcon large car and Territory SUV going until at least 2016.

Toyota's compulsory redundancies contrast with the Ford job losses that were voluntary redundancies.