The closure of Toyota’s local operations will lead to a economic crisis of the like that hasn’t been seen since the Great Depression, the federal Labor opposition says.

The world’s largest car maker has announced it will stop building cars in Australia by the end of 2017.

Some 2500 of the 4000 workers employed by Toyota locally will lose their jobs, and hundreds more positions are expected to be go in the components sector and other related supplies industries.

Toyota’s departure signals the impending end of car making in Australia, following recent similar decisions by Ford and Holden.

Prime Minister Tony Abbott Tony Abbott described the loss of Toyota as devastating, but said there would be “better days ahead”.

“The important thing is to remember that while some businesses close, other businesses open; while some jobs end, other jobs start,” he said on Monday.

But the federal opposition says the Victorian economy may take 20 years to recover from the closure of the Toyota plant at Altona and its industry spokesman Kim Carr has compared the impact to the Great Depression which struck Australia in the 1930s.

“There’s likely to be, for many blue collar Australians, an economic crisis the like of which we haven’t seen since the Great Depression,” he told ABC Radio on Tuesday.

“There are going to be families that won’t be able to get work. There will be whole communities that will be savaged by this decision.”

Victorian Premier Denis Napthine is flying to Canberra on Tuesday to meet Mr Abbott and seek support for affected Toyota workers.

“We should be trying to salvage from the wreckage all that we can,” Senator Carr said.

“It is still possible for there to be new investment proposals put forward from other companies,” he said.

Employment Minister Eric Abetz defended the coalition government’s efforts to support the local car industry.

Senator Abetz said he had intervened in a dispute between unions and Toyota, which was seeking to vary its enterprise agreement with workers to improve productivity.

The minister said high labour costs were one of a “multiplicity of factors” behind the car maker’s decision.

“The union movement, and Labor-Greens made a difficult situation just that little bit more difficult,” he told ABC Radio.

Opposition leader Bill Shorten said reading between the lines of what Toyota said, there was an issue around the supply of car components.

Once the government rejected Holden’s business case, component suppliers had lost a large part of their work.

“They couldn’t supply the volumes which made Toyota sustainable,” Mr Shorten told ABC radio.

“The car industry in Australia has died on the government’s watch, and I do blame them.

“I don’t blame for the high dollar. I don’t blame them for our fragmented market, but I do blame them for destroying the critical mass for car components.”