FOR battered Australian manufacturers, there's nowhere to hide from our rampaging currency and other sectors could soon be in its path, writes Jeff Whalley

The high exchange rate crushing manufacturers will sweep up other industries including the multi-billion dollar tourism and international student sectors, a peak business group says.

Australian Chamber of Commerce and Industry policy director Greg Evans says it "is clear" any sector competing internationally will have to deal with the "sharp edge of the economic adjustment".

His warning came after Alcoa yesterday said it would review the viability of its aluminium smelter at Point Henry, in Geelong, warning 600 jobs could go.

Alcoa said the smelter had become unprofitable, blaming higher metal prices, input costs and unfavourable exchange rates.

The past several months have seen a raft of layoffs by major employers, including 380 positions culled at Bosch in Clayton, 350 at Toyota in Altona and 240 at Ford in Geelong.

Mr Evans told Business Daily that the lucrative tourism and international student sectors could also be hit by the soaring Australian dollar.

Analysts say the dollar could soon test the levels it hit last July, when it briefly traded above $US1.10, after the Reserve Bank this week surprised economists by keeping the official cash rate on hold. The dollar was last night buying US108.29c.

The international student market is worth $3.5 billion to the Victorian economy every year, while tourism is worth about $16 billion.

Mr Evans said tourism was a "key" example of a sector likely to follow manufacturing.

"For example, we can expect to see lower hotel occupancy rates and this would flow on to employment and then restaurants in the area and the chefs they employ," he said.

"With education services as well there is clearly a flow-on impact - they need accommodation and a whole range of things. And currently we see overseas student numbers have declined."

Mr Evans said the foreign student education sector would eventually move from a high-volume industry to one focused on specialised services for smaller student numbers.

He said the floating exchange rate now had "widespread acceptance", acting as a valuable shock absorber for the economy, and the way to tackle the problems affecting the exposed industries was through tax reform.

"Particularly large employers - such as manufacturers - are hit by payroll tax," he said.

"This needs to be reformed. It is a tax on jobs basically.

"It discriminates against the labour intensive and is based not on profitability but on payroll size."

Meanwhile, incoming Reserve Bank board member Heather Ridout - who has quit as head of the Australian Industry Group to take the role - said she was concerned about how the high dollar constrained exporters.

"It is very worrying," she told Bloomberg.

"We have to have a big think about the sort of economy that we'll have if we stay in this range of $US1.05 or even $1.10-plus for an extended period of time. It's very, very tough."

Ms Ridout said there was "too much froth in the Australian currency" and based on economic fundamentals, the true value of the dollar was broadly US90c to US95c.