The prolonged death of Australian Auto Manufacturing

[XR Martin]

As ive said before we're going to end up like Greece, where they dont even make their own milk on a commercial scale.
Their biggest industries are Sea Sponges and Olives.

[dirtyclevo]

I think tony abbott has sort of noticed this.

is that why he's pushing the "australia is open for business" ?

whats he mean by that? manufacturing, or to sell everything off?

[2011G6E]

When you've got less people in your country than some big cities overseas, it's sometimes better economic sense to admit that it's just too costly to produce an item...cars for instance...in your own country when you could do what many countries do and pick and choose the best the world has to offer.

Making cars here only really made sense back in the old strongly protected days when they sold to a "captive audience" of gullible buyers who honestly thought that the world couldn't produce a better car than a local Holden or Falcon. Once the barriers started to drop and people were exposed to that foreign stuff, things started to change, and so they should have. Strongly protect any local industry and there's a huge danger they'll become complacent and know that they don't have to try any harder because the public will just do what dad did and his dad did and buy a Holden or Falcon without thinking too hard about it.

There's also the fact that we haven't really had a "local car industry"...we've just had small, very small, local arms of large American corporations.

[Crazy Dazz]

Originally Posted by 2011G6E

When you've got less people in your country than some big cities overseas, it's sometimes better economic sense to admit that it's just too costly to produce an item...cars for instance...in your own country when you could do what many countries do and pick and choose the best the world has to offer.

Not the point.
As I've said, I'm not advocating a return to the days of producing small numbers of costly unique cars for local consumption.
And, at the end of the day, if it makes the most sense for Australia to not make cars, but to make "X" instead, I'm fine with that.
But WTF IS "X"?
I'm talking about productive employment, and we are losing it every day.
EVERYONE needs to ask themselves these questions:
What is MY job?
Can my job be outsourced overseas? (because if it can, it WILL be.)
If not, will my job still be required and adequately remunerated when unemployment is at 30%, nobody has any money to spend, and the government is bankrupt?

THEN ask those same questions for your kids.

If you work in a service industry (or for the government) you need to understand that you only get paid as long as their are people to pay for the service.

[2011G6E]

Originally Posted by Crazy Dazz

Not the point.
As I've said, I'm not advocating a return to the days of producing small numbers of costly unique cars for local consumption.
And, at the end of the day, if it makes the most sense for Australia to not make cars, but to make "X" instead, I'm fine with that.
But WTF IS "X"?
I'm talking about productive employment, and we are losing it every day.
EVERYONE needs to ask themselves these questions:
What is MY job?
Can my job be outsourced overseas? (because if it can, it WILL be.)
If not, will my job still be required and adequately remunerated when unemployment is at 30%, nobody has any money to spend, and the government is bankrupt?

THEN ask those same questions for your kids.

If you work in a service industry (or for the government) you need to understand that you only get paid as long as their are people to pay for the service.

Good points. Love the question "But WTF is X?". Hit the nail right on the head. We're in a perilous position in the world...we're a tiny western first world democracy with a great standard of living, plonked right amongst tightly packed countries with a total of a couple of billion people not that far away from us in the region with a lower standard of living and economies of scale in production that make us look like a joke. There's literally no way we can "compete" fairly with the hordes to our north, despite our governments here over the years smiling and signing "free" trade agreements with them.

Australia does best at things that people now cringe and laugh at..."living off the sheeps back" and digging crap up and sending it overseas. Oh sure, there are technical and scientific things we do in an excellent way as well, but they're small fry.

So what IS "the next big thing" that will create and more importantly maintain high levels of employment? I don't know.

[BENT_8]

Originally Posted by 2011G6E

Good points. Love the question "But WTF is X?". Hit the nail right on the head. We're in a perilous position in the world...we're a tiny western first world democracy with a great standard of living, plonked right amongst tightly packed countries with a total of a couple of billion people not that far away from us in the region with a lower standard of living and economies of scale in production that make us look like a joke. There's literally no way we can "compete" fairly with the hordes to our north, despite our governments here over the years smiling and signing "free" trade agreements with them.

Australia does best at things that people now cringe and laugh at..."living off the sheeps back" and digging crap up and sending it overseas. Oh sure, there are technical and scientific things we do in an excellent way as well, but they're small fry.

So what IS "the next big thing" that will create and more importantly maintain high levels of employment? I don't know.

Well don't you think an answer to that question should come before we make excuses for our current manufacturing demise.
Isn't that what intelligent people would have, a plan 'B' before plan 'A' is abandoned?

Like I said before, the problem with this country is that everything Australians believe to be right must be because they thought of it.

Your previous post is exactly why the manufacturing industry is free to pack up and leave without fear, because people like you explain the economics of their decision and its importance to an American Corporation whilst failing to recognise the economics and importance of our manufacturing workforce.

I would also go out on a limb and assume everyone who 'likes' your previous post doesn't rely on manufacturing to feed them either.

[rdmr]

Originally Posted by 2011G6E

There's also the fact that we haven't really had a "local car industry"...we've just had small, very small, local arms of large American corporations.

Not this **** again. Your so far off the mark it's not funny. I'm outa here.

[2011G6E]

Originally Posted by rdmr

Not this **** again. Your so far off the mark it's not funny. I'm outa here.

Really...so the "GM" part of "GMH" has disappeared completely has it? "Ford Australia" isn't in any way linked to that big company in the USA that happens to share the same name and also make cars...?

...sure it has...

Originally Posted by CyberWasp

May I ask, what was the turning point in England after they hit rock bottom, to get them back to where they are today?

A couple of things. Thumbing their nose pretty much at the EU helped. Back before that though the unions who were stupidly militant over there (and which cannot in any way be compared to unions here that some people might think are "militant". The English ones were several levels of magnitude above anything we have ever seen here) helped kill their car industry.
However, they had the luck to have very old well respected brands to fall back on...Jag, Aston, some others...and a national psyche that had a long, long history of thinking...and knowing...that they could build the best in the world and beat outrageous odds against them.

Australia is a newcomer on the world stage. We're still reasonably young in the big international scheme of things. Manufacturing everything here worked...and worked well...however you have to realise that this was back when "Jap Crap" was an accurate descriptive and goods took a long time to get here from anywhere, so we pretty much had to make everything here.

Once an international trade in goods got faster and better, and the quality of those imported goods got better, it was the beginning of the end of our tiny industries here.
Basically, we're just not big and powerful enough to throw our weight around on the world stage like some people seem to think we should be able to...but unfortunately we are surrounded by countries that are.

Sorry, but don't shoot the messenger...

[rdmr]

Originally Posted by 2011G6E

Really...so the "GM" part of "GMH" has disappeared completely has it? "Ford Australia" isn't in any way linked to that big company in the USA that happens to share the same name and also make cars...?

...sure it has...

We were never outcrops, we still are not. We produce cars that are not produced anywhere else on the planet. Designed here, developed here, fanatically followed here. Australian car companies have done this for decades, whether they be Holden, Ford or other.
Someone may pull the strings at times sure, as those strings are now cut. But we never had to ring detroit on the shop floor at 8am to ask what we were doing at 10am.
We had a car industry mate, still do, so wise the **** up and don't insult those that build the vehicles.

[gtfpv]

WHAT a sad state of affairs . I'm very sad that i was born in what i consider one of the best countries in the world , to one of the dumbest and one with no back bone or culture .
HOW could this have been done to our beautiful country . the worst part is its drifing down towards the waterfall .

[dirtyclevo]

globalism.

australia's got an identity, but now you have to leave the cities to see it.

[Nic302ef]

im a lil scared for the future of this country too.

One of the major reasons for the local manufacturing in the automotive to begin was it was more cost effective, "was", also the product from over sea's wasnt able to handle our rough roads and extreme heat conditions. Imported products have come a fair way, some..... not all.

[b0son]

As far as car manufacturing goes, it was the beginning of the end the moment our local manufacturers became foreign-owned. The only cars we were allowed to build here were the ones that couldn't be sourced elsewhere, or that had no market elsewhere. They could have survived a while longer if they'd been allowed to make vehicles that the people wanted, but instead, had to keep pouring ever more development dollars into a platform that had no future.

[CyberWasp]

The 'next big thing' is the Space Industry.
Look at how much the airline / tourist / cargo / hospitality ect ect industries employ.
What country is going to put their hand up and get people into orbit, the moon and mars, generating employment and technology.
Being a country that specialises in mining may not be such a bad thing if the process of mining is taken to the moon or asteroids for rare materials that are not found on earth.
All we need is a leader with vision.
My last sentence was the most fanciful.

[vztrt]

One thing to remember Ford Oz at least is still doing big R&D here. The R&D is where the money is (manufacturing isn't all that much in comparison but it does produce more jobs). If FoA could get another Ranger/Everest contract then that would get interesting.

[SpoolMan]

Here is a 4 Corners story on Australian car manufacturing in my view the best investigative journalism.

End of the Road 45 min
Reporter Stephen Long looks at what the real impact will be as the car industry heads to the end of the road.

http://www.abc.net.au/4corners/stori...14/3982809.htm
Looks at everything, key points, only 8 to 10% of car manufacturing are labor wage costs.
200,000 job losses.
England went down a similar path, now there biggest export is car manufacturing.

[Wretched]

Originally Posted by SpoolMan

Here is a 4 Corners story on Australian car manufacturing in my view the best investigative journalism.

End of the Road 45 min
Reporter Stephen Long looks at what the real impact will be as the car industry heads to the end of the road.

http://www.abc.net.au/4corners/stori...14/3982809.htm
Looks at everything, key points, only 8 to 10% of car manufacturing are labor wage costs.
200,000 job losses.
England went down a similar path, now there biggest export is car manufacturing.

This is also a good doco on how the Brits coped with imports, how their industry collapsed and how they brought it back.

http://www.youtube.com/watch?v=JPhlZYiEkQY

[b0son]

Originally Posted by SpoolMan

Here is a 4 Corners story

Some of the quotes gave me a chuckle ... workers saying 'we've done everything we possibly could to keep the company viable', or only ever mentioning the take home pay but not all the other benefits.

Compare their EBA with a basic manufacturing award, and they are on a pretty good wicket. Fine when the industry is profitable and can afford it. That ship well and truly sailed. The sad reality is as volumes fall, they would need to bring all costs down, including wages/benefits. The unions refuse to entertain that idea. Wages have and always be a 'only way is up' affair, and with profits falling, the outcome of that position is predictable. Management have to take some blame here too, they approved rises they knew they probably couldn't afford. Just dumb.

There's no question cost savings could be found elsewhere... executive pay, dropping the loss-making cruze, etc. But you wont find those savings while your head is buried in the sand, and it certainly seems like both management and workers are guilty of that.

[SpoolMan]

Originally Posted by b0son

S

Compare their EBA with a basic manufacturing award, and they are on a pretty good wicket. ..

Wages make up 8 to 10% of a cars total price, whatever one thinks of there total package it doesn't look that unreasonable.

[b0son]

Originally Posted by SpoolMan

Wages make up 8 to 10% of a cars total price, whatever one thinks of there total package it doesn't look that unreasonable.

It does when it is double the cost of labour in a European car, and 4 times that of an Asian car.

[Romulus]

Originally Posted by b0son

It does when it is double the cost of labour in a European car, and 4 times that of an Asian car.

And therein lies the issue. Why build here when you can build overseas with 1/4 the wages cost.

[new2ford]

Originally Posted by b0son

It does when it is double the cost of labour in a European car, and 4 times that of an Asian car.

You can't expect wages to be lower when the cost of living is so high. In fact, Australian wages are proportionally lower than in some European car manufacturing countries.

When I was looking at figures a couple of years ago two examples (round figures) off the top of my head were:

Germany - Australian disposable income 50% higher, Australian cost of living 90% higher
Czech Republic - Australian disposable income 100% higher, Australian cost of living 150% higher.

I've lived in both countries and it's my impression those figures would be about right. I didn't have a close look at comparative car prices but I had the impression that an equivalent car manufactured in those countries was about 100% more expensive in Australia. Some overseas exporters (of many products) must do very well out of Australia.

On the other hand (casual observation), a bottle of typical Jacobs Creek Australian wine in a Czech supermarket was about $7 but it was competing with top quality French and German wines selling for about $2-3 a bottle.

Only examples but I'm sure part of a big picture.

[bobthebilda]

Originally Posted by SpoolMan

Wages make up 8 to 10% of a cars total price, whatever one thinks of there total package it doesn't look that unreasonable.

Oh, that is complete crap. Even if you take low end figures that the car manufacturing industry in Australia employed 20,000 people ( and most say it is upwards of 50,000), and assign them a wage of $70,000, that equates to $1.4 billion for the 200,000 cars australia made last year. If you then subtract that on average 30% of the car was imported, then it is $1.4 billion on 140,000 cars. Thats around $10,000 per car. Then consider that a great deal of australian cars are $15000 to $18000 wholsaled camry's and cruzes etc, then you can look at the labour $ in an Australian car being well over 50%. No wages figure x total employment / cars produced that you could credibly produce, would show a 8 to 10% figure.

[SpoolMan]

Originally Posted by bobthebilda

Oh, that is complete crap..

I didn't make it up, blame 4 corners and the car industry experts and university consultants they interviewed for there numbers.

[Pugsley100]

Originally Posted by b0son

There's no question cost savings could be found elsewhere... executive pay, dropping the loss-making cruze, etc. But you wont find those savings while your head is buried in the sand, and it certainly seems like both management and workers are guilty of that.

The savings you mentioned wouldn't have helped. They have economies of scale problems.
Just looking at Thailand where the multinationals have built new factories and set up a car manufacturing hub. They have deliberately built factories with over capacity in a country where car workers live what I would call a subsistence life, crammed into rented apartment accommodation with little money left over to enjoy life.

Thai factories are able to ramp up production as factories close elsewhere around the world but at present are reining in production as generally the car industry is in over supply. There is even long term talk of shifting manufacture from Thailand to other countries as even the Thai workers lowly wage is considered high. There are cheaper workers available in Indonesia and India.
Do you think Australian workers would agree to be paid subsistence rates to compete with a Thai worker who gets, perhaps $160 a week with overtime?

[b0son]

Originally Posted by Pugsley100

Do you think Australian workers would agree to be paid subsistence rates to compete with a Thai worker who gets, perhaps $160 a week with overtime?

I think at best, they could have bought themselves some more time. I don't think there's anything unreasonable, however, of wages falling to basic Australian manufacturing award levels if that's all the profitability of that industry allows. Take it or leave it.

This was the crux of the dispute at Toyota. Toyota wanted to approach the workers directly to take a vote on wages. I don't doubt that faced with the prospect of no job, many would have accepted it. Instead, the union killed the proposal, and the factory decided to shut its doors instead.

When the workers eventually hold their hands out wanting assistance, I wonder how much of the tens of millions their union is sitting on, will be offered to help .....

[Romulus]

Originally Posted by b0son

When the workers eventually hold their hands out wanting assistance, I wonder how much of the tens of millions their union is sitting on, will be offered to help .....

The silence from the union is deafening when it comes to this being answered......

[gtfpv]

Originally Posted by b0son

I think at best, they could have bought themselves some more time. I don't think there's anything unreasonable, however, of wages falling to basic Australian manufacturing award levels if that's all the profitability of that industry allows. Take it or leave it.

This was the crux of the dispute at Toyota. Toyota wanted to approach the workers directly to take a vote on wages. I don't doubt that faced with the prospect of no job, many would have accepted it. Instead, the union killed the proposal, and the factory decided to shut its doors instead.

When the workers eventually hold their hands out wanting assistance, I wonder how much of the tens of millions their union is sitting on, will be offered to help .....

this is only my opinion , but your comments make me sick !!!

[aussiblue]

I have to ask but how can a death be other than prolonged? Sorry couldn't resist that cheap shot:-) Was it the prolonged death throes perhaps.

OK onto topic. Even as an economist I can't agree with the way we have bowed to the US self interested global free market propaganda while they continued to protect their home farmers and industries.

Similarly I don't agree with allowing cheap tariff free imports from places like China and South Korea where they have suppressed the democratic labour movement to keep costs down (see http://www.ituc-csi.org/internationa...unions?lang=en re Korea). Their prices are artificially low as a result of undemocratic suppression of the free labour movement.

I also disagree with the dual standards where we let China buy into Australia when it's illegal for Australia to buy land in Australia etc.

Again I also disagree with selling of our minerals cheaply for the short term profits of their often foreign owners. We should tax these exports higher; yes sales will decrease in the short term but in the long term we will still have it here to sell later at a higher price for the benefit of future generations.

But unfortunately the average Australians are also are very much to blame. Most Australians look down on Holdens and Falcons seeing them as of inferior quality (they are not) and associated with the bogan fringe (yes but why?). Perhaps its just about older Australians naturally modest personalities and reluctance to self promote and a desire of the younger generation to be more brand conscious and to have the in shoe and car brands. It may be an impact of the cyber age where we are more exposed to overseas marketing and where Falcons and Holdens don't feature but "international" models do. Perhaps also overseas facebook or twitter friends can't relate to Holdens or Falcons and you need to buy a Merc or BMW to impress.

Yes; key and difficult issues we have for any manufacturing is a extremely small home market (lets learn from the US history an encourage increased immigration) and higher that competitors shipping costs - we are a long way away from any large export market.

I think Oz car manufacturers should have focussed more on speciality vehicles that were always going to have relatively low world production numbers - e.g. Mitsubishi might have been more successful if the had made 4WD vans here (for OZ and the relatively low volume export market) rather than large cars. Perhaps Ford and Holden with their RWD expertise (and the latter did to an extent) should have focussed on the world police car a taxi markets and made speciality vehicles to suit them rather than focussing on a shrinking segment of the Oz market.

In any event it's too late and the current Government is moving more to laissez faire (policy of minimum governmental interference in the economic affairs of individuals and society) so it will get worse not better. Not only will the OZ manufacturing industry shrink but the resulting unemployed will be left to fend for themselves.

PS I should admit a bias; as well being an economist and an accountant I was also a very active union delegate and councillor (no not a militant unionist but a moderate who was involved due to my idealist philosophical beliefs of unionism as a fundamental support of democracy - Government's find it more difficult to manipulate union rights than they do the right to vote and unions historically have been significant forces in overthrowing oppressing regimes, dictatorships and the like).

[aussiblue]

But unfortunately the average Australians are also are very much to blame. Most Australians look down on Holdens and Falcons seeing them as of inferior quality (they are not) and associated with the bogan fringe (yes but why?). Perhaps its just about older Australians naturally modest personalities and reluctance to self promote and a desire of the younger generation to be more brand conscious and to have the in shoe and car brands. It may be an impact of the cyber age where we are more exposed to overseas marketing and where Falcons and Holdens don't feature but "international" models do. Perhaps also overseas facebook or twitter friends can't relate to Holdens or Falcons and you need to buy a Merc or BMW to impress.

And after watching the BBC video re the UK v German car industry I have to also therefore conclude perhaps in parts it reflects a failure of our OZ car makers to understand that people buy cars for self image and abstract perceptions and that they didn't match that market with either the advertising or perhaps the product.

If our cars defined us; for many Holden and Falcon is and was perceived (albeit sometimes wrongly or at least subjectively) as about V8 racing, hoons, bogans and accidents and police pursuits involving stolen cars. The local industry's adverts never tried to change that perception and perhaps to do so they even needed to risk moving away from those traditional "no status" Falcon and Commodore names (and also risk losing the shrinking market that identified with an image [perhaps another more positive image] they associated with those brands).