Who killed the car industry?

[Express]

Yet another write up on the demise of the local industry.

It doesn’t make any mention that the local press also put the boot in.

Who killed the car industry?

13 November, 2015
Jason Dowling



The end of of Australia's car manufacturing industry is approaching and it will be brutal. It is shaping as an extinction event of Australian jobs, an entire industry being wiped out, writes Jason Dowling.


See the SMH link below for video


When Shaun Matthews finished school in Melbourne in the 1990s it didn't take him long to find a job, a great job at one of the best employers around – Holden in Port Melbourne.


It didn't need to fall off the edge of a cliff in the way in which it will and then having to rebuild something from the ashes.
South Australian Premier Jay Weatherill


Shaun was lucky enough to become an apprentice maintenance fitter, helping fix machines that built some of Australia's favourite cars. "It was a good place to work, good people to work for," he says.



Former Holden worker Shaun Matthews Photo: Darrian Traynor


Six months before Shaun started, his late father Ray finished 27 years on the production line at Holden – it was that sort of employer.

The end of of Australia's car manufacturing industry is approaching and it will be brutal. It is shaping as an extinction event of Australian jobs, an entire industry being wiped out.

Most Australians can't remember when this country did not build cars – as a young man Premier Daniel Andrews cut laps of Wangaratta in his first car – an Australian built red Holden VB Commodore.



Toyota announced the closure of their Altona factory by 2017. Photo: Angela Wylie


Welcome to the new Australia – football, meat pies, kangaroos and imported cars. Next year Holden will close its Port Melbourne engine plant and the last locally built cars will roll off the Holden and Toyota assembly lines in 2017.

Holden expects to cut 2300 jobs all up –1600 jobs from the Elizabeth manufacturing plant in South Australia and 600-700 in Melbourne. Job losses will also be felt across Holden's 121 direct suppliers.

Toyota expects to shed 2600 jobs when it finishes manufacturing cars. Another 9000 jobs from frontline Toyota suppliers are expected to go.


The last locally built cars will roll off the Holden and Toyota assembly lines in 2017. Photo: Carla Gottgens


Holden says the industry provided direct employment for about 45,000 people and estimated another three to six people were employed in supporting industries for every one direct automotive job.

According to Professor Andrew Beer from the University of South Australia, who studied the fortunes of auto workers two years after Mitsubishi closed its engine plant in Adelaide in 2004, many of these car industry workers are heading for long-term unemployment or worse employment conditions than they had before.

Two years after the closure Professor Beer found a third of retrenched workers were in full-time employment, a third were out of the workforce or unemployed and a third were under employed – in part-time and casual work and not doing as much work as they would like to do.

Clearly, the impact of the coming loss of the local car industry will be deeply felt – but was it inevitable?

There has been much talk about the impact of the high Australian dollar, tariff barriers, free trade agreements, and the scale and fragmentation of Australia's car market.

What this obscures is events in the crucial weeks of late 2013 when Australia's auto manufacturing industry was on the line. Dig down deep and it comes to one question – was GM Holden genuinely encouraged to stay?

Holden was the key. Toyota wanted to stay. The company had a viable export market to the Middle East, a robust business plan and most importantly, pride on the line.

Nowhere in the world had Toyota closed a fully-owned vehicle manufacturing plant and Australia was the first western country outside of Japan where Toyota chose to manufacture vehicles. Toyota just needed a viable supply chain, so the future of Holden and Toyota were linked.

As one car industry expert put it: "There was 100 years of samurai pride on the line."

September 2013 and the Coalition is elected with a commanding majority and the new Abbott government it is in a hurry.

Its attention quickly turns to the future of the car manufacturing industry. Under the former Labor government Ford had already quit and incoming Prime Minister Tony Abbott is promising to slash $500 million in government funding from the auto industry.

By the following month Treasurer Joe Hockey has told the Productivity Commission to investigate Australia's automotive manufacturing industry, including "the long-term profitability, sustainability and productivity of the industry". The car industry was being audited.

In the lead up to the 2013 federal election, Holden presented a new business case to the Labor Government – an update on a March 2012 deal when Holden agreed to build the next generation Commodore and Cruze in Australia from 2016-2022 and the federal Government, Victorian Government and South Australian Government agreed to provide $275 million in assistance.

Then Industry Minister Kim Carr said there was not enough time to ratify a new deal on the updated business case with Holden before the 2013 election.

A few months later there is a new government. On October 2 that business case is again given to the government, specifically new Industry Minister Ian MacFarlane in the boardroom at Holden in Adelaide.

One of those present at that meeting, South Australian Premier Jay Weatherill, says Holden wanted government assistance to continue.

"It was the ongoing support for automotive transformation that was the critical issue," he told Fairfax Media.

Weatherill says a deal could and should have been struck with Holden to extend the car industry for another decade.

"It didn't need to fall off the edge of a cliff in the way in which it will and then having to rebuild something from the ashes."

Holden would not say how much government assistance was requested. But reports at the time suggest Holden needed an additional payment of between $150 million and $265 million to build the two new models in Australia.

What is clear is the new prime minister was in no mood for doubling down on the car industry. "There's not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time," Mr Abbott said in early December 2013.

Then came the verbal assault from senior ministers days later in parliament, demanding Holden immediately announce its long term intentions.

"Either you're here or you're not," Treasurer Joe Hockey told parliament.

South Australian senator Nick Xenophon describes the comments as "taunting" Holden.

"I think it was very much in the balance...but when General motors in Detroit were being taunted, 'are you going to stay or are you going to go'... they thought 'why should we stay?'
"They [GM] were not going to be lectured to by the Australian government. It was completely unnecessary."

The ultimatum to Holden came despite the government not revealing its position publicly, having said it would wait for the Productivity Commission's findings – a preliminary report was to be released 10 days later – before making any funding decisions on the car industry.

GM Headquarters in Detroit decided it could take no more and announced it was quitting building cars in Australia 24 hours after the parliamentary assault. Toyota folded two months later.

The final Productivity Commission report released in August 2014 took a negative view of Government assistance to the auto manufacturing sector. But the report was redundant as the government had telegraphed its punches and Holden was gone.

Carr says he had promised the car industry $300 million-a-year ongoing funding before the election and contacts at Holden told him after the election:"If we are not welcome we'll go to a place we are". Carr says the new Coalition Government took a "a contemptuous attitude" towards the car industry.

Ongoing funding may have been what Mike Devereux, Holden boss at the time, had in mind when he told the Productivity Commission inquiry, a "public-private partnership" was needed.

GM said it invested three dollars for every one dollar of government help.

Another former Labor minister, Greg Combet knows what it is like to oversee the death of a local car manufacturer – he was Industry minister when Ford called stumps in May 2013 and says there was little he could do. This should not have been the case for Holden and Toyota, he says.

"They [the Coalition] went to the election and they won the election on the basis that they'd defund the Automotive Transformation Scheme and it was their policy in effect to close the industry and they did it," he says.

Those in the Coalition close to the action in 2013 are not talking. Tony Abbott, Joe Hockey and Ian Macfarlane, declined or did not respond to requests for interviews.

A spokesman for new Industry Minister Christopher Pyne, who is from South Australia, one of the hardest states hit, declined to comment on whether Holden presented an offer to the Government in October 2013 to build new two news cars in Australia after 2016.

When asked if more should have been done to save the car industry, he says the Productivity Commission was to advise the government on the best way "for government to ensure the ongoing viability of the automotive industry" and Holden made its decision to leave before the findings were released.

Craig Kelly, assistant state secretary with the Australian Manufacturing Workers' Union says a negative attitude towards the car industry had persisted within the Coalition from opposition too government.

"Holden were very keen to stay, they had a business plan, on the record they said they had made the best Commodore ever," he says. He says the loss of 50,000 direct jobs "just doesn't make any sense".

Not everyone blames the Abbott Government for Holden's decision. Victoria's then Premier Denis Napthine had been in the job a little over six months and the closure announcement did him few favours.

"The whole American car industry at that time was absolutely undergoing massive change to be competitive … decision-makers in Detroit were absolutely in a mood of massive rationalisation … in that mindset I think it was inevitable," he says.

Holden's boss of international operations, Stefan Jacoby, said at the time the decision to quit Australia was "driven purely by business rationale, and not by any direction this government or any future government would give their auto industry in Australia".

John Freebairn, Professor of Economics at the University of Melbourne, says the huge dollar appreciation and high labour costs were critical in Holden's decision.

Others, including Professor Peter Fairbrother from RMIT University, say the car industry should have been thrown a lifeline.

"It is effectively like a deliberate decision made by a government to move Australia out of the car production industry; it need not have happened."

Fairbrother says "there is a very small window now" to save some form of auto motive industry if the Turnbull Government acts quickly.

Likewise, Tim Piper, Victorian head of the Australian Industry Group, says the economy had changed since 2013 with the dollar now at US70¢ and tipped to fall further, the Turnbull Government should revisit car industry policy.

Meanwhile, Premier Weatherill is calling on the federal government to broaden the $1 billion Automotive Transformation Scheme to help suppliers when the car industry winds down in 2017.

"My concern is too many of them will run out of runway by the end of 2017," he says.

Local Holden boss, Mark Bernhard, wants to look forward and says Holden will maintain a design and engineering workforce here of more than 300 people beyond 2017.

He says there are "big things to come", including a new Commodore in 2018. Holden will not say yet where it will be built.

But it is the warning in Holden's Productivity Commission submission that has many feeling nervous. "Nobody yet has described in detail how the economic shock and significant unemployment will be dealt with in Australia, if automotive manufacturing goes away."

Shaun Matthews left Holden at the end of 2014 – after 17 years with the company. "I got the feeling that the government had just gone 'you know what? … we really don't care'; that's how it felt to me, they didn't care."

http://www.smh.com.au/business/the-e...12-gkx1c8.html

[mik]

Not much new there really, but this statement by Mr Napthine holds water ....

"The whole American car industry at that time was absolutely undergoing massive change to be competitive … decision-makers in Detroit were absolutely in a mood of massive rationalization … in that mindset I think it was inevitable," he says.

And lets face it, our car industry(and manufacturing industry ) has been in a canoe without a paddle heading for that big water fall for decades not years.
The policy direction put in place by the powers that be over decades insured it could only end this way.

[b0son]

The car industry had been playing economic chicken with the government for years. $275mil was supposed to keep Holden here til 2022, and barely two years later, they want more. It had to stop.

[Ford Falcon XR6]

Surely with the right business plan it could have been turned into a profitable self sustaining industry. Even if that ment cutting the falcon, commodore and camry from their respective line ups and building cars people are currently buying 4x4 utes and SUV's.
I'm a massive supporter of falcons and commodores but if they needed to be cut for the industry to survive so be it. Jobs are more important than a nameplate.

[jmack]

i like the line where "gm were not going to take it any more"but were only to willing to take money from tax payers .true nothing about him and his mates in the media who hounded the magna into extinction then turned on the falcon and when that was gone started on the commodore.and what was with the line about a certain****head that used to do laps in a red vb commodore have to do with it

[lownloud]

The guy is a knob, we all know that. Nothing new there!
They can throw there arms up in the air and carry on about it as much as they like but truth is look at what you see driving around the streets. I went to Sydney during last week and truthfully I think Aussie made cars would account for about 5% of the cars I saw on the road. Also I went to Bathurst this year and the car park was full of Hilux's, Tritons and Hyundai's and this is meant to be the Ford/Holden die hard faithfuls. Hardly a Falcodore to be seen. I felt like a rebel driving a Territory. Sad days but we did it to ourselves.
It scares me to think what it's going to cost in a few years time when the only 2nd hand car I can buy will be an import and it needs work....

[Express]

Just so people don’t mistake the reporter for Joshua Dowling the Motoring Journalist.

This article is written by Jason Dowling who has been a Political Reporter and Editor for The Age and is now employed as one of its Senior Reporters.

The Age and The SMH are sister papers.

I do agree though that some in the media certainly helped fuel public opinion into the direction of thinking the car industry was no longer providing relevant vehicles and therefore was a burden on tax payer funds.

There was a period of time when the media definitely didn’t go in to bat for the local industry.

[zilo]

No electric car program?

Who cares if they leave..the sooner the better so someone in touch with future needs can take up the govt funding.

I mean really...$275 million for an aluminium panel on a commodore?

FFS..they milked us dry for years...goodbye general motors and good riddance.

[EB#]

A rather long article that fails to mention a critical point - the nose dive in sales for the Commodore and Falcon. WTF?

[b0son]

Originally Posted by EB#

A rather long article that fails to mention a critical point - the nose dive in sales for the Commodore and Falcon. WTF?

Easily fixed with a buy local preference at all levels of government.

[Uncle Tone]

Does anyone remember when every rep's car was a Commodore or a Falcon? When company cars were sedans, not dual cab Utes?

Fleet sales were massively important. Think about the cars bought for fleets now, and who legislated what fleets could buy without tax implications.

[Bossxr8]

Originally Posted by zilo

No electric car program?

Who cares if they leave..the sooner the better so someone in touch with future needs can take up the govt funding.

I mean really...$275 million for an aluminium panel on a commodore?

FFS..they milked us dry for years...goodbye general motors and good riddance.

Yeah cause the 500 or so electric cars sold here per year is a massive slice of business to go after. What a stupid comment

[Rastas]

If I picked 1 individual as the main catalyst for bringing down our auto industry it would be Josh (I really hate Fords) Dowling!

[chevypower]

It's simple. Unions, a global economy, and a shift in the market from sedans and station wagons dispersed over a larger variety of vehicle types. Also the headquarters of each manufacturer all wanting to consolidate their global vehicle range and produce them as cost effectively as they can (but that is in response to unions and global economy).

[Hulsty]

I still think its a joke that all these people think the government was "wasting" 275million on the car industry and now it will be able to spend that same money on something else, well no, government cash flow will be reduced and there will be less money to go around once the car companies pack up shop.

[sunnycoast_fg]

.....

[zilo]

Originally Posted by Bossxr8

Yeah cause the 500 or so electric cars sold here per year is a massive slice of business to go after. What a stupid comment

Only stupid comment in this thread is by you.

how many Fail-cans sold this month?

[Wretched]

What killed it?

• Poor government policy that doesn't support local business or local investment. Setting up and running a business in AU is a nightmare of red tape and inflated running costs.
• Small market, face it, we sell in a year as many cars as bigger markets sell in a month. To justify the high costs of manufacturing without an export programme makes no sense.
• Lack of investment in innovation and technology for the products made here. Holden and Ford applied for extensions to the emissions control deadlines. Still a fair way behind the rest of the world. Makes exporting the product hard.
• Product itself suffered quality control issues even when the rest of the world stepped up. How long has Falcon and Commodore been manufactured and they still cannot get it right.
• Wages, face it, it is still a high cost to employ people here. Whether wages are a small percentage of the cost of doing business it still adds up. For example, in my business, a local person is quoted at near $1800 a day (that includes a number of factors) to ensure there is profit made. The equivalent person in Manilla, $500 a day. Then you have political issues, strikes, etc. They all add up to someone running a business.
• Reliance on subsidies from the government, clearly the business plan doesn't work if there is such heavy reliance on government subsidies to deliver a product. Reliance on government fleet is NOT a good business plan either.
• Poor product planning, just not reading the market right, for a company that is supposedly building cars for the local market/conditions both really seem to have missed something.
  

All these and probably more factor into the failure of the local industry. Not one can be blamed on its own. It is time for AU to move away from this and begin looking at investing in other industries for future. If car manufacturing is what we still want to do then we need to be on top of the game. Not lagging behind. Looking at future technologies, electric, Hydrogen, etc.
It may not be full scale manufacturing but even as a suppliers/vendors who R&D/Build/Engineer components for these cars.

When the wind of change blows, some people build walls, others build windmills. I hope we're the latter.

[FNQracing]

I'm a little harsher on the car makers. Lots of things added to the death potion, however the manufacturers had a big play in it:

1. Ford and Holden in particular were punch drunk on fleet sales. Both of them basked in the sun when everyone could pick any fleet car they wanted as long as it was a Commodore or Falcon.
2. As a result, Ford and Holden dragged their heels in improving quality and specification.
3. Joe Public, sick of (relatively) poor quality cars (ever owned an 80's Falcon?) started looking more favourably towards the imports.
4. Private buyers bought Toyotas and Mazdas.
5. Unwillingness to develop new product to suit a shifting market place.
6. Prayed to god that Falcon and Commodore would magically return to the top of the charts, ie they did nothing.
7. User choice was another nail in the coffin for the Aussie car.

By the time Ford had made a genuinely great car with the FG it was all over. Too late to the party. 7 years previous they were passing off a rickshaw (AU) as a modern vehicle. The AU was mechanically sound, but belonged in a bygone era. A great product for 1993.

Ofcourse there were other things too, but these points were a big factor IMHO.

[pottery beige]

Originally Posted by zilo

Only stupid comment in this thread is by you.

how many Fail-cans sold this month?

how many magnas were sold last month

[FairmontGS]

Originally Posted by zilo

Only stupid comment in this thread is by you.

how many Fail-cans sold this month?

You probably got to this forum by accident.

[Uncle_Ken]

I'm surprised we ever had a 'real' car industry, we just never had the people.
It doesn't matter, most of Australia will be shipped to China, so WA will disappear and we can all live nice and close to each other (that's why new land/house packages are so small)
You heard it hear 1st folks.
UK
(Tongue in cheek)

[Bossxr8]

Originally Posted by zilo

Only stupid comment in this thread is by you.

how many Fail-cans sold this month?

A hell of a lot more than all electric cars combined

[zilo]

Originally Posted by Bossxr8

A hell of a lot more than all electric cars combined

Including hybrids?

[zilo]

Originally Posted by pottery beige

how many magnas were sold last month

how many middle fingers am I holding up?

[zilo]

Originally Posted by FairmontGS

You probably got to this forum by accident.

Sold our last falcon 12 months ago....no regrets.

[blue sleeper]

Too easy, John Button......

And don't give me that crap about good for the country, he started the oxidation of the car industry here. Forward thinking my ****....

[blue sleeper]

Originally Posted by zilo

Sold our last falcon 12 months ago....no regrets.

Cool, can you go away now?

[Adamz Ghia]

Originally Posted by zilo

Including hybrids?

Hybrids are the biggest ****, more so than Chev badges on Commodores. Imagine how much further along we'd be with electric cars if instead of mucking around with these compromised wastes of space the likes of Toyota and Honda put all their resources into fully electric cars.

[Harrison]

The Pharisees.