The government's car crash of an automotive policy   :(

Date
    January 13, 2016
    The Age

The decision to reduce automotive tariffs to levels our Asian competitors see as unworkable has sent the new-vehicle market into turmoil. According to the latest registration figures, the top 10 selling marques have been significantly rearranged since 2001, when the Motor Industry Development Plan, known as the Button plan, had reached fruition and a 15 per cent tariff, a favourable dollar and a cheap assistance plan seemed enough to sustain the local industry.

The registration figures also show how Australia will be exporting more than a fifth of its manufacturing base just so we can buy new cars for a few dollars less.

It goes to show how much Australians like a discount – we're happy to put our neighbours out of a job to get one.


The Australian car industry is coming to the end of the road. 

In 2001, the four most popular marques were Holden, Toyota, Ford, and Mitsubishi, all local manufacturers. Together they garnered 62.3 per cent of the market.

In 2015, the top four makes were Toyota, Mazda, Holden and Hyundai. The two local manufacturers held 26.7 per cent while Ford, now in 6th place, added 6.1 per cent to the locals' market share.

The importance of this change lies in how many Australian jobs are supported by the vehicle sales of each marque.

In 2001 the four manufacturers directly employed more than 12,000 people, excluding the parts suppliers that are the bedrock of the industry.

In 2015, the top four marques employed about 7700 people in Australia, and that figure will drop alarmingly over the next two years.

Comparisons between the four marques illustrate the folly of the Abbott government in deciding to close the car industry.

A total of 206,236 Toyotas were sold in 2015 and Toyota employed 3900 people in Australia to achieve those sales, a ratio of 53 vehicles for each person employed.

Mazda, which came second with 114,024 sales, employed 125 people. In total. That's a ratio of 912 cars for each person employed. And Mazda is not the only importer achieving big sales from skeleton staffing levels.

In short, Australia is getting nothing in terms of employment from getting rid of tariffs and creating the most open car market in the developed world.   :(

Yes, we have access to cheaper cars but, although market economists say competition will keep prices down, there is reason to believe that when the local factories close, the constraints they have brought to price rises will also disappear.

Chances are, right-hand drive vehicles will suddenly cost more to produce.

No one can be surprised at this result. The surprise lies in the willingness of the Abbott government to export as many as 200,000 automotive jobs to other countries, jurisdictions that value domestic employment – steady employment, eight hours a day, award wages -- more highly than we do.

So much so, they have for quite some time offered greater assistance to their carmakers than Australia ever did. It was so low under Labor's Automotive Transformation Scheme, the Productivity Commission was too embarrassed to do the comparison, as requested by Joe Hockey, when it compiled its last report.

Australia already offered the lowest level of assistance of any car-making country when acting prime minister Warren Truss and treasurer Joe Hockey decided in December 2013 to close down the car industry without even a vote in the House.

All it took to wipe out 70 years of achievement and accumulated industrial capacity was a whim by an austerian treasurer, who did not even last long enough in the post to oversee the displacement of the 200,000 automotive workers he in effect sacked, and a National Party leader keen to redirect some of the automotive assistance to his own constituency.   :(

Our embrace of the misleadingly named free trade philosophy has made us even more of a laughing stock than Australia's current carbon emissions policy. There is nothing "free" about removing tariffs and kissing goodbye to 200,000 automotive jobs. That sounds like just the opposite, a trade policy with a very high price tag.

How long will it take us to train a similar number of architects and lecturers, the vaunted shock troops of Australia's new export economy? Will sufficient people want to pay US-style fees to obtain those qualifications?

With more than 60 different brands available on the market, the list of importers creating minimal numbers of jobs in Australia is extensive.

An honourable exception in this sad list is Nissan, which made cars here for 26 years before throwing in the towel in 1992. The company has maintained its aluminium casting plant in Dandenong, and its workforce, since it stopped making cars.

The only importer that does recognise the absolute free kick Australia's industrial non-policy has delivered is Hyundai. Like the other pure importers, Hyundai has a low ratio of jobs to sales – fewer than 200 people to sell more than 100,000 vehicles a year in Australia.

However, the big Korean group has at least been seeking to establish its good citizen credentials by drawing attention to its steel mill in Korea, which uses mostly Australian iron ore and coking coal to produce more than 20 million tonnes of steel a year.

That at least shows some awareness of the great benefit it is deriving from our open market and the need to offer something in response.

But it also draws attention to the fatal flaw in the government's plan to eschew manufacturing and base the country's future on primary industry, whether it be mining or agriculture.

Hyundai might buy 8.2 million tonnes of iron ore at $55 or $60 a tonne, but when this is viewed from a national perspective, it is not that flattering for the bureaucrats and the Productivity Commission who designed this part of the economy.

The business plan they have designed looks like this. Australia sells iron ore at $60 a tonne and buys it back in the form of vehicles at around $20,000 a tonne. Value adding? Who needs it?

As well as loading iron ore on to ships and sending them off to foreign parts, we are also, in a sense, loading Australian dollars on to foreign ships and sending them off to foreign parts, as well.

And 200,000 automotive jobs are about to follow.

wrote on Jan 18^th, 2016 at 8:32am:

the displacement of the 200,000 automotive workers he in effect sacked

Disgraceful.

comments

        The tenure of the Abbott Government will probably go down as one of the worst governments in Australian history, because of the opportunities frittered away. We should have kept at least one vehicle manufacturer here. It's not just the auto industry, but its suppliers.
        Similarly, Abbott's blind adherence to a climate-altering fossil fuel instead of embracing the self-evident future of solar energy in Australia will cost us dearly, as will a TPP which has no discernible benefit.
        The sickest aftermath of Abbott, Hockey, Truss, Hunt etc. is the fact they will be rewarded with plum posts and fat pensions, when their rightful place is at the back of a dole queue.   :(

    Commenter
        bazza4.0
    Date and time
        January 13, 2016, 1:05AM

wrote on Jan 18^th, 2016 at 8:38am:

comments         The tenure of the Abbott Government will probably go down as one of the worst governments in Australian history, because of the opportunities frittered away. We should have kept at least one vehicle manufacturer here. It's not just the auto industry, but its suppliers.         Similarly, Abbott's blind adherence to a climate-altering fossil fuel instead of embracing the self-evident future of solar energy in Australia will cost us dearly, as will a TPP which has no discernible benefit.         The sickest aftermath of Abbott, Hockey, Truss, Hunt etc. is the fact they will be rewarded with plum posts and fat pensions, when their rightful place is at the back of a dole queue.   :(     Commenter         bazza4.0     Date and time         January 13, 2016, 1:05AM

Well said Bazza.

wrote on Jan 18^th, 2016 at 8:38am:

comments         The tenure of the Abbott Government will probably go down as one of the worst governments in Australian history, because of the opportunities frittered away. We should have kept at least one vehicle manufacturer here. It's not just the auto industry, but its suppliers.         Similarly, Abbott's blind adherence to a climate-altering fossil fuel instead of embracing the self-evident future of solar energy in Australia will cost us dearly, as will a TPP which has no discernible benefit.         The sickest aftermath of Abbott, Hockey, Truss, Hunt etc. is the fact they will be rewarded with plum posts and fat pensions, when their rightful place is at the back of a dole queue.   :(     Commenter         bazza4.0     Date and time         January 13, 2016, 1:05AM

Well spoken and could not agree more bazza. History will show what an absolute mess these incompetent ars#%oles made of their tenure and they should be held to account. But still the rightards on this forum will be singing their praises.

and can anyone please explain why Abbotts 'free trade agreement'  with Japan prevents the sale of gearboxes from Australian manufacturers to Japan??

The buffoon not only shuts down our domestic market, he then shuts down spare parts manufacturers largest foreign market!

Car workers are unionised.

Whoever wrote this article didnt check their facts, i used to work for mazda and they employed 350 people nationally, and indirectly through dealerships around 2500 people.

John Smith wrote on Jan 18^th, 2016 at 10:08am:

and can anyone please explain why Abbotts 'free trade agreement'  with Japan prevents the sale of gearboxes from Australian manufacturers to Japan?? The buffoon not only shuts down our domestic market, he then shuts down spare parts manufacturers largest foreign market!

It will all come out in the wash , the Japs, Chinese and the Koreans didn't jump at a FTA that had been some ten years in the making because it was beneficial to Australia.... putting a deadline on a FTA, amatuer mistake that one  :o

Jovial Monk wrote on Jan 18^th, 2016 at 10:11am:

Car workers are unionised.

And?  Business have their business groups.  Defence force have their unions.  Government sectors do.  Retail/Health/etc do.  AMA is similar to one.

Welcome to the Button plan, the Hawke Government plan to REDUCE the number of local manufacturers. They got rid of Nissan.

Obviously the commentators on this article seem to forget that Ford closed up shop during the Rudd/Gillard years and Holden and Toyota all decided to quite during that same government, only announcing it a few weeks into the Abbott govt term. Mitsubishi closed up because the SA Labor government refused to support them.

So in short, the decisions that drove car manufacturing out of the country all took place under Labor governments and were in large measure the result of union demands on salaries and conditions and the choice by government not to busy locally built cars.

Now we wait for JS to say that none of this is true, DNA to blame Howard, Fraser and Menzies for it and Monk to say that the government could start its own car company for $50M.

So predictable...

stunspore wrote on Jan 18^th, 2016 at 10:35am:

Jovial Monk wrote on Jan 18th, 2016 at 10:11am: Car workers are unionised. And?  Business have their business groups.  Defence force have their unions.  Government sectors do.  Retail/Health/etc do.  AMA is similar to one.

The AMA doesn't demand 6 additional 'training weeks' for union organisers in car companies and then demand that one in 5 be a union organiser.

But of course, none of this added to the cost of making a car right? That was all the fault of Turnbull and the next Liberal PM and the one after that.

stunspore wrote on Jan 18^th, 2016 at 10:35am:

Jovial Monk wrote on Jan 18th, 2016 at 10:11am: Car workers are unionised. And?  Business have their business groups.  Defence force have their unions.  Government sectors do.  Retail/Health/etc do.  AMA is similar to one.

We have a Credit Union, not much industrial protection there.

The ADF has advocacy groups to advocate on their behalf, but it is nothing like the advocacy provided by civilian unions. Which is why I saw only 2 (non-cpi) pay rises in 10 years.

Can't strike, go slow or quit, take what you are given and get on with it.  :) :)

mariacostel wrote on Jan 18^th, 2016 at 11:36am:

Welcome to the Button plan, the Hawke Government plan to REDUCE the number of local manufacturers. They got rid of Nissan. Obviously the commentators on this article seem to forget that Ford closed up shop during the Rudd/Gillard years and Holden and Toyota all decided to quite during that same government, only announcing it a few weeks into the Abbott govt term. Mitsubishi closed up because the SA Labor government refused to support them. So in short, the decisions that drove car manufacturing out of the country all took place under Labor governments and were in large measure the result of union demands on salaries and conditions and the choice by government not to busy locally built cars. Now we wait for JS to say that none of this is true, DNA to blame Howard, Fraser and Menzies for it and Monk to say that the government could start its own car company for $50M. So predictable...

still flapping your gums about stuff you have no idea I see ...

the decision to shut down Holden and Toyota came after Hockey decided to try and shove his ample weight around. Holden and Toyota had always said their decision to stay would be determined by what the govt did with its subsidies. The Abbott govt. cut them, they left. It had nothing to do with labor :D :D

Was subsidizing the car industry costing the taxpayer more than having a substantial amount people out of a job and effectively shutting down an  entire industry?

What effects did Howards tariff reductions have on the industry?

mariacostel wrote on Jan 18^th, 2016 at 11:38am:

stunspore wrote on Jan 18th, 2016 at 10:35am: Jovial Monk wrote on Jan 18th, 2016 at 10:11am: Car workers are unionised. And?  Business have their business groups.  Defence force have their unions.  Government sectors do.  Retail/Health/etc do.  AMA is similar to one. The AMA doesn't demand 6 additional 'training weeks' for union organisers in car companies and then demand that one in 5 be a union organiser. But of course, none of this added to the cost of making a car right? That was all the fault of Turnbull and the next Liberal PM and the one after that.

Nor does having a top heavy management structure on a sizeable portion of wage bill.

John Smith wrote on Jan 18^th, 2016 at 8:35am:

wrote on Jan 18th, 2016 at 8:32am: the displacement of the 200,000 automotive workers he in effect sacked Disgraceful.

It is disgraceful that we can't manufacture cars on a commercial basis.  Priced out of the market by greedy unions and old fashioned industrial relations policies.

Perhaps the unions should buy the plants if they think they're viable?

Swagman wrote on Jan 18^th, 2016 at 12:30pm:

John Smith wrote on Jan 18th, 2016 at 8:35am: wrote on Jan 18th, 2016 at 8:32am: the displacement of the 200,000 automotive workers he in effect sacked Disgraceful. It is disgraceful that we can't manufacture cars on a commercial basis.  Priced out of the market by greedy unions and old fashioned industrial relations policies. Perhaps the unions should buy the plants if they think they're viable?

and yet Germany's car industry is thriving despite being just as unionised.  :D :D :D

John Smith wrote on Jan 18^th, 2016 at 12:46pm:

and yet Germany's car industry is thriving despite being just as unionised.

...and without Australian taxpayer's asssistance

In a secret room at lib headquarters .... "Yes, now that we got rid of car manufacturing that's less unions and union members...onto the next target..."

Swagman wrote on Jan 18^th, 2016 at 12:51pm:

John Smith wrote on Jan 18th, 2016 at 12:46pm: and yet Germany's car industry is thriving despite being just as unionised. ...and without Australian taxpayer's asssistance

no, they use german taxpayers assistance.

Swagman wrote on Jan 18^th, 2016 at 12:30pm:

Perhaps the unions should buy the plants if they think they're viable?

.....you and your comrades can all invest your own hard earned in this Smithy.

Good luck attracting investors.

....Fairfax media might chip in  :D

Swagman wrote on Jan 18^th, 2016 at 12:56pm:

....Fairfax media might chip in  :D

Does Turnbulls innovation policy involve any taxpayers money Swag?

What actually is the Libs plan for these workers when it all shuts down ?

Its time wrote on Jan 18^th, 2016 at 1:18pm:

What actually is the Libs plan for these workers when it all shuts down ?

The creation of viable jobs that aren't a leech on the tax-payer.

Unemployment is trending down despite what Fairfax propaganda implies.

http://i17.photobucket.com/albums/b76/timbo2530/job%20vacancies.jpg http://i17.photobucket.com/albums/b76/timbo2530/unemploy.jpg
     

Quote:

MEDIA RELEASE 14 January 2016       Strong trend growth in Australia's employment continues The Australian of Bureau of Statistics (ABS) reported that the strong trend growth in employment has continued. "The trend shows that around 312,000 more people were employed in December 2015 than in December 2014. Full-time employment growth was stronger than part-time over the year, increasing by 186,600 people," said Bruce Hockman, General Manager of ABS' Macroeconomic Statistics Division. The increase in employment has contributed to the trend employment to population ratio rising over the year from 60.6 per cent to 61.4 per cent, while the unemployment rate has decreased over the year from 6.2 per cent to 5.8 per cent.

Swagman wrote on Jan 18^th, 2016 at 2:07pm:

Its time wrote on Jan 18th, 2016 at 1:18pm: What actually is the Libs plan for these workers when it all shuts down ? The creation of viable jobs that aren't a leech on the tax-payer. Unemployment is trending down despite what Fairfax propaganda implies. http://i17.photobucket.com/albums/b76/timbo2530/job%20vacancies.jpg http://i17.photobucket.com/albums/b76/timbo2530/unemploy.jpg       Quote:   MEDIA RELEASE 14 January 2016       Strong trend growth in Australia's employment continues The Australian of Bureau of Statistics (ABS) reported that the strong trend growth in employment has continued. "The trend shows that around 312,000 more people were employed in December 2015 than in December 2014. Full-time employment growth was stronger than part-time over the year, increasing by 186,600 people," said Bruce Hockman, General Manager of ABS' Macroeconomic Statistics Division. The increase in employment has contributed to the trend employment to population ratio rising over the year from 60.6 per cent to 61.4 per cent, while the unemployment rate has decreased over the year from 6.2 per cent to 5.8 per cent.

That's a great result, but not what I asked.

A nice stats - but how does it correlates to underemployment?
You could get more employment figures by converting a full time job into 2 part-time jobs.  Or something similar in such a way that it gets counted as full-time even though it isn't 38 hours.

Swagman wrote on Jan 18^th, 2016 at 2:07pm:

Its time wrote on Jan 18th, 2016 at 1:18pm: What actually is the Libs plan for these workers when it all shuts down ? The creation of viable jobs that aren't a leech on the tax-payer. Unemployment is trending down despite what Fairfax propaganda implies. http://i17.photobucket.com/albums/b76/timbo2530/job%20vacancies.jpg http://i17.photobucket.com/albums/b76/timbo2530/unemploy.jpg       Quote:   MEDIA RELEASE 14 January 2016       Strong trend growth in Australia's employment continues The Australian of Bureau of Statistics (ABS) reported that the strong trend growth in employment has continued. "The trend shows that around 312,000 more people were employed in December 2015 than in December 2014. Full-time employment growth was stronger than part-time over the year, increasing by 186,600 people," said Bruce Hockman, General Manager of ABS' Macroeconomic Statistics Division. The increase in employment has contributed to the trend employment to population ratio rising over the year from 60.6 per cent to 61.4 per cent, while the unemployment rate has decreased over the year from 6.2 per cent to 5.8 per cent.

Who would've thought just dumping sloppy and abort would inspire so much confidence  :D

Its time wrote on Jan 18^th, 2016 at 2:26pm:

That's a great result, but not what I asked.

Yes it was.

The creation of viable jobs.

John Smith wrote on Jan 18^th, 2016 at 12:03pm:

mariacostel wrote on Jan 18th, 2016 at 11:36am: Welcome to the Button plan, the Hawke Government plan to REDUCE the number of local manufacturers. They got rid of Nissan. Obviously the commentators on this article seem to forget that Ford closed up shop during the Rudd/Gillard years and Holden and Toyota all decided to quite during that same government, only announcing it a few weeks into the Abbott govt term. Mitsubishi closed up because the SA Labor government refused to support them. So in short, the decisions that drove car manufacturing out of the country all took place under Labor governments and were in large measure the result of union demands on salaries and conditions and the choice by government not to busy locally built cars. Now we wait for JS to say that none of this is true, DNA to blame Howard, Fraser and Menzies for it and Monk to say that the government could start its own car company for $50M. So predictable... still flapping your gums about stuff you have no idea I see ... the decision to shut down Holden and Toyota came after Hockey decided to try and shove his ample weight around. Holden and Toyota had always said their decision to stay would be determined by what the govt did with its subsidies. The Abbott govt. cut them, they left. It had nothing to do with labor :D :D

AS always, you are dead wrong. Holden said and I quote "nothing short of a blank cheque would have had us stay."

Most people would read into that the the decision to leave was already well in place. You of course, will choose a different interpretatiion.

stunspore wrote on Jan 18^th, 2016 at 10:35am:

Jovial Monk wrote on Jan 18th, 2016 at 10:11am: Car workers are unionised. And?  Business have their business groups.  Defence force have their unions.  Government sectors do.  Retail/Health/etc do.  AMA is similar to one.

And now there are less unionised workers. I believe that was a key consideration by the fascists. How else do you explain no exports of parts to Japan etc? Incompentence doesn’t really explain it. 8-)

Holden & Toyota could be exporting their heads of now thanks to the low dollar. Moronic Libs.