Tariff cuts to proceed

[King Nothing]

At different points in time different industries are in boom and bust cycles. At the moment the Australian Automotive Industry (I'll call it AAI, including holden, fort, mitsu, and component supliers) is in a slump, aggrevated by record oil prices that were not foreseen.

However in the past it has been profitable, and will be again in the future. It was only 10 years ago that there was a waiting list for a VT commodore, they couldn't make enough of them. At that point in time petrol prices were low and there was no major warnings of a massive hike. Greenhouse gas was only something "those weird greenies" used to talk about.

Things were going well, and there were no major signs of trouble ahead. So I imagine that the AAI made a decision to sail on with minimal R&D in small/efficient cars, as is somewhat reasonable. Remember that the margins on these small cars are very small. So why invest in something, that did not have as large a market as anticipated and made less money, instead of doing very well selling thousands of profitable cars.

Fast forward 10 years and its a very, very different picture. Particularly in the last 5 years where large car sales have shrunk massively, mistu is gone, environmental concerns now actually mean something (accellerated even more since the election of labor), and greenies aren't as weird as they used to be to a lot of people. Think how much Aus has changed, really. It is a massive change.

We now have an automotive industry that is struggling. Companies which, when in good times, provide thousands of people with jobs (both direct and indirect) and contribute massively to the economy. Sure, they may have misread the last 5 years badly. But who else predicted it? Not many, I'm sure.

The AAI is behind the ball, no doubt. No proper diesels (craptiva doesn't count), an old technology LPG system at ford, holden only recently getting into the game. No hybrids, let alone electric. In fact no small cars, bar the upcoming focus. They are up the proverbial creek, no doubt.

So the solution posed by some on this forum? Let them drown if they can't hack it. Maybe they are right. But this is a huge decision that cannot be rushed into. Once our automotive industry is gone, it will never come back. Ever. Do we dare risk an entire industry, based on poor performance and poor management in the last few years? An industry which, given the help and support it needs, could produce some fine vehicles.

The AAI has historically done a lot with a little. Really, we have quite good quality cars for such a small market, especially the Falcon with no major export market. This industry can do it. It just needs time. Sure, a lot of the money goes overseas to american companies. But if it dies, a hell of a lot more will be leaving our shores, and a lot of jobs will be lost.

Will it help or hinder the economy? I don't know, I'm not an economist, I'm an engineer. But to me, looking at it from a material flow point of view in terms of dollars, I don't see how draining more of our wealth overseas, as opposed to keeping it in our borders, is better for us overall.

Australian manufacturing (as a whole) has some of the highest quality and safety standards in the world. This not only gives great efficiency, but also costs money to maintain. We also have some of the lowest tariffs in the region. So why should we, as a country, allow other countries with (in general) lower quality and safety standards (hence lest cost), and higher tariffs on OUR goods, to destroy what is left of our manufacturing industry? It could all very quickly turn around again.