The end looms for local car manufacturers?

[bobthebilda]

Thanks JG34JA, no I'm not a builder, more of a destroyer. But not sure that high lighting the greatness that cames from isolating yourself from the rest of the world, holds much currency, when you dont also mention the inevitable wars (altho you alluded to wwii) that result from it many years down the track.

I assume somehow we are supposed to say to china and japan etc, please take our hundreds of billions of dollars of resources each year, but you can shove your $18 billion dollars of cars.

I somehow dont feel comforted by knowing that if we did get in another war, we will be able to build 25% of a cruze, or 66% of a Falcon or commodore (remember we cant import anything, so they would have no tyres lol), and use them in any defensive or attacking action against the enemy.

I do feel comforted by knowing that chung wung in beijing, or Jimmy kawasaki in nagasaki, have plenty of food in their bellys from australian agriculture and a good home made from australian iron ore. Because they have the ability to freely trade something they have, with something we have (no need to fight over something if you have something to trade). Their forefathers often did not see things this way.

Keep swapping with chung and jimmy and their insumountable 1.4 billion countrymen until the resources run out and it doesnt matter who has what anyhow. Try building a car with no iron ore, coal or oil.

[XD 351 Ute]

Originally Posted by charles_wif_xf

Very astute observation JG34JA. Rep for you.

Agreed, finally someone has posted something along the lines of what I've wanted to add.

Eventually all our manufacturing/primary industries, regardless of what they make or produce will probably end up being flushed down the toilet in the name of free trade, etc, etc.

What are we going to become, a nation of consumers?
Where is everyone's wages going to come from if we don't make anything?

Tourism? Mining? Selling Avon?

Eventually our resources will run out, and if I was an overseas tourist, I'm sure as heck that I wouldn't pay to come & see a big hole in the ground.

As others have mentioned previously, protectionism in some shape or form is alive and well with most of our trading partners from what I understand, and we are fools if we don't cover our backsides somehow.

It's all well and good to harp on about freedom of choice, but what good is that if we start getting paid wages similar to the sweatshops overseas, in a bid by our employers if they decide to cut wages to remain competitive with the overseas manufacturers?

Who will be able to afford to buy anything?

My apologies for the rant, and also if some of my beliefs are misguided, but this issue is one that gets under my skin.

I do realize that there are positives and negatives to everything, but sometimes I think we don't see the wood for the trees.

I'd certainly hate to see history repeat itself......

Ed

[jpd80]

Originally Posted by prydey

why do people bang on about supporting australian made when you do the grocery shopping or buy electrical goods or furniture or whatever so that the profits stay in the country. woolies and coles are often the enemy who are putting the decent hard working aussie in his little corner store out of business. bunnings is making it more and more difficult for the small shop to survive.

This is the Walmart argument in America.
Everyone cries buy Australian and then goes down to the supermarket or Bunnings and buys whatever
they want, be they cheap Asian goods or more expensive items from Australia, Europe or North America.

It's not Coles or Wollies putting the corner store out of business, it's people's demand for low cost goods,
those same people don't see the value in a corner store that dares to charge more for the same goods...


It is not a case of being unpatriotic, people just don't feel the connection to companies that charge more
unless there is a perceived need for quality that's somehow deficient in the low cost alternatives.

Local manufacturing has to come to terms with this, do you want to directly compete with low cost
Asian goods or offer something of much more perceived value but also reduce your field of buyers?

[prydey]

Originally Posted by jpd80

Local manufacturing has to come to terms with this, do you want to directly compete with low cost
Asian goods or offer something of much more perceived value but also reduce your field of buyers?

agreed. i think this is where its at at the moment. unfortunately, the economy is forever rising and at a rate far greater than most peoples disposable income.

[jpd80]

Originally Posted by bobthebilda

Toyota price their cars like the supermarkets price their goods. You put the price of milk or bread down, you put the price of petrol up to cover it.

Even if all input prices were the same for a Corolla and a Cruze, the Corolla will still cost $3000 to $4000 less than the cruze, just from the fact it comes from a factory making 400,000 units a year, and the cruze will come from one making 25,000 per year. They use the corolla and other cars to price shift other slower movers. Toyota australias last 2 profits have been $180 and $120 million. At 200,000 cars a year, they are only making on average $750 a car.

FYI, Focus sold 58,000 units in December and is fast approaching 700,000 units per year globally.
Focus is far and away outstripping Corolla around the globe, so where are our discounts?
Answer is Ford's new found desire to make good money off every car sold.

Maybe you're right, perhaps Falcon is worth more money and should demand it,
Today's XR6 discount price is the same as they were in 1995, that can't be good for business...

[cheap]

Originally Posted by bobthebilda

Keep swapping with chung and jimmy and their insurmountable 1.4 billion countrymen until the resources run out and it doesn't matter who has what anyhow. Try building a car with no iron ore, coal or oil.

I don't want to hijack the thread too much, but I have traveled extensively and visited major coal mines in NSW and Qld. What keeps sticking in the back of my mind is how much coal these miners have dug up yet how insignificant their efforts seem in relation to the quantity of coal that still in the ground.

For example, Goonyella/Riverside or Blackwater have been in operation for some +40 years but figuratively speaking haven't made a dent into their coal reserves.

I agree that one day reserves will run out, but when?

Given these immense proven reserves, I would be surprised if Australia alone doesn't have hundreds of years supply.

All this talk about running out of resources seems to be a tad premature, alarmist and conveniently opportunistic in tricking the ill-informing masses that the miners need to be taxed because our resources are about to run out - they're not!

In my opinion, taxing the miners will simply create a situation where less development occurs in Australia, the miners either move off-shore or create a situation where most of their profits come from off-shore (and BTW, other countries have immense reserves of resources too).

[vztrt]

Originally Posted by cheap

I don't want to hijack the thread too much, but I have traveled extensively and visited major coal mines in NSW and Qld. What keeps sticking in the back of my mind is how much coal these miners have dug up yet how insignificant their efforts seem in relation to the quantity of coal that still in the ground.

For example, Goonyella/Riverside or Blackwater have been in operation for some +40 years but figuratively speaking haven't made a dent into their coal reserves.

I agree that one day reserves will run out, but when?

Given these immense proven reserves, I would be surprised if Australia alone doesn't have hundreds of years supply.

All this talk about running out of resources seems to be a tad premature, alarmist and conveniently opportunistic in tricking the ill-informing masses that the miners need to be taxed because our resources are about to run out - they're not!

In my opinion, taxing the miners will simply create a situation where less development occurs in Australia, the miners either move off-shore or create a situation where most of their profits come from off-shore (and BTW, other countries have immense reserves of resources too).

Wait till China actually starts mining properly as ATM they're still doing it quite inefficiently. What happens to us when out minerals aren't going o/s?

Apparently China will be mining their own gas in 10 years and ours wont be going there.

[bobthebilda]

=jpd80]FYI, Focus sold 58,000 units in December and is fast approaching 700,000 units per year globally.
Focus is far and away outstripping Corolla around the globe, so where are our discounts?

$22990 for a 4 speed auto focus (2010 plated) seems like a pretty good deal when compared to its competitors. I assume when you say discount, you are referring to Toyota's 2.9% finance. If the Focus is selling well, why "discount". Its a mass produced, world selling, competively priced car, probably doesnt warrant a discount. No point sending a car to OZ to sell at a discount if you can sell it somewhere else at full price. Its these sorts of cars that will allow Ford to stay in business(and compete)

Answer is Ford's new found desire to make good money off every car sold.

Its a good business plan to have.

Maybe you're right, perhaps Falcon is worth more money and should demand it,
Today's XR6 discount price is the same as they were in 1995, that can't be good for business

[/QUOTE]Well i dont know if it is overpriced or under priced. All i know is that around the world, only 1400 (OZ and NZ) people wanted to buy it last month, and maybe the same will this month. I cant see how slugging one of the OZ buyers who wants to buy a world competitive focus (Fords Future), an extra $3000 in tariffs, is going to bring out another Falcon buyer.

Cheap: I agree that one day reserves will run out, but when?

Cheap, I assume you didnt drive to the mines in your coal powered car. What you need to do, is get all the ingredients to make a cake. You may end up with 5 things. Now throw the eggs away, and try and make the cake. It wont be a cake.

To dig the coal out, you need machines made from steel. To get the steel, you need iron ore and coal. To dig up the iron ore and coal, you need trucks that run on oil. To drive the trucks you need truck drivers. To get truck drivers to work, you need oil. To feed the truck drivers you need food grown with the assistance of hydrocarbons. Take one of these items out, and you dont have a coal industry.

Do you wonder why we are paying $100 for a barrel of oil, when the world economy is so weak.

[cheap]

bobthebilda, I drive and fly using machines which required hydocarbons as their primary source of energy and not carbon(coal). I would dearly love to continue to this discuss your comments, however I do no want to hijack the original question.

[aussie muscle]

Originally Posted by cheap

In my opinion, taxing the miners will simply create a situation where less development occurs in Australia, the miners either move off-shore or create a situation where most of their profits come from off-shore (and BTW, other countries have immense reserves of resources too).

no offense, but it's not like the mining companies can take their business off-shore. the resources are buried in the ground here.

[cheap]

Originally Posted by aussie muscle

no offense, but it's not like the mining companies can take their business off-shore. the resources are buried in the ground here.

No offense taken.

First off: You will find that the big 3 miners are multinationals and already have substantial leases throughout the world, they are no longer solely based in Australian. Some have their corporate HQ and identity based in Australia, some don't.

Second: It is wrong to assume that Australia is the only country with resources as there are vast reserves of minerals well almost everywhere. However there are many reasons why minerals are mined here in Australia and not in Timbuktu, and cost is one of those reasons.

Third: If the burden of tax becomes so large here in Australia, then through existing legitimate corporate structures the big miners could extract less minerals here in Australia and more from overseas. It is false to state they can't take business off-shore because it is already there. Profits could be retained oversea too.

Fourth: Many business have a risk/contingency plans. The big miners have these plans too. In simple terms if a particular mine is having an issue, then they increase production at another site. In the case of a country having an issue, they increase production at another country. The bigger the issue the longer it takes to invoke, but they do have these contingency plans.

From the Australian: Mr Kloppers has joined Rio Tinto's chief executive Tom Albanese in describing the proposed mining tax as the greatest sovereign risk facing his company anywhere in the world.

These people have stewardship over companies that have been around much longer that the average 3 years of an Australian federal government. Their mission is to continue to stay in business. They're making plans as you read this, if you were in their shoes what would you do?

[bobthebilda]

Ah cheap, I am glad you didnt hijack the original question. But if you dont hijack the thread then its going to end the way of most threads here anyhow. either by
1) Natural death - nothing more to say on the issues or matters that are loosely linked to it.
2) A continual procession of 200 posts of - yeah i like it, ooh thats great, thats different, car advice are crap, its just another Holden beat up, Ford marketing are crap. Where the last post ends up being the same as the first post. Just because australian cars dont evolve, doesnt mean the same has to happen for australian car forums. If you accept stagnation, you will get it.

Just like you hear people complaining about the $1 a week flood levy, or the car industry complaining about lack of support, you are always going to get horror stories from the mining sector if they have taxes raised.

However, wouldnt you be ****ed too, if a company that millions of australians have ownership in, whose worldwide head office is based in australia, that contributes 10's of thousands of very high paying jobs, that work to worlds best practice, are whose products are used by hundreds of millions of people a year are going to be taxed more SO some of the money can go to an american / japanese company, who makes a product that very few people want and has no nett economic value to australia.

[cheap]

The world is full of mean/naughty people with cruel and sinister intentions, under every grain of worldly sand lurks vast amounts of inequity.

But luckily for Australia we have had an obsession of governments that correctly know everything about everything and have always YOUR best interests as their priority.

Can you please just stop baiting me!

[Carby]

Originally Posted by bobthebilda

No boss, I own an australian made car. In fact my last two have been australian made. Probably owned more australian made cars than some here.

Just dont think the governments intervention over the many years, has benefitted the industry one bit. And the facts surely bear it out. The more money the government has thrown at it, the more sales continue to decline. The money just gets siphoned off.

You have other australian companies coming up with innovative ideas, which have to go overseas to get development money. And yet the australian government thinks it innovative to give the likes of a US company $150 million to build a car that has been produced in Korea for many years, or a Japanese company many millions to import a Hybrid engine made in Japan.

If you keep taxing $50,000 wage earners, so their money can be paid to overseas execs earning $1 million, so they can invest the money to keep the $50,000 wage earners in a job, you end up on a merry go round to poverty.

Like most articles say, The majority of the politicians want the industry to die, they just dont want it to happen when they are in power. It just ends up being a waste of money. Its a populist play, with irrational decisions made on an adhoc basis, with no long term goal put in place.

You'd be better of venting your anger at your local politician, or the management of ford australia who has lead to this terrible decline, or the 900 odd thousand australians who prefer to buy imported cars.

Whilst I havent owned a Falcon before (have rented some), I have done far more to support the industry, than all the others listed above.

What rubbish! If someone gets paid a million dollars - they will also be taxed, nice little windfall for the Oz Government coffers there no doubt.

You talk about Australian Government assistance - what about the fact that of 15 major car producing nations we make it the easiest for imported vehicles to come in?

There are so many inaccuracies in your arguments that it is suffice to say that your type of thinking if adopted by all will ensure we will become another Pacific Island Nation.

[Carby]

[Bobthebilda] However, wouldnt you be ****ed too, if a company that millions of australians have ownership in, whose worldwide head office is based in australia, that contributes 10's of thousands of very high paying jobs, that work to worlds best practice, are whose products are used by hundreds of millions of people a year are going to be taxed more SO some of the money can go to an american / japanese company, who makes a product that very few people want and has no nett economic value to australia.[/QUOTE]


Please convert this to something remotely decipherable........

[BroadyFord]

A bit of positive news:

Read in today's Financial Review that the govt has pledged not to cut anymore money from the Car Plan to pay for flood recovery or other budget cuts. There was a meeting last night between Kim Carr, Holden boss Mike Deveraux and Gillard where the promise was made.

Still remains to be seen what will happen under an Abbott-led government!

[bobthebilda]

Carby]What rubbish! If someone gets paid a million dollars - they will also be taxed, nice little windfall for the Oz Government coffers there no doubt.

Oh i see your point Carby, we should employ everyone as public servants, and pay everyone a minimum of $100,000 per year. That way the government would earn heaps in taxes.

You talk about Australian Government assistance - what about the fact that of 15 major car producing nations we make it the easiest for imported vehicles to come in?

As said previously, the 20th biggest car manufacturing nation in the world, produced 522,000 cars in 2009. In 2009 Australia produced 223,000 vehicles. Since we arent in the top 15, then I cant see any relevance to this.

There are so many inaccuracies in your arguments that it is suffice to say that your type of thinking if adopted by all will ensure we will become another Pacific Island Nation

Well you draw a long bow there. But I have been to elizabeth, I have been to Campbellfield and I have been to Fiji. I did prefer Fiji.

Please convert this to something remotely decipherable

Cant you just get a Thesaurus or Dictionary.

[Bud Bud]

Originally Posted by bobthebilda

Well you draw a long bow there. But I have been to elizabeth, I have been to Campbellfield and I have been to Fiji. I did prefer Fiji.

What to live in or as a holiday destination??? Did you convert your Aussie dollars to use as currency or did you scrounge around with the locals???

Unfortunately every place is better than Australia until you start comparing wages, how many Fijian folk holiday in Australia???

If we lose our entire manufacturing sector to Asia and beyond, then it will be the newly formed middle class Vietnamese and Malaysians that will be holidaying in Australia in the very near future instead.

Bud Bud

[olds]

The government wont allow manufacturing to die in Australia,the same as the American government didn't with GM. The government will wait until manufactures slowly fall over, so there is no fallout , as with Mitsubishi . Then when they are on their last legs they will subsidies the one who employs the most Australians.To the point of maybe buying it off the parent company and calling it Australian motors.Then they will apply massive tariffs and protection to keep it supporting local suppliers. As has been stated on this forum before the country cannot sustain three manufactures as the market isn't big enough but it could embrace one. Which one is the question. To be in the running I would be manufacturing and employing as much as I could in Australia as to gain government support.

[JG34JA]

Thanks Bobthabilda for the reply. Destroyer of things eh, sounds like fun.

I also see where you are coming from. It is much better to trade in peace with northern neighbours than fight them; it is much better that through earning more from us and being more frugal with earnings they purchase our mines and secure their access to resources, rather than send an army to secure it.

It is very important that global trade remain open and free for the sake of peace. However, in every agreement such as this you will get sides maneuvering to their advantage. It may be currency, it may be a "one way" free trade agreement. It may be outright banning of a product's importing, it may be tariffs, it may be vast assistance, predatory pricing. Many things can be used to lever an advantage, and Australia has been subject to almost all of them in the time frame I mentioned. We have taken it well - only lost 90% of our manufacturing and evolved into a 'Mining and Maccas' economy. I vividly remember the heralding of the US 'Service and Consumption' based economy as the dawn of a new age, look where they are now... Wondering why their 'recovery' is jobless!

Hint: you need Production to have a recovery with jobs.

Your points are valid, however "free trade" has never existed. Never. See my post in the 'Chinese Cars' section for more.

[BroadyFord]

http://www.carpoint.com.au/news/2011...-promise-23601

The FCAI has put government and opposition on notice that both sides of politics must support the automotive industry
News that the federal government had binned the Green Car Innovation Fund brought a swift response from the automotive industry.

Who can say how much behind-the-scenes brawling went on between the industry and Innovation Minister Senator Kim Carr after Prime Minister Julia Gillard announced the Green Car Innovation fund would be shelved? The government put an end to the Fund, along with numerous other schemes to pay some of the cost to restore infrastructure in Queensland after the devastating floods last month. Ironically, many of those axed schemes were environmentally motivated.

Whatever words might have been exchanged, both the federal government and the Federal Chamber of Automotive Industries (FCAI) have issued statements declaring their mutual understanding of each other's position. Representing the local industry, the FCAI is "reassured" that the government won't dilute industry support further.

The FCAI's Chief Executive, Andrew McKellar (pictured) and other industry members met with the Prime Minister and the Senator earlier in the week to stress that the automotive industry provides massive benefit to the local economy and must continue to have the support of the federal government.

"It was good to meet with the Prime Minister and have the opportunity to reinforce the commitments the Government had previously made to the industry as well as highlight the need for certainty in the future", McKellar was quoted as saying in the FCAI's press release.

"Public private partnerships underpin the industry in every automotive manufacturing economy and this co-investment has developed an industry that directly employs more than 50,000 people with the capability to design and engineer world-class vehicles for Australia and global markets."

"The vehicle manufacturers and component suppliers can be reassured by the confirmation from the Australian Government that no further policy changes will be made.

"Australia is competing with dozens of other vehicle manufacturing economies and the guarantee provided by the Prime Minister gives the industry a basis to work to continue to attract new investment."

For their part, Senator Carr and Prime Minister Gillard also issued a statement. In the release, Senator Carr threw his support behind the on-going 'New Car Plan for a Greener Future'.

"What we are making is a commitment to all other elements of the New Car Plan," he was quoted as saying in the release. "That includes the Automotive Transformation Scheme, the Automotive Industrial Structural Adjustment Program, the Automotive Supply Chain Program, the Automotive Market Access Program and the Automotive Industry Innovation Council."

"This underwrites high-skilled, high-tech manufacturing jobs and a more productive economy. The New Car Plan will help attract and retain international investment and foster continuous innovation within the industry."

Just the day before the meeting with the Senator and the PM, the FCAI also took a swing at the opposition in what appears to have been a warm-up for the showdown with government. Responding to the opposition's plan to reduce funding for the Automotive Transformation Scheme, the FCAI was nothing if not forthright.

"This is an ill-advised proposal and would severely damage the local vehicle manufacturing industry," McKellar said.

"To cut funding from the Automotive Transformation Scheme would endanger existing and planned investment projects and potentially put thousands of jobs at risk. Other countries are bending over backwards to attract new automotive investment and it is essential that Australia must continue to strive to retain a reputation as an attractive place to do business in."

[BroadyFord]

http://www.carpoint.com.au/news/2011...industry-23617

Funding cuts reignite debate about taxpayer support of local car manufacturing
Comment

Now you see it, now you don't. Chilling before-and-after shots of cyclone and flood damage help illustrate the devastation from natural disasters that have swept our nation in recent weeks. But 60,000 auto workers who live nowhere near the storm-affected areas may also feel in the impact -- several years from now.

In the wake of mother nature's fury the Federal Government moved swiftly -- axing the Green Car Fund without a moment's notice to help pay for the reconstruction of ravaged communities.

There is no doubt the government had to take drastic action in these extraordinary times. But the aftermath of the cyclones and floods nevertheless sent shockwaves to the global headquarters of the three local car makers -- Holden, Ford and Toyota -- who are each about to make critical decisions in the next six months about vehicles they may or may not build here from 2016 onwards.

Some sections of the Australian community were overjoyed by the announcement of funding cuts to an industry they believe is getting fat off the taxpayer -- while the hearts of 60,000 auto workers skipped a beat as they wondered how it would affect them.

Now, after a tumultuous fortnight, the Federal Government has reassured Australian car makers that the worst of its funding cuts are over.

On late Wednesday afternoon last week, the Prime Minister Julia Gillard and industry minister, Senator Kim Carr, had a meeting in Canberra with the chief executive of the Federal Chamber of Automotive Industries, Andrew McKellar, and Holden boss Mike Devereux, who is also chairman of the FCAI.

The industry executives called for the crisis meeting to seek assurance that no further cuts were imminent after the Gillard Government halted the Green Car Innovation Fund to help pay for disaster-relief efforts.

"In an attempt to recover from a natural disaster there was a risk of creating a man-made disaster," the chief executive of the Federal Chamber of Automotive Industries had warned.

After Wednesday's meeting Senator Carr's office issued a statement under the heading "Keeping Our Industry Strong", which said in part:

"The recent floods and other natural disasters across our nation represent an extraordinary and unprecedented set of circumstances. This has required some tough budget cutbacks, including savings in the Federal Government's New Car Plan, so that funds can be redirected into the rebuilding of roads, bridges, rail lines and public facilities in flood ravaged communities.

"But the Government understands the need for certainty and the long lead times for investment in the highly competitive automotive industry. The Prime Minister and Minister Carr have confirmed to the automotive industry that all other parts of the New Car Plan ... will be retained.

"The New Car Plan helped see Australia through the worst economic crisis faced by manufacturing since the Great Depression and the changes will help ensure its future. What we are making is a commitment to all other elements of the New Car Plan."

In 2007 the Federal Government pledged $5.4 billion of financial support to the local car making industry and its suppliers through to 2020 -- and called it the New Car Plan. In 2008 this figure grew to $6.2 billion with the addition of the Green Car Innovation Fund -- and the name changed to New Car Plan for a Greener Future.

The extra GCIF funding, however, was short-lived. It was cut twice in the lead-up to the 2010 Federal election -- $200 million was cut to the supplier base and a further $200 million was cut to vehicle manufacturers. Following the disasters in January, the remaining GCIF funds were frozen -- but funding already pledged was secure.

Holden received $149 million from the GCIF and another $30 million from the South Australian government to go towards its new Cruze small car, which will be made at its Elizabeth factory from next month.

Ford received $42 million from the GCIF and an undisclosed amount from the Victorian Government to go towards a diesel Ford Territory and the four-cylinder Falcon.

Toyota received $35 million from the GCIF and an undisclosed amount from the Victorian government to go towards the hybrid Camry program.

The Victorian government chose not to reveal exact funding figures on these occasions but the amount is well into the millions in both cases.

All this sounds like a vast sum of money -- and it is -- but it is no different to what other governments in other parts of the world do to attract car makers.

Dozens of states in North America offer incentives in the form of lower tax rates or rebates in return for setting up factories. That's why brands such as Toyota, Nissan, Hyundai, Kia, BMW, Mercedes-Benz and Volkswagen (among others) have established green-field car-making facilities there. Indeed, one of the reasons the three North American domestic makers (General Motors, Ford and Chrysler) have struggled to compete on their home turf is because of the high level of assistance offered to foreign companies to establish car factories -- and create thousands of jobs.

Government assistance is happening on Australia's doorstep, too. The Thailand government has been offering incentives to foreign makers to establish factories there for more than a decade. And guess what? Honda, Toyota, Nissan, Ford and Mazda now make cars or utes there in globally significant numbers.

Why is it that other countries want to save or create jobs in the car industry -- but a broad section of Australians don't? Is it because they don't realise the ramifications of not having a car industry?

Clearly most Australians aren't living in fear of losing their jobs. More than 1 million people treated themselves to a new car last year -- the second-best on record -- although 90 per cent of the cars were imported.

Some senior executives in Australia who represent imported car brands question the level of taxpayer assistance offered to our three local carmakers. Some of these executives offer these opinions to journalists off the record, as background, so they can still mingle guilt-free with their friends from local car makers at motor shows.

Others, such as Suzuki Australia general manager Tony Devers, are happier to put their name to their views. Devers told the Carsales Network last year that Australia should switch its efforts to building more relevant cars -- or become a hub for research and engineering.

By his estimation "Ford would make more money importing cars from Thailand than making them in Australia". He would know. Suzuki is about to join other Japanese brands and establish a car factory there in a couple of years -- thanks to assistance from the Thai government.

Incidentally, the Carsales Network has since been told that Ford Australia contributes 40 per cent of total profit to Ford's Asia-Pacific operations -- and local carmaking is a "significant proportion" of that.

Devers also calculated that $6.2 billion of Australian government funding roughly equates to $100,000 per car industry employee -- if the figure of 60,000 workers spread across the three carmakers and their suppliers is accurate.

"Nobody's really done the sums, have they?" Devers said, suggesting that the government was blinded by "an overriding idealism that we need [a manufacturing] industry".

But spread over the 13 years of the program, the $6.2 billion equates to $7700 per person per year. There's a fair chance the Federal Government will get more than that back from each worker in income tax -- and GST from goods and services they purchase.

What is also conveniently overlooked by detractors is the estimated $16 billion the car industry (that is, vehicle manufacturers and suppliers) will invest as a result of government contributions. That $16 billion does not include wages, incidentally.

In the outline for the GCIF in 2008 the government said: "Manufacturing is the mainstay of families and the lifeblood of communities around the country. We can't have a balanced economy without it -- and we can't have a just society without it either.

"The automotive industry makes a huge contribution -- both direct and indirect -- to Australian output, jobs, exports, innovation and skills. Its latent significance to national security -- as a storehouse of industrial know-how and capability -- is immeasurable."

In 2007-08, the report said, Australia exported $5.6 billion worth of vehicles and vehicle components. That's more than Australia earned from exports of wool, wheat, beef or wine.

The government acknowledged the shift in demand to more economical vehicles. "The world is changing and Australia's automotive industry must change with it. Our choices are simple -- our industry must either adapt to the new environment, or face extinction," the report said bluntly.

"Adaptation will require significant investment in new technologies. [And] we will only get that investment if people believe the industry has a future and are certain of the Australian Government's commitment."

It is interesting to revisit the original GCIF document in the wake of having the rug pulled a fortnight ago. The reality is that the same principles -- and threats -- still apply to the car industry today as they did in 2008.

While the three local carmakers have calmed down now after being reassured there will be no further cuts, they had a tense lead-up to last Wednesday's meeting, especially after the Federal Opposition threatened to make further cuts to car industry funding if it wins power at the next election.

Presumably to make sure the Federal Government's commitment to the car industry remained on public record, the FCAI issuing a statement that said in part:

"It was good to meet with the Prime Minister and have the opportunity to reinforce the commitments the Government had previously made to the industry as well as highlight the need for certainty in the future," FCAI exec McKellar said.

"Public private partnerships underpin the industry in every automotive manufacturing economy and this co-investment has developed an industry that directly employs more than 50,000 people with the capability to design and engineer world-class vehicles for Australia and global markets.

"The vehicle manufacturers and component suppliers can be reassured by the confirmation from the Australian Government that no further policy changes will be made."

The talk of funding cuts struck at a critical time for the three local carmakers because each is vulnerable for a different reason.

In the next six months Ford and Holden will decide what type of cars they will build from 2016 onwards -- and whether or not they will be built here.

Ford Australia built just 45,000 vehicles at its Broadmeadows factory last year -- including fewer than 30,000 Falcons -- and the parent company in Detroit has announced there will be no more one-off vehicles such as the Falcon and Territory for individual countries.

This means that Ford Australia must make a business case to Detroit as to why future Falcon- and Territory-type vehicles should be made in low numbers in Australia, when their equivalent US models will be made more cost-effectively in the hundreds of thousands in North American factories -- and could be imported with a zero tariff under the free trade agreement Australia has with the USA.

In January this year, Holden pledged its intentions to continue making the Commodore locally well into the 2020s -- but it would not be viable without government assistance.

Holden says its factory -- and any car factory for that matter -- must produce at least 100,000 vehicles per year to turn a profit. But last year its Adelaide plant built fewer than 60,000 vehicles.

Holden's parent company General Motors could potentially shift Commodore production to one of its under-utilised plants in North America, or elsewhere in the Asia-Pacific region. Holden already assembles the Caprice in China, while the majority of its small cars come from factories in Korea and Thailand.

Toyota built in excess of 120,000 vehicles (most of which were exported) last year but, despite producing by far the most number of vehicles, it is possibly the most vulnerable of the three local makers. The strong Australian currency has meant that Toyota Australia has been losing money on every Camry it exports.

In the next 12 months Toyota will make a decision on whether or not to build the 2017 Camry in Australia -- or import an identical vehicle from its Thailand factory with a zero tariff because of a free trade agreement Australia has with that country.

All this explains why the FCAI issued the following warning after the GCIF was axed: "The decision to abolish the Green Car Innovation Fund comes as an unwelcome surprise and it sends an adverse signal to international investors responsible for future investment in the Australian industry.

"We urge the Government not to renege on the clear policy framework which it has implemented to secure new investment and jobs in the industry. We urge the Government to re-think this decision.

"The program was originally put in place in response to the 2008 review of the automotive industry, after extensive consultation with the industry and other stakeholders and it is a key element of the Government's New Car Plan."

The boss of Jaguar and Land Rover in Australia, David Blackhall, has a unique perspective on the dilemma facing Australian car manufacturers.

Before he took charge of the prestige brands locally seven years ago, he spent the majority of his automotive career -- more than 22 years -- with Ford Australia and has an intimate understanding of the local car industry. He was also formerly the marketing director of Ford in Taiwan.

As of January 1, he is responsible for Jaguar and Land Rover in the Asia-Pacific region and has just returned from a whistle-stop tour of his new territory. He is also on the FCAI executive committee.

"I think it's a worrying time for the three local manufacturers," he told the Carsales Network.

"[The industry] is in an extreme state of flux right now and there'll be some very important decisions made in the next six to 12 months about where companies place investment bets. That's not good news if you're looking at the big picture in Australia."

Blackhall is concerned that the lack of warning about the axing of the Green Car Fund will spook the global bosses of Ford, General Motors and Toyota.

"The most unnerving thing [about the Federal Government's funding cuts] is the without-warning change," he said.

"What [car] companies need is stability and certainty, to enable them to plan for the future. When you have something in place, you make big investment decisions based on that being in place -- but when that changes overnight, that changes the situation dramatically.

"If you're the boss of a car company sitting in Detroit or Japan and you're looking at the sudden without-warning move the Australian government has made, that does not instill you with confidence about making investment decisions here. [This is] especially [the case] when other governments -- some of them neighbouring countries to Australia -- are bending over backwards to encourage vehicle manufacturing to create jobs in those countries."

Blackhall said a reduction in -- or removal of -- financial support "alters the economic sums significantly".

"I'm not saying Julia Gillard could do anything else in the wake of floods and cyclones but when the policy changes overnight it changes the business case dramatically."

He said one of the biggest hurdles facing the local car industry was non-tariff trade barriers.

"Australia has signed Free Trade Agreements with some of its neighbours, and that's all well and good, but there hasn't been enough attention paid to the non-tariff barriers."

In Thailand, some cars attract a registration fee that is up to 200 per cent of the cost of the car because of the vehicle's engine size -- and Australian cars happen to fall into that category. In Singapore there is a modest import tariff, but the registration fee is equivalent to 100 per cent of the cost of the car.

"Successive Australian governments have talked about the level playing field and Australia's commitment to free trade... But what I've been surprised by in my first few weeks of looking at the Asian markets are the non-tariff barriers in countries such as Korea, Thailand and Malaysia," Blackhall said.

"There can be administrative barriers and bureaucratic processes that frankly are sometimes more difficult to negotiate that even figuring out what the price should be.

"A lot of effort goes into creating the perception of a level playing field by various governments around the region, but there ought to be an opportunity for those governments to sit down together and say ‘hey, are we really serious about this?'.

"I think Australia's attitude has been trying to do the right thing and what's best for world trade. No-one wants to go back to the 1930s when import tariffs were 60 and 70 per cent. But Australia has definitely led the field [in terms of free trade] and there are other countries with more nationalistic views that perhaps aren't coming along quite as easily."

He said a return to higher import tariffs was not the answer in Australia.

"Raising our import tariffs would be the wrong thing to do. Instead, real energy needs to be applied to have dialogue in ASEAN and other forums."

But even with non-tariff barriers removed, would Australian-made cars find wide appeal in our neighbouring countries? Small cars and body-on-frame utilities (such as the Toyota HiLux) dominate Asian-Pacific car sales. Large cars are even out of vogue in North America, as buyers shift to compact vehicles and SUVs.

Thailand is the world's capital for building body-on-frame (workhorse) utilities; they build them better and cheaper than any other country in the world so it is unlikely Australian factories could compete with them.

As Ford and Holden have proved, building small cars in Australia is not viable without government assistance. Ford halted plans to build the new Focus at Broadmeadows at the 11th hour because of a lack of government funding at the time. Holden got the Cruze hatch over the line because of government funding.

The inconvenient truth is that all these factors combine to create a grim outlook for local carmakers -- unless there is taxpayer support.

Basically, Australia needs to decide if it wants a car manufacturing industry -- and get behind it, or get out of the business.

Before you decide, just ask yourself what the 60,000 displaced workers are going to do and who is going to pay for their employment benefits, because there aren't that many research and engineering jobs to go around if the shop shuts on manufacturing.

Indeed, 60,000 jobless people would likely leave a black hole far greater than any cyclone or flood damage. Now you see them, now you don't.

[Fireblade]

Originally Posted by BroadyFord

Indeed, 60,000 jobless people would likely leave a black hole far greater than any cyclone or flood damage. Now you see them, now you don't.

This here is what is at stake the most, 60,000 on the unemployment queue would not go down well, and if car makers decide to pull the pin, what about the steel industry (which I'm a part of) they wouldn't be long after creating tens of thousands more of unemployed workers. Lets be real here, manufacturing is under threat in a big way with the strong Aussie dollar, if manufacturing doesn't get the dollars required to maintain production we will all be paying these workers the dole instead, we need to get behind it before its too late.

[Flat Top]

Innovation is always used as an excuse to help to try and drive the local sub supplier base , which has been decimated in the last 5 years. It wont innovate unless it gets a return so its a chicken and egg situation. The government has tried to help with the ACIS and ATS schemes but the order of magnitude is quite a lot. The local source decisions are made in Shanghai (GM) and Detroit and it is done on a unit cost basis , not a delivered Total Cost basis.
The tarrif reductions and high $dont help Ford and GM export which they need to do to get the Local manufactured units right. Both will struggle unless export happens in my view .Toyota production is 80-% exported it gets some gain from importing cars to offset some of the xchange rate losses.(but under pressure)
Ford Australia now have decisions to make about local production post 2015 and cant see them dumping hugh customer loyalty based on using imported stock only. Perhaps the small car alternate platform needs to be looked at again , with some export incentives to make up for the high $ which the mining boom has generated. After all we need a balance economy for when mining runs out of puff (as other resorce bases come on stream post 2014 the price will drop? and so will the exchange rate)
Then what???
thats my $0.02 worth trev

[jpd80]

Originally Posted by F6 FOON

This here is what is at stake the most, 60,000 on the unemployment queue would not go down well, and if car makers decide to pull the pin, what about the steel industry (which I'm a part of) they wouldn't be long after creating tens of thousands more of unemployed workers. Lets be real here, manufacturing is under threat in a big way with the strong Aussie dollar, if manufacturing doesn't get the dollars required to maintain production we will all be paying these workers the dole instead, we need to get behind it before its too late.

But here's the thing, Australia's work force is around 11 million and unemployment is
running at around 5% which is 550,000 so if you were at worst to add say 50,000 to that,
it would bump unemployment up to 5.5%. I don't think too many would flinch at that prospect
especially if all the multi-billion hand outs to the car industry went to other areas instead.

(playing devil's advocate..)

[bobthebilda]

Originally Posted by F6 FOON

This here is what is at stake the most, 60,000 on the unemployment queue would not go down well, and if car makers decide to pull the pin, what about the steel industry (which I'm a part of) they wouldn't be long after creating tens of thousands more of unemployed workers. Lets be real here, manufacturing is under threat in a big way with the strong Aussie dollar, if manufacturing doesn't get the dollars required to maintain production we will all be paying these workers the dole instead, we need to get behind it before its too late.

Gee, Its good to see that when wars are fought, the truth is the biggest casualty. Propaganda at its best.

if the figure of 60,000 workers spread across the three carmakers and their suppliers is accurate.

Now common sense would tell anyone, that the 60,000 figure is not true. There might be 60,000 in the australian auto industry ie mechanics, sales people, transporters and assemblers but if australia was to stop local manufacturing, then sales people, mechanics and transporters etc would still have a job.

Australia produced 223,000 vehicles in 2009 and 239,000 in 2010. If someone (and even some of our politicians seem to believe this) believes that it is taking one employee (average $50,000 per year) to produce only 4 cars (average $25,000) each year, then they should have been out of business years ago.

There was a big uproar a few years ago, when radio announcers would mention products on air, as a hidden promotion. Maybe its time the communications watchdog checks some of the origins of these articles.

You cant fool all of the people all of the time, but apparantly its quite easy to fool some of them all of the time.

[Van D]

Originally Posted by JG34JA

Firstly I'd like to point out Bobthabilda is, I assume, a builder. Building and construction were bailed out in a panic move by the Rudd Government in 2008 with the First Home Vendors Bribe. They are not a free market; a free market would have let their industry crash as a wave of fear swept the globe for the banking system was insolvent. This building crash did not occur. Building residential dwellings does nothing to create gains in productivity in a society, for the dwellings are for the vast majority not part of the nation's Production. Building plant equipment does. Indeed, this is one of the reasons why dwelling prices can reach levels of 10 times average earnings (1-3 is the average throughout the 20th Century and sanity); and there is not a commensurate 'wealth' effect spreading throughout society except for those speculating in such an activity. That, friends, is a bubble.

Secondly, the author of the SMH article is spot on. As a historian by initial training, I know exactly what Australia was prior to the Great Depression. It was a resource economy, supplied by foreign capital. That is all. When the mainly British lenders called in the loans in 1932, and Jack Lang suggested delay, we came very close to our own little revolution. The loans were repaid, for foreign capital rules. The fracas that was the 1930s, in the wake of the Wall St bubble popping in 1929, became one of competing nation states, tariffs, and eventually war.

We are witnessing the beginnings of this now, in the initial stages of currency war this time. Australia has been reamed for a decade by currency manipulation and other tactics as it is - while we played 'free market, low tariffs', they went 'Thanks!' and took our manufacturing base.

So understand that in 1929 Australia marched into Depression as a resource economy reliant on foreign capital, and importing foreign goods.

The young adults who lived through these tumultuous years became the great civic policy makers of the Post War era. They understood just how badly the country suffered, and determined to make sure it would never happen again.

They created a Commonwealth Bank to ensure that domestic capital would be available to fund Australian projects within Australia. This guaranteed independence from the wholesale international markets. Later a Reserve Bank was split from this institution.

They created a tariff protected manufacturing industry. There were guidelines as to how local content would increase (it was at 95% when the LC Torana was released in 1969, and would go higher in some makes). Many of the industrial towns in SA were created in this time. The nation flourished with auto makers actually encouraged to set up shop and manufacture (what Thailand and others do now, for example), and Land Rovers, Minis, Renaults, Nissans, and others were assembled or made here. People took home their pay and spent it in the economy. This all sounds very socialist and centrally planned, but incredibly it worked. The nation became a manufacturer and exporter to Asia. Holden even had its own ship! Textiles, steel, chemicals, petrol refining, you name it.

They created agricultural schemes and expanded agriculture enormously. The upper WA wheatbelt, on Kangaroo Island, the Murray-Darling's "fruit bowl" are some examples I have seen. The agricultural sector flourished in this time.

National telecommunications were provided, and a brilliant system spread the country through the PMG. Later to be Telecom, and now you know its name. I've worked on it, and for its era, it is a great system.

Education was free. The nation was rich enough to do this by 1972. Health care was in better shape than it is now. Why? Because the nation was productive and wealthy enough; indeed, in 1971 Australia and Canada both had the highest living standard in the world.

Mining, at this stage, had a lesser role, the NW ore fields were being discovered in this time.

I might add the currency was fixed for much of this time too, allowing businesses to calculate into the future without wild fluctuations undermining decisions.

During the 1970's, there was a deliberate change in policy, to export the manufacturing base of the Western world to the developing world. It was eagerly taken up by these economies, who are essentially mercantilist. Look it up if you like; we signed it against our nation's interests. Today is the inevitable result of such a policy. Since about 1980 Australia has lived through floating currency, the Button Industry Elimination Plan (played nicely into a collective inferiority complex), the emergence of the speculative FIRE economy (Finance, Insurance, Real Estate), deregulation, debt (Australia was 95% foreign owned in the late 1990s when the stat stopped being reported I believe), hocking of national assets such as the very valuable Commonwealth Bank to clear public debt, a mining boom, and an increasing reliance upon cheap foreign capital to fund our lifestyle, which is in deficit. This is because we consume more than we earn. This in turn is because we took all the Production we had created and destroyed it.

So in 2011 the Australian economy emerges as a resource economy, reliant on foreign capital, consuming more foreign produce than we earn the right to.

Sound familiar?

So yeah, let's kill what is left of the manufacturing industry. Our grandkids will have to rebuild it.

Excellent post.

There's a similar thread on the front page that I posted in yesterday, however my view is that I couldn't care if it falls. The way to stimulate an economy is not to keep buying out failing sectors but to cull them and start new.

My own belief is that a large part of global economy is going to crash in the coming years, however in the mean time (as I mentioned in the other thread), I 100% support decriminalisation and growing of industrial and medical hemp in Australia. It is so perfect for our country and climate I believe it can save Australian farmers, boost economy as well as bring Australia to the forefront in innovation and social contexts.

[cheap]

Originally Posted by bobthebilda

Gee, Its good to see that when wars are fought, the truth is the biggest casualty. Propaganda at its best.



Now common sense would tell anyone, that the 60,000 figure is not true. There might be 60,000 in the australian auto industry ie mechanics, sales people, transporters and assemblers but if australia was to stop local manufacturing, then sales people, mechanics and transporters etc would still have a job.

Australia produced 223,000 vehicles in 2009 and 239,000 in 2010. If someone (and even some of our politicians seem to believe this) believes that it is taking one employee (average $50,000 per year) to produce only 4 cars (average $25,000) each year, then they should have been out of business years ago.

There was a big uproar a few years ago, when radio announcers would mention products on air, as a hidden promotion. Maybe its time the communications watchdog checks some of the origins of these articles.

You cant fool all of the people all of the time, but apparantly its quite easy to fool some of them all of the time.

Perhaps you could correct this travesty of reporting and provide succinct information to the forum, exactly how many people do work in the Australian car industry?