Economic catastrophe?
One problem in measuring the economic impact of these closures is that the Australian labour force is vastly larger than the workforce of the whole automotive sector.
The Australian labour force is presently comprised of around twelve million workers. Unemployment fluctuates seasonally, and with many other non-seasonal factors, and currently stands at around seven hundred thousand, so three, or even ten or twenty thousand additional job seekers, staged over five years, will be invisible, completely swamped by normal fluctuations.
The foreign multinationals that manufacture cars in Australia regard the World as their oyster and make rational decisions about where to manufacture to maximise shareholder returns, taking into account temporary changes and perceived long term trends. The plant and equipment has a finite lifetime and new investment can take place anywhere in the World that maximises returns.
Both Ford and General Motors (Holden) have been quite explicit. Unless Australia makes it worth their while to keep operating here, by subsidising their inadequate returns with taxpayer money, they are prepared to scrap or relocate their aging manufacturing facilities in Australia. No doubt they will relocate key human assets, like key members of their design teams, to the US, Europe or Asia and to concentrate their efforts, and remaining Australian workforce, on the sales, distribution and marketing of overseas built cars. But in the event that economic or technological conditions change sufficiently to make manufacturing here profitable, they will promptly move them back again.
Today a medium sized retail shopping mall employs more people than the largest Australian manufacturers. And many employees in the mining and mining equipment industries; as well as in electronics; and scientific and medical equipment manufacturing; are on average both more skilled and better paid than automotive workers.
So manufacturing will never disappear entirely. Many businesses enjoy the protection of distance and transport costs or market proximity or a high service component or proprietary technology or local inputs. Many medium sized, home grown, Australian firms are world leaders in their field Australia exports mining and medical and other scientific equipment to the World. Unlike foreign multinationals, these businesses have their roots here and are motivated by lifestyle, family and business relationships, and dare we mention it, patriotism, in addition to purely commercial considerations.
And you never know, there may even come a time when technology advance makes ‘cars to order’ from boutique manufacturers feasible. Then we may find an economic justification for local automotive manufacturing and see a revival of the industry. But it will quite a different beast to the one presently consuming taxpayer and car buyer’s money. Money that can be spent better elsewhere.
The factors that make manufacturing viable are well understood. To read my earlier paper on this subject click on: The growing controversy around manufacturing in Australia
But I have a personal problem.
I am an industrial patriot at heart so I have always supported the Australian automotive industry through my past purchases. But now, with both Ford and Holden gone, what am I to buy in future?
Given that a purchase by me seems to be the kiss of death, are there any other iconic brands you would like to see disappear from these fair shores? Toyota perhaps?
Richard McKie
2013/2020