This is a car crash we can't afford
By Staff Writers · 18 Apr 2013
You should see my car. After a long line of unreliable jalopies built in Italy, Sweden, Japan and Fishermans Bend, it's the best car I've ever owned. The engineering, the fuel economy, the features, they're all great.The car was designed and built in Victoria and in an age when so many manufactured products are such rubbish, at least for me it's something that can be viewed with a bit of patriotic pride.When I bought it a few months ago, I realised I might be buying a museum piece. The outlook for our auto industry is, to put it mildly, hazy. There's every likelihood Holden, Ford and Toyota will shut their factories in the next few years.That would be a social calamity for tens of thousands of Australian families -- most of them in Victoria -- and a devastating economic blow for the nation. This is, I acknowledge, an increasingly unconventional and mostly unwelcome view in political, media and bureaucratic circles.The vibe, if you want to call it that, about the local industry is that it is unworthy, unproductive and extortionate. Because it relies on subsidies paid by the federal, Victorian and South Australian governments, to provide up to a quarter of its Australian investments, it's considered as little more than a financial leech.In short, there are a lot of people in the opinion-shaping game who would be delighted to see the factories close down. They have a dislike for local car makers that only closure of the industry will satisfy. But other heavily subsidised industries, such as agriculture, don't exercise them.As for our politicians, the attitude of the Liberal-National Coalition is unclear, although shadow treasurer Joe Hockey appears unsympathetic to industry support programs.The Labor Party has put in place the Automotive Transformation Scheme, which provides $3.3 billion from 2010 to 2020. But with the companies regularly making job cuts -- Holden shed 500 workers last week -- the Government doesn't go out of its way to champion the policy.Meanwhile, Holden's recent admission that it received $2.2 billion in federal government assistance during the past 12 years is treated as red meat by the industry's detractors, regardless of the company's claim that the subsidy has generated 18 times its value in economic activity.Last week, the former global head of Ford, Jac Nasser, said he was pessimistic about the future of the domestic industry. He predicted that if one of the three car makers fell over, the others would follow soon after. Nasser was bemused by Australians' lack of emotional connection to the industry. Other countries paid a lot more in subsidies than Australia in order to hold on to their car makers and felt a sense of national pride in doing so, he said.In the US in late 2008, George W. Bush bailed out Ford, General Motors and Chrysler. A year later, under Barack Obama, General Motors emerged from bankruptcy with the US Federal Treasury as its majority owner.Another ex-chief of Ford Australia, Bill Dix, said this week the high dollar and the wide range of available models made it inevitable that the domestic industry would be gone by 2020. But that's under the current policy settings. If the Automotive Transformation Scheme is nixed, the closure would come much sooner. The general speculation is that Ford would be the first to go.Let's consider what that means. There are 50,000 vehicle workers and more than 200,000 other workers dependent on the industry. As well as the three car makers, 165 more companies are engaged in supplying parts. If domestic manufacturing shut down, car dealers and mechanics would still be needed to sell and service the imported cars we'd all be driving. So many jobs would be saved.But most would go. All of the ancillary activities such as design, engineering, plastics and metal casting, hi-tech finishes and electronics, with all of their spin-off applications for other sections of the manufacturing sector, would be lost.On top of the lost economic activity and taxes, what happens to tens of thousands of workers who find themselves with no employment? Opponents of the industry say those workers are inefficient so they did not deserve their jobs in the first place and the market will find them a job in a genuinely productive sector.Easy to say when it's not your livelihood on the line. The market won't absorb an entire industry's workforce. Those who argue for the rug to be pulled from under the domestic car makers need to take responsibility for what would come after. Until they do, Australia should keep designing and making cars, especially cars like mine.
