The future of Australian Manufacturing

[evo]

I remember in the 70s that you had Holden, Ford, Chrysler/Valiant/Mitsubishi, Toyota, Mazda, Datsun/Nissan, Honda and low numbers of imported niche brands.

Look at the range of brands and prices these days.

It seems like these days it is rare to see a standard new Commodore or Falcon on the road. When I was growing up they seemed to make up about 75% of all cars on the road.

I reckon Toyota in particular really beat the Australian car makers at their own game. In cars, people generally j just want a good reliable product. Toyota and probably Nissan and Honda as well seem to deliver that in spades.

 

[mantis]

It seems like these days it is rare to see a standard new Commodore or Falcon on the road. When I was growing up they seemed to make up about 75% of all cars on the road.

I reckon Toyota in particular really beat the Australian car makers at their own game. In cars, people generally j just want a good reliable product. Toyota and probably Nissan and Honda as well seem to deliver that in spades.

Add Mazda to that list, I have only ever had Toyotas & Mazdas, except my very first car which was a VW Beetle.

 

[Herne Hill Hammer]

It seems like these days it is rare to see a standard new Commodore or Falcon on the road. When I was growing up they seemed to make up about 75% of all cars on the road.

I reckon Toyota in particular really beat the Australian car makers at their own game. In cars, people generally j just want a good reliable product. Toyota and probably Nissan and Honda as well seem to deliver that in spades.

Interesting cover story from last Friday's HUN, Cars Guide.

Holden sold 750,000 cars in the '50s and sold 250,000 EHs in 18 months in '63/'64. It's been the fastest selling car in Australia of all time. 30,000 Commodores were sold last year and 14,000 Falcons.
The HQ Holden sold 485,000 in 3 years in the 70's. 100,000 Falcons sold in the first 2 years that it was on the market.

In '98 there were 94,000 Commodores sold. At the start of the decade (2000) Australian made cars had 33% of the market, by 2005 it was 25%. Last year it was 12.5%. At the beginning of the century there were less than 50 brands and 200 models to choose from, there are now 67 and more than 360 models.

It also says that Australia has more choice in cars than any other developed country.

 

[Pessimistic]

There are far more variations in europe

 

[tazzietiger]

Just on the topic of competition of vehicle varieties in Australia. Why does GM import similar car's to compete in the same market share as they already produce domestically here. Example Holden Cruze and the Opel Astra. If Opel is successful here it will most likely hurt sales of the Cruze which receives government funds to manufacture.

 

[evo]

Holden sold 750,000 cars in the '50s and sold 250,000 EHs in 18 months in '63/'64. It's been the fastest selling car in Australia of all time. 30,000 Commodores were sold last year and 14,000 Falcons.
The HQ Holden sold 485,000 in 3 years in the 70's. 100,000 Falcons sold in the first 2 years that it was on the market.

I remember when the HQ Holden came out, it was about the time I started primary school. I think the XA Falcoln came out about the same time. Everyone's Dad were getting one or the other becasue they were a whole new style after the HG and XR.I was pissed off because my dad got a valiant lol.

I don't know if I'm misremembering, but I think a brand new HQ cost about $1850. That's inflation for you.

When I turned 18 I bought a HR, then later a HQ and then a Torana. All cars were super cheap to run because whenever something broke down, you'd just go to the wreckers, buy the part for 10 dollars and put it in yourself.In fact you could often put HQ parts in a Torana - even whole engine blocks would bolt straight in. We used to put whole new gear boxes, clutches or diffs in ourselves over a couple of beers. It was a great way to learn how cars worked. Now you look under the bonnet and you wouldn't have a clue what has gone wrong.

 

[LouisCK]

Holden and Ford operate in one of the most expensive manufacturing markets in the World and produce cars of mediocre quality that the local market doesn't want to buy.

I reckon give them another subsidy, that'll fix the underlying problems.

They're still pretty good value for money at the high end (Try getting something with the punch of a Typhoon or Club Sport for the equivalent price in Europe - its impossible).

But imported Japanese cars are cheaper, easier at the petrol bowser and well made. I'm all for government protection of some industries, but I can't see the car manufacturers being viable at any point. Take the subsidies away and invest it into new industries I reckon.

 

[Scotland]

They're still pretty good value for money at the high end (Try getting something with the punch of a Typhoon or Club Sport for the equivalent price in Europe - its impossible).

But imported Japanese cars are cheaper, easier at the petrol bowser and well made. I'm all for government protection of some industries, but I can't see the car manufacturers being viable at any point. Take the subsidies away and invest it into new industries I reckon.

It's not an apples to apples comparison when there are subsidies, import duties etc. in play. Sure, each of our import partners has their own internal taxes, tariffs, IR laws etc. but the affordability of Australian cars vs European imports is pretty skewed.

I agree that getting a well built large 4 door sedan with a 300 kW V8 for $45k is pretty good value, but our cars are pretty basic and without subsidies Holden's BEP would be much higher.

 

[Hill2Pav]

Less government assistance to manufacturers with the savings used to lower company taxes would help;

http://www.afr.com/p/opinion/car_subsidies_drive_the_economy_yKfZMPtcmiWxQwXlcMlEcO

Car subsidies drive the economy down

PUBLISHED: 02 Apr 2012 00:05:08 | UPDATED: 02 Apr 2012 00:47:59
Malcolm Bosworth

The federal government, led by Treasurer Wayne Swan and Prime Minister Julia Gillard, justifies continued financial aid for the car industry by claiming incorrectly that it is essential to Australia remaining a sophisticated manufacturing nation.

The PM recently stated “car manufacturing needs to be part of our future . . . because it does have, at its forefront, design and innovation skills which are important not only to car manufacturing, but to the rest of manufacturing”.

But in reality, car subsidies are economic poison and poor public policy – blatant industry protection that hurts taxpayers, consumers and productivity. The car industry demonstrates how assistance stifles efficiency and how imports can promote competitiveness and consumer interests.

Car making is still heavily assisted relative to other industries. Selective assistance advantages the car industry in competing with other users for resources, thereby penalising these other industries. The Productivity Commission’s latest effective rate of assistance estimates for cars of 11.1 per cent is almost three times the manufacturing average of 4.4 per cent, and equivalent to an annual net subsidy of $1.6 billion.Consumers paid 55 per cent of this through higher prices for home-made cars from the 5 per cent tariff; the rest came from taxpayer-funded subsidies (grants and tax concessions).A $6.2 billion car assistance package to apply from 2009 to 2021– A New Car Plan for a Greener Future – extended new commitments of $3.2 billion. Car industry subsidies are becoming permanent, yet they were introduced as a transitional measure to facilitate scheduled cuts in tariffs and import quotas.

The government recently announced $34 million in funding for Ford to boost the fuel efficiency and emissions performance of core models, and $275 million for GM Holden. Even with greater fuel efficiency, Australians are still unlikely to buy bigger, more powerful, locally made vehicles as imports also become more fuel efficient.
What matters for national welfare is that activities adjust to the higher dollar so that resources are used most efficiently. As some industries contract, they also release the resources needed for more efficient sectors to expand.

Former prime minister Paul Keating is right: car subsidies fly in the face of the government’s aim to reconnect with the Hawke-Keating unilateral trade policy reforms to promote a more open and competitive economy.
Mr Keating said last week: “If you are going to have terms of trade like this for a decade, or 15 years or perhaps even longer, and the exchange rate is going to be elevated . . . the idea of trying to insulate companies and industries is . . . going to produce a bad outcome.”

Trade Minister Craig Emerson would be flat out explaining how these subsidies are consistent with the government’s trade policy statement.

The claim that the nation must preserve the car industry to keep jobs is false. Protection does not save jobs overall. At best, they are kept temporarily in the assisted industry at the expense of jobs elsewhere in the economy. And these specific jobs become costly and burdensome for other activities, consumers and taxpayers.The car industry’s net annual subsidy equivalent is some $35,000 per direct job. Most jobs associated with cars, such as in selling and repairing (mechanics, panel beaters) will exist irrespective of whether cars are made locally or imported.

Arguing that the car industry is needed to ensure a technologically advanced manufacturing sector is nonsense. Technology transfers and spillovers from innovation in making cars are no greater than those flowing from the activities burdened by car protection.

Indeed, a lack of innovation should be the last thing the government is worrying about given that the definition of research and development used to fund car makers is softer than that under general government R&D schemes.
The PC’s disturbing assistance figures do not tell the full story. They exclude substantial extra assistance provided by the 33 per cent luxury sales tax on cars priced above the relatively low threshold of $57,466, which are mainly imported.

Also omitted is protection from the prohibitively high specific tariff of $12,000 per vehicle on imported used cars, state government financial assistance, and government procurement favouring domestic cars over imports.
New Zealand, which allows imports of second-hand cars, is a major importer of modern used Japanese cars, such that Australian used car prices are on average 45 per cent higher. Our used-car tariff thus heavily burdens consumers and assists car manufacturers. The car subsidy policy needs an urgent rethink. The industry needs ongoing reform and rationalisation, not continued assistance to keep doing what it has always done.

And if the car industry’s competitive environment has become more difficult, then the only appropriate response is not government assistance but for the industry to become more competitive – for a start by dismantling the sweetheart inflexible and non-competitive union deals “negotiated” with companies and paid for from car assistance.

Opposition Leader Tony Abbott’s statements on car industry assistance as integral to maintaining the nation’s manufacturing technology prowess also reflects muddled thinking. As the PC’s assistance estimates show, the opposition’s policy of reducing car subsidies by $500 million, while a step in the right direction, would still leave the industry receiving more assistance than any other.

Malcolm Bosworth is a visiting economist at ANU Enterprise.

 

[LouisCK]

It's not an apples to apples comparison when there are subsidies, import duties etc. in play. Sure, each of our import partners has their own internal taxes, tariffs, IR laws etc. but the affordability of Australian cars vs European imports is pretty skewed.

I agree that getting a well built large 4 door sedan with a 300 kW V8 for $45k is pretty good value, but our cars are pretty basic and without subsidies Holden's BEP would be much higher.

I'd be interested to see the sales of the SS and F6 etc. as I reckon they're great performance cars for their price.

 

[Rob]

Just on the topic of competition of vehicle varieties in Australia. Why does GM import similar car's to compete in the same market share as they already produce domestically here. Example Holden Cruze and the Opel Astra. If Opel is successful here it will most likely hurt sales of the Cruze which receives government funds to manufacture.

I'd guess because they can sell an Astra in Australia for a lot more than they can get for it in Europe.

 

[JoondalupJ]

With more job loses in the manufacturing sector making headlines today with the announcement of Boral cutting 700 job. I thought given its an election year also we could have a thread to discuss the issues of government assistance and long-term manufacturing viability in Australia. Now we all know the issues that effects our exporters such as the Australian dollar, IR, taxes and regulation.

With the American economy and European economies on a long-term path to recovery can we afford to keep paying out government assistances to industries until our dollar decreases in value that would allows us to become competitive once again in global markets or has the time now came that we(Australia) just have to accept that most manufacturing can now be done in Asia and imported cheaper and most likely going to stay that way for the next couple of decades.

Well Colin Barnett has the answer , give all the work to china.

 

[JoondalupJ]

Well Colin Barnett has the answer , give all the work to china.

Where does that actually leave us. Is this place doomed . Pessimism is rampaging through Aus. Are we really stuffed or do the money manipulators of the world just bullshit to us plebs.
I think the bullshit answer is it . What about you people. It goes on Judah, it goes on.

 

[Dry Rot]

Where does that actually leave us. Is this place doomed . Pessimism is rampaging through Aus. Are we really stuffed or do the money manipulators of the world just bullshit to us plebs.
I think the bullshit answer is it . What about you people. It goes on Judah, it goes on.

We are really stuffed.

 

[Scotland]

Well Colin Barnett has the answer , give all the work to china.

Is this the same Colin Barnett that wants the gas hub at James Price Point ahead of FPSO production?

 

[tazzietiger]

The locally made car industry had one of their worst monthly sales on record.

Preliminary sales figures for January obtained by Drive show Holden sold roughly 1600 Commodores for the month, believed to be its worst month on record. It was a record low for its traditional rival too, with Ford selling less than 800 examples of the Falcon.
Toyota’s locally made sedans, the Camry and Aurion, also registered what is believed to be their worst monthly sales on record.
January is typically a bad month for the locally-built sedans because fleet buyers, who account for up to 70 per cent of their sales, don’t buy cars in January.
But the results put further pressure on an industry that has been criticised for relying too heavily on government subsidies for its survival.
Just five years ago, the four locally-made sedans found 10,000 buyers in January. This January the figure slumped to little more than 3000 as buyers deserted the old staples.

http://m.smh.com.au/drive/motor-news/local-car-industry-hits-lowest-ebb-20130204-2du49.html

 

[King Elvis]

Holden and Ford operate in one of the most expensive manufacturing markets in the World and produce cars of mediocre quality that the local market doesn't want to buy.

I reckon give them another subsidy, that'll fix the underlying problems.

http://www.theaustralian.com.au/nat...r-cent-wage-rise/story-fn59noo3-1226270229745

The Unions celebrate these insane wages and conditions, yet seem completely dismissive of the fact that they're a large part of what will result in the closure of these plants.

And I have no idea why Great Wall type cars are allowed to be sold here - what benefit does it have to Australia?

 

[tazzietiger]

To have a open debate about the topic of government subsidies to the manufacturing industry we need to know the full amount of funds that is going to the industry. Unfortunately the government believes us knowing information will be harmful and not in our interests.

The federal government has refused to reveal how much money it is providing to keep each of the local car manufacturers afloat, weeks after GM Holden and Toyota confirmed they might need more financial assistance this year.
The Department of Industry and Innovation this week rejected an application by The Australian Financial Review for “a single dollar figure” of the assistance paid to each of the car makers– Toyota, Ford and General Motors – by the federal government between 2001 and 2012.
Struggling to sell cars and cutting staff, Holden last year was promised an extra $275 million, while Ford was given at least $35 million in handouts. Over 10 years each company could have received $1 billion.
The government successfully asked the Federal Court last year to stop the Financial Review revealing the actual figures, which the department accidentally sent to it.
When the Financial Review tried to get the information through the Freedom of Information Act again, the department this week said the figures would not “contribute in any meaningful way to informing debate on a matter of public importance”.
The opposition’s industry spokeswoman, Sophie Mirabella, hasn’t said if she would release the information either, although she said transparency in government programs was essential to assessing their effectiveness. “The government has continually failed to provide the Coalition with even the most basic details of past and future spending on their car industry programmes,” she said.
NOT IN THE PUBLIC INTEREST


The Coalition wants a Productivity Commission inquiry into the local car industry. On Monday, the Industry Department’s manufacturing division general manager, Mark Durrant, said disclosure of information in response to the latest request would not be in the public interest.

http://www.afr.com/p/national/car_subsidies_are_state_secret_bureaucrat_jXjhBxKmp56U6nh2oJ0oxL

 

[checkraiseulite]

We need to compete on quality/innovation or price. I just can't see us competing on either.

QFT.

 

[Max zero]

http://www.theaustralian.com.au/new...t-help-essential/story-fn3dxiwe-1226611041371

The $2.2 billion figure is around 50 per cent more than some economists had previously estimated.

Mr Devereux said without the assistance it would be "absolutely impossible to make cars in this country".

Good to see car workers get their pay rise though.

 

[tandino]

http://www.theaustralian.com.au/nat...r-cent-wage-rise/story-fn59noo3-1226270229745

The Unions celebrate these insane wages and conditions, yet seem completely dismissive of the fact that they're a large part of what will result in the closure of these plants.

The Brits walked down this road 40 years ago.

 

[noddy]

Manufacturing is doomed in this country as we can't compete with the Asian countries unless we drop our standard of living to what we have been accustomed to a level similar to what those of the Asia Pacific regions have.

We will be left as a great tourist destination with plenty of minerals in the ground & if Gina & Rupert are correct a great big food bowel up in the north.

The Brits walked down this road 40 years ago.

How many cars, ships & white goods are now made in Britain?

I would hazard a guess as very few.

 

[medusala]

How many cars, ships & white goods are now made in Britain?

I would hazard a guess as very few.

Heaps of cars are made in Britain see below. Luckily for the UK they had a quality pm who stared down the rent seekers in the union movement. Output recovered to not far from its peak and some decent cars started to get made instead of rubbish state owned ones like Leylands. Not many ships are made, you can thank the unions for that.

http://blogs.thisismoney.co.uk/2009/09/chart-of-the-day-uk-car-manufacturing.html

 

[tandino]

How many cars, ships & white goods are now made in Britain?

I would hazard a guess as very few.

The UK still produce a significant amount of cars, almost as much as they ever have done in the past.

But it's one thing to build local variants of global models with access to export markets that in some cases are 20 miles from your borders (Land
Rover/Vauxhall/Toyota/Honda), as opposed to building and developing cars for a domestic market with negligible export potential, cars that nobody buys and bankrolled by Government. That is the story of British Leyland, Holden and Ford.

 

[noddy]

Heaps of cars are made in Britain see below. Luckily for the UK they had a quality pm who stared down the rent seekers in the union movement. Output recovered to not far from its peak and some decent cars started to get made instead of rubbish state owned ones like Leylands. Not many ships are made, you can thank the unions for that.

http://blogs.thisismoney.co.uk/2009/09/chart-of-the-day-uk-car-manufacturing.html

Besides the ET & Boy George tid bits i did notice this part which sort of brings it into perspective.

"Most cars supposedly "made in the UK" now are not designed and made here at all! Most are designed abroad, all or almost all the component parts are manufactured abroad, and the "factory" in the UK is just a knock-down component assembly plant, where relatively unskilled operatives assemble the parts. That is not UK Engineering. As a result we have lost the key foundational skills in world class motor car design and production engineering"

As for Ship Building i worked for a number of years in two Ship Building sites one in Whyalla the other in Port Adelaide both are closed now & i know for a fact that both were subsidized by both state & federal governments while the one in Whyalla was very heavily subsidized, if you did not know it but we built quite large boats mainly for BHP itself but also for other shipping companies, one of BHPs fav tricks was to manufacture a strike of some sort if they were looking at being unable to deliver on time which resulted in extra time/$$ it was Bob Hawke who eventually put a stop to this by withdrawing all subsidies which left to the permanent closure of major Ship Building in this country, not many believed this could happen but it did & this city went from a population of around 32,000 to under 20,000 within ten years.

I can assure you the Unions played a minor part of the closure of the Whyalla Shipyard it was pure economics plain & simple.

The UK still produce a significant amount of cars, almost as much as they ever have done in the past.

But it's one thing to build local variants of global models with access to export markets that in some cases are 20 miles from your borders (Land
Rover/Vauxhall/Toyota/Honda), as opposed to building and developing cars for a domestic market with negligible export potential, cars that nobody buys and bankrolled by Government. That is the story of British Leyland, Holden and Ford.

You don't have to tell me i bought a Leyland Morris Marina brand new for around $2,000 in the seventies & couldn't even give it away for nix three years later, terrible motor car.