The future of Australian Manufacturing

[Qsaint]

No big surprises there.

The problem, as always, is volume production and Australia's relatively small population. The most viable car production plants around the world do volume runs in the hundreds of thousands of vehicles per year. The domestic market in Australia can't generate enough demand for all those vehicles, therefore Australian production must be geared to export a significant chunk of production. Ford decided against this, instead of going down the road of producing a left-hand drive Falcon for export they developed the Territory SUV for the domestic market. Turns out to have been the wrong strategic choice.

Or

Our minimum wage is double that of Germany and UK, we allow unions far to much power and we have dumped huge overheads on businesses around compliance, Ohs yadda yadda

 

[tandino]

I think eventually we'll see multinational workers unions established, with people striking in Melbourne to support workers in China etc.

It will be a good thing. We can't just accept the 1%'ers views on using offshore labor, we need to ensure those third world workers are given similar standards to our own. At the expense of profit if necessary.

To be perfectly frank, I don't think the vast majority of people in Melbourne or wherever else put too much thought into the conditions of workers in China.

Where's the mass outrage over what happened in Bangladesh recently?

 

[Eastern Rangers]

The Territory wasn't built at the expense of the Focus being built, they almost went with the Focus after the Territory was in production and they scrapped the idea. If you look at the market they made the right choice, the only problem was it would have been better to build something smaller like the Kuga/ Escape.

I'm stoked we'll be getting the Taurus, Edge, Mustang. Lame that we're loosing a great RWD icon.

Perhaps we'll see Lincoln down under with some RWD sedans.

 

[cancat]

Ford set to announce its pulling manufacturing out of Australia.

The Labor government committed $5.4 billion to subsidise car making with the stated intention to make the industry "economically and environmentally sustainable". It was never going to happen. It was just a sop to their union paymasters to fund overgenerous redundancy packages. The likely arrangement at Ford will be five weeks' pay per year of service, capped at 90 weeks. Compare this to Fair Work Ombudsman terms of 2 weeks per year capped at 16 weeks.

 

[LouisCK]

To be perfectly frank, I don't think the vast majority of people in Melbourne or wherever else put too much thought into the conditions of workers in China.

Where's the mass outrage over what happened in Bangladesh recently?

Fair point. But as the jobs leave our shores, it will (hopefully) become apparent that better conditions in China/Bangladesh lead to better conditions for everyone.

global minimum wage and a global 8 hour day would be a good start.

 

[Qsaint]

The Territory wasn't built at the expense of the Focus being built, they almost went with the Focus after the Territory was in production and they scrapped the idea. If you look at the market they made the right choice, the only problem was it would have been better to build something smaller like the Kuga/ Escape.

I'm stoked we'll be getting the Taurus, Edge, Mustang. Lame that we're loosing a great RWD icon.

Perhaps we'll see Lincoln down under with some RWD sedans.

Town cars and Taurus must have improved since I last drove them they were shite compared to th commodore/statesman/falcon etc of the day. The best fords are the ones that come/designed out of the uk

 

[noddy]

Or

Our minimum wage is double that of Germany and UK, we allow unions far to much power and we have dumped huge overheads on businesses around compliance, Ohs yadda yadda

Why stop at the minimum wage just go right across the board from the executive level all the way down.

 

[Admiral Byng]

Or

Our minimum wage is double that of Germany and UK, we allow unions far to much power and we have dumped huge overheads on businesses around compliance, Ohs yadda yadda

Bit simplistic. It assumes that auto assembly workers in both Australia and Germany/UK are all paid only the minimum wage. I'm sure they earn far more than that, so it becomes a bit of a moot point.

There's basically two options for car assembly lines, lots of automation with relatively few workers, or manual assembly using masses of low skilled workers doing simple repetitive tasks. Most developed countries would opt for the former of course. But this option comes at huge capital cost to set up, and volume production is the only way to get a return on investment. There are factories in South Korea that can churn out a quarter of a million cars a year, while employing less than 100 people. So the wages cost would be a relatively small proportion of the costs of production. Germany would be much the same.

It still comes back to the basic problem that an efficient plant requires huge volumes, and the Australian market isn't large enough to absorb all of that production. I don't think that cutting the wages for Australian assembly workers from the award to the minimum wage would make much of a dent in the economics of running the plant. If they aren't producing enough volume they are not profitable.

 

[R00StaR]

Is there a solution hidden somewhere in there?

There are solutions imo, but we need to get rid of this nanny cradle to grave welfare mentality. What we're doing atm is bound to fail, all we do is increase immigration, take from those with jobs to support them and other unemployed, pay them a mint (on a world scale) to have children which sees all that money spent with the retailers who do nothing more than put imports on the shelves. Retailers and Banks love this wealth redistribution.

Despite all the Western world having declining birth rates (i wonder why, we cant afford huge families and maintain lifestyle) we need to spend massive dollars (raise taxes) to pay for all the infrastructure of our booming population. Where is the booming population coming from? Cant be the first world countries.....hmmm and why is it a given we MUST have it?

My solution

* Fully privatize education and health - supply vouchers


* Introduce Negative income tax


* No min wage - not needed with the neg income tax. Allow people to build skills in the work place and be paid true market value. Protected via tough immigration standards.

* Positive Money (debt free)

Allows banks to die if they fail while money expansion is spent into the real economy. Meaning less speculative investment in shares/ property, more jobs and innovation. You can drop the value of your currency (printing more) without the debt attached - lower currency = higher cost to import and easier to export (hello manufacturing)

* Immigration - should be tough to protect peoples wages with no min. Immigrants should be able to pay their own way and contribute for 5 years before receiving vouchers, should prove to be a net asset with the skills/ education they bring.

* Sliding scale tax on business - Gives start ups a slight advantage to offset economy of scale of the larger companies. Makes monopolies near impossible. More mum and dad supermarkets/ hardware stores ect - allowing workers greater flexibility in employment.

 

[JRoo]

Or

Our minimum wage is double that of Germany and UK, we allow unions far to much power and we have dumped huge overheads on businesses around compliance, Ohs yadda yadda

If these workers were only getting paid the minimum wage we probably wouldn't have had the announcement by Ford of their closure today. The fact is many if not 100% of these workers get incomes well in excess of the minimum wage and their entire remuneration see's them earning significantly more than the minimum wage.

 

[Scotland]

All govt subsidies to Ford should be cancelled immediately.

Re-train workers, build some nice parks - I don't really care. Auto industry subsidies are wasted money, and subsidies to companies that have announced they are shutting down are just absurd.

 

[tazzietiger]

Nick Champion ALP MP is pushing for tariffs to be re-introduced.

AN emergency tariff on vehicle imports could save manufacturing jobs, including many at Holden's Elizabeth car plant, says federal Labor MP Nick Champion in a push to overturn 40 years of policy.
A special temporary tariff of between 5 and 10 per cent would make imported cars more expensive, helping local manufacturers to compete for sales.
Labor first dropped tariffs under Gough Whitlam in 1973 and has continued to remove the protective cushion in many industries to make imports cheaper and force protected sectors to innovate and become more efficient in order to compete.
Vehicle tariffs stand at 5 per cent but Mr Champion said global -conditions, including the high Australian dollar, had changed circumstances.
"We have limited options to help the automotive industry but one is a special tariff in these unusual circumstances of an abnormally high Australian dollar while competitors are devaluing their currency," he said.
"There is a lot of support within the Labor Party for the car industry and while our history is obviously one of opening up Australia to free trading, we now face different circumstances."
Mr Champion said the tariff should stay in place while the dollar remained above US94c

http://www.adelaidenow.com.au/busin...save-holden-jobs/story-e6fredel-1226645933717

 

[Mason Burrell]

Given that Australia has been quite one of the lucky few who had avoided recession over the recent years, job losses are highly unusual and this put Australian Manufacturing into the spotlight. It is no secret that not all manufacturing companies are going to be successful. This speaks not only for Australia but for other countries as well. I guess this is the main reason also why most businessman prefer importing from China rather than setup his own manufacturing industry. Importing has proven to be cheaper than manufacturing as well. I also know of some company owners who do the manufacturing themselves but still import the parts or supplies from China. If you want to know more why more businessman are gearing up towards importing from China, click here to know the benefits as My Import Label shares them all.

http://www.myimportlabel.com.au/import-from-china

 

[tandino]

Given that Australia has been quite one of the lucky few who had avoided recession over the recent years, job losses are highly unusual and this put Australian Manufacturing into the spotlight.

The correlation between the lack of a technical recession and the lack of job losses is not as strong as you make it out to be.

Take today, for instance.

 

[chelseagle]

Bit simplistic. It assumes that auto assembly workers in both Australia and Germany/UK are all paid only the minimum wage. I'm sure they earn far more than that, so it becomes a bit of a moot point.

There's basically two options for car assembly lines, lots of automation with relatively few workers, or manual assembly using masses of low skilled workers doing simple repetitive tasks. Most developed countries would opt for the former of course. But this option comes at huge capital cost to set up, and volume production is the only way to get a return on investment. There are factories in South Korea that can churn out a quarter of a million cars a year, while employing less than 100 people. So the wages cost would be a relatively small proportion of the costs of production. Germany would be much the same.

It still comes back to the basic problem that an efficient plant requires huge volumes, and the Australian market isn't large enough to absorb all of that production. I don't think that cutting the wages for Australian assembly workers from the award to the minimum wage would make much of a dent in the economics of running the plant. If they aren't producing enough volume they are not profitable.

You are right about the trend towards automation, but how much of that was the fault of successive Australian governments giving the car makers money to protect jobs? The car companies should have started the process towards full automation decades ago. However, the aim of government funding was never to help or protect Australian manufacturing, it was to protect the jobs of a small group of people who just so happened to be members of a union.

 

[Eastern Rangers]

Town cars and Taurus must have improved since I last drove them they were shite compared to th commodore/statesman/falcon etc of the day. The best fords are the ones that come/designed out of the uk

Thankfully Ford doesn't really work like that any more.

Fiesta, Focus, Mondeo/ Fusion, Kuga/ Escape are global cars and have design work done across the world.

For instance the all new Mustang is being designed in the US, UK and Australia.

 

[Scotland]

You are right about the trend towards automation, but how much of that was the fault of successive Australian governments giving the car makers money to protect jobs? The car companies should have started the process towards full automation decades ago. However, the aim of government funding was never to help or protect Australian manufacturing, it was to protect the jobs of a small group of people who just so happened to be members of a union.

Large-scale fully automated plants would only work if we produced enough cars for export to keep them pumping out cars 24/7. If you wanted a large RWD sedan you'd get one from Germany. If you wanted a small 4 cylinder car you'd get one from Japan or Korea. If you wanted a 4WD you'd get one from Japan. We don't offer anything comparable but better than the rest of the World has to offer or different that the rest of the World has strong demand for.

Holden spent squillions not long ago setting up the new engine plant in Melbourne and from 2003 to 2013 sales of the car which uses the engines produced at this plant have fallen by two thirds. That's just poor business. If a company spent millions setting up a state of the art factory to produce photographic film in the 2000s would we be talking about bailing them out?

 

[chelseagle]

Large-scale fully automated plants would only work if we produced enough cars for export to keep them pumping out cars 24/7. If you wanted a large RWD sedan you'd get one from Germany. If you wanted a small 4 cylinder car you'd get one from Japan or Korea. If you wanted a 4WD you'd get one from Japan. We don't offer anything comparable but better than the rest of the World has to offer or different that the rest of the World has strong demand for.

Holden spent squillions not long ago setting up the new engine plant in Melbourne and from 2003 to 2013 sales of the car which uses the engines produced at this plant have fallen by two thirds. That's just poor business. If a company spent millions setting up a state of the art factory to produce photographic film in the 2000s would we be talking about bailing them out?

Not sure what the point of your post is, as I am not advocating bailing them out.

Plenty of niches in the automotive market that Australian manufacturing could fill, however government support has been explicit in supporting generic sedans aimed at the consumer market, manufactured in a labour intensive method. Is there any company in the world thriving with this model?

Government policy regarding this seem rooted to the idea of what worked in the 1950s.

 

[LouisCK]

However, the aim of government funding was never to help or protect Australian manufacturing, it was to protect the jobs of a small group of people who just so happened to be members of a union.

So you're saying being a union member is a good idea for manufacturing workers?

 

[Scotland]

Not sure what the point of your post is, as I am not advocating bailing them out.

Plenty of niches in the automotive market that Australian manufacturing could fill, however government support has been explicit in supporting generic sedans aimed at the consumer market, manufactured in a labour intensive method. Is there any company in the world thriving with this model?

Government policy regarding this seem rooted to the idea of what worked in the 1950s.

My point is that the driver for employment in automotive manufacturing is being able to profitably produce cars that people want to buy.

Greater automation wouldn't save the Oz industry because a whiz bang state of the art plant designed to produce 100,000 Commodores a year wouldn't be worthwhile producing 20-30,000.

Govt support has always just prolonged the inevitable, but the carmakers have long been trend watchers. We're just a small scale version of America really - we were good in the 1950s and rested on our laurels while other nations improved, innovated etc. and have now gone way past us.

 

[chelseagle]

Govt support has always just prolonged the inevitable, but the carmakers have long been trend watchers. We're just a small scale version of America really - we were good in the 1950s and rested on our laurels while other nations improved, innovated etc. and have now gone way past us.

Harsh, the US is where the next big things in autos is growing - Tesla Motors and the Google X Car project.

Always opportunities for Australian manufacturing to thrive, but government by and large has to get out of the way. Support can be OK, but the support in Australia has been based on old notions that manufacturing is a big employer when the reality is labour in the manufacturing sector is going the way of labour in the agricultural sector.

People mention the decline in US manufacturing but what they don't see is that gross manufacturing product in the US tends to grow strongly year-on-year, it just doesn't employ mass labour any more (and nor should it).

 

[Dry Rot]

Was it all Tony Abbott's fault?

The irony of this 18/4/13 report is delicious

In an attack on the eve of Mr Abbott's appearance tonight at the Geelong Advertiser /Sky News People's Forum, Ms Gillard said the Coalition's plan for the automotive sector was "laughable" and would cost 1500 jobs in the region. "There will be no car industry in Geelong," Ms Gillard told the Geelong Advertiser in an exclusive interview. "Not only would it kill the jobs of today, it would rob the jobs of tomorrow through advanced manufacturing."...

Corangamite MP Darren Cheeseman will also speak at the rally. "Our large employers contribute $300 million annually to the Geelong economy and Mr Abbott holds that in contempt and disregard," he said. "The next parliament will be critical in determining the future of these very significant employers in our region."

http://www.geelongadvertiser.com.au/article/2013/04/18/363226_news.html

Well done Julia.

 

[cancat]

Well done Julia.

Jobs are safe in her hands.

 

[Bradesmaen]

Isn't the number one pillar on Tonys economy "Manufacturing"? How the hell can he say that in this climate. Why can't politicians accept that manufacturing is dead in this country. It started being killed off 15 years ago.

 

[Dry Rot]

Jobs are safe in her hands.

And AWU funds.