Abbott, Hockey et al would have you believe that GM have made a decision to cease manufacturing in Australia. Kim Carr and Jay Weatherall have been saying that GM were willing to continue and had specified exactly what was required. My recall is that Weatherall said they wanted the Government to chip in $130 million. Carr told Waleed Aly that the price was significantly less than $150 million. Carr said further that the hectoring and bullying by Hockey, Abbott and others clearly let GM know they were not wanted.
I think Carr is right. The Government wanted to make the decision look as though it was made by GM alone and to a degree they have succeeded.
Tim Colebatch, in a column written before the decision was announced (sadly, his last) was clear that the decision was made by Abbott. He thinks it could precipitate a recession. And:
car programs cost $400 million a year, nothing like the $3 billion a year for diesel fuel rebates to mining companies, or the $5 billion to subsidise negative gearing. The budgetary cost of losing this industry will dwarf the cost of keeping it.
A study by Allen Consulting Group estimates in Melbourne alone, its closure could cost 33,000 jobs, and cut the nation’s output by $7.3 billion a year. The numbers are speculative, but clearly, this will be a huge economic shock.
The whole article is worth reading. He says that the dollar was not the only problem but a 91% rise since 2002, when we were roughly competitive with Korea, is a large part of it.
the focus of the federal government seemed more on ensuring it was not seen as culpable for the decision than on dealing with its consequences.
In what seems to be becoming a concerning pattern, the Coalition appears to have no alternative plan in place to deal with either the political or policy fallout of the GM Holden decision.
The broader issue here of course goes to the future of manufacturing in this country, particularly when confronted by a relentlessly high Australian dollar.
The Coalition spruiks concern about a high cost base which makes manufacturing uncompetitive. But it has nothing constructive to say about what it can do about this, or even indicated it is thinking about it.
On the components industry, one anecdote I heard on the radio is perhaps instructive.
The particular supplier makes glass windows for cars. However, more than half his business is now in making glasses for drinking, where he is the largest supplier in Australia. If he folds then that part of the business goes too. The die maker he uses is also local.
The 7.30 Report had a report by Sabra Lane as well as an interview with Ian MacFarlane, who was gritty and pragmatic, as usual, not the worst industry minister we’ve had. However, like GMH, he was never going to diss the Government or be completely open about the real story. Of interest, he did say that a car was twice as long on an assembly line here as it was in Japan.
The World Today have had a number of interesting segments on the issue including interviews with Bill Malkoutzis who runs an auto engineering consultancy firm, Talk Torque, and worked for Ford for 13 years, including a stint in Detroit and with Nicholas Gruen from Lateral Economics.
There’s no shortage of ideas and advice. Readers might like to contribute other links.
My own view is that the demise of car making is probably inevitable, unless we could find a genuine quality niche in the global supply system. I would have preferred to keep the music playing a little longer, to maximise the opportunities for suppliers to also diversify and globalise their businesses also, and for governments to develop industry policy.
In general, Australia’s biggest competitive weakness is in the quality of its bosses, both in politics and industry.