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Ford bailout reignites car manufacturing 
debate

During the opening day of the Detroit motor show yesterday, Minister for Manufacturing Kim Carr announced a $103 million cash injection for Ford in order to secure the company’s Australian-based operations until at least 2016. Holden is said to be also close to securing a deal with the Gillard government.

With $34 million coming from the public purse, Carr argues the cost of losing the Australian car industry will be greater than the cost of maintaining it. His announcement aimed to put to bed speculation that Ford Australia is set to shut up shop here, which, critics may argue, is an attempt to reduce the amount of fuel that could be used against the government come election time.

Exchanging handshakes, smiles and signatures with the car industry’s top rev heads, Carr said:

There is a sense of urgency about the situation but not a sense of panic. There’s no doubt that this announcement puts to rest some of the wilder rumours that have been floating around about the future of the company.

Carr’s Ford Australia bailout has accelerated a familiar debate about the viability and future of the car manufacturing industry in Australia. Unsurprisingly, Gillard believes the industry has plenty of fuel left in the tank. In an op-ed for the Herald Sun she wrote about the importance of maintaining a well-oiled sector with a view to the future:

While car makers went to the wall across the OECD, Australia attracted new investment, securing the Holden Cruze, the fuel-efficient Ford Falcon and the hybrid Toyota Camry … Labor has a proud record of investment with the automotive industry to help it build new, cutting-edge cars right here on our shores.

Joshua Dowling, writing for The Age from Detroit, claimed the wheels almost came off the deal due to poor performance from South Australian Premier Jay Weatherill:

Moments after Ford’s briefing, it all began to unravel. The South Australian Premier, Jay Weatherill, unwittingly overplayed his role as the knight in shining armour, telling local radio he hoped to ”save Holden”, sparking unwarranted concern.

The Australian’s Philip King argued there is a very good reason why the “wild rumours” have circulated:

The rumours have their basis in unavoidable facts. Chief among them is the declining demand for large car …The money is an admission, in effect, that Ford Australia needs life support just to get it that far.

While the social good of the industry is beyond doubt, given the $12 billion in government support over the last decade, more questions need to be asked about the efficacy of the industry and where it is heading in the decades to come.

Ian Verrender at the SMH pulled no punches:

How ever much time he (Carr) buys, an air of inevitability hangs over the industry. As a car manufacturing hub, Australia’s days are numbered … While we’re at it, let’s be brutally honest. There is no such thing as an Australian car industry. It is an American and Japanese car industry with a couple of plants here.

And the Fin Review took a broader, more curt take on the debate:

State and federal governments have learnt many lessons about industrial protection and subsidies in the past few decades, with those lessons boiling down to one golden rule — don’t bother.

Lobbying an op-ed all the way from Oman, The Oman Daily Observer damningly associated the car industry with the Australian Institute of Sport, writing:

Every four years, the Australian Institute of Sport wrings a mountain of cash from Canberra by warning of a dearth of medals and national shame at the next Olympic Games. Now the automotive industry seems to be putting on a similar pantomime, nearly four years after it was bailed out in the 2008 financial crisis.

13
  • 1
    Suzanne Blake
    Posted Wednesday, 11 January 2012 at 10:43 am | Permalink

    Australia makes good cars and we should strive to keep production here

  • 2
    Hugh (Charlie) McColl
    Posted Wednesday, 11 January 2012 at 11:14 am | Permalink

    Another few years of the V8 Supercar circus - showing how mind-numbing the whole carbon debate is on the Australian electorate. “Good cars” which weigh nearly two tonnes and chew petrol like water are not good sense. The Ford Falcon and Holden Commodore are now dinosaurs which we should be trying to replace rather than perpetuate.

  • 3
    Lord Barry Bonkton
    Posted Wednesday, 11 January 2012 at 11:22 am | Permalink

    SB , you socialist ? What happened to the Free market ?

  • 4
    RamaStar
    Posted Wednesday, 11 January 2012 at 11:26 am | Permalink

    SB the may be good cars (their quality compared to imports is arguable), but they’re not what Australian’s want to buy. The Commodore for the first time in over 12+years is not Australia’s bestselling car. That went to Mazda 3, Toyota Corolla in 3rd. Collectively, small cars far out-sell large cars in this market. And it is this change in consumer demand that is the primary reason for Ford/Holden’s current predicament.

  • 5
    Suzanne Blake
    Posted Wednesday, 11 January 2012 at 11:45 am | Permalink

    @ Lord Bonkers

    We are loosing our manufacturing at a rapid rate and this IS national security issue.

    The Carbon Tax will drive more offshore.

  • 6
    Peter Ormonde
    Posted Wednesday, 11 January 2012 at 12:08 pm | Permalink

    Milord,

    It appears that the old nanny state protectionist streak still runs down the spine of Australian conservatives. It’s a big yellow historical curse. And it haunts them still. It haunts us all actually.

    Not really capitalists - more corporate socialists. Bit like the agrarian socialism of the Country Party throughout it’s history. A brown stain on our wide brown land.

    Always got their hands out. Always making excuses. Always on the edge of ruin. Oliver Twists in Zegna suits. And most most important - never investing in R&D, in the skills of the workforce, in the public interest. Three years is a long term plan.

    These guys would have loathed Margaret Thatcher. The free market rhetoric of the Tea Party might warm the cockles and open the check books but goodness me not in practice. Not here. Not now. Not me. It’s all very well to talk this stuff but it’s another thing entirely when it comes to actually trying it on. It’s all very well in theory but everything is in the timing. And that is just never quite right, is it?

    Laissez faire - not bloody likely.

    Anyway - better than tarrifs - at least we can see these handouts.

  • 7
    Rhys Bevilaqua
    Posted Wednesday, 11 January 2012 at 12:09 pm | Permalink

    National security issue” is bulldust too, it’s not like we won’t have allies if some massive war broke out. We are too small and remote to matter if a war broke out, the only tactical resource we really have is iron - and that isn’t one of the first things you secure during war.

    It’s not like we are suddenly going to ramp up from making a few thousand sedans to a few thousand tanks or aircraft carriers if war broke out anyway, not to mention that we don’t have the population to operate them anyway.

    In the event of war we survive by the good graces of our larger allies, and that there is nothing here!

  • 8
    GuttedEwok
    Posted Wednesday, 11 January 2012 at 12:54 pm | Permalink

    @SB - national security issue? What the hell are you smoking? Can I please have some?

  • 9
    Suzanne Blake
    Posted Wednesday, 11 January 2012 at 4:29 pm | Permalink

    @ Guttedewok

    Of couse its a National Security issue if we cannot produce cars, steel etc

  • 10
    Suzanne Blake
    Posted Wednesday, 11 January 2012 at 4:32 pm | Permalink

    @ Rhys Bevilaqua

    You are living in the 1900 - 1960’s with your threat assessment.

    In the event of war we survive by the good graces of our larger allies, and that there is nothing here!”

    Crap - we have food production / minerals / space. The large allies may be elsewhere busy.

    Who do you think the treat is, China, North Korea? look closer to home Rhys, blinkers on.

  • 11
    wbddrss
    Posted Wednesday, 11 January 2012 at 4:41 pm | Permalink

    I believe local manufacturing keeps prices & costs low. The importers know they cannot increase prices so they decrease prices to keep or increase market share. When I visited an underdeveloped country recently I was stunned at how wages were low, prices high & everything seemed to be imported. Well I believe local manufacturing is part & parcel of keeping competition high , skills high & minimising businessmen exploiting “everything imported” to keep gouging consumers with high profit margins.

    I really believe immigration can only be successful if it is balanced with job creation in manufacturing. Unfortunately we have the opposite effect of immigration with most gravitating into Sydney/melbourne service type economy. This I think is unsustainable and will eat at the heart & soul of the work ethic of younger aussies scrambling for jobs. Immigrants all want to be middle class & not help Ausies create jobs in advanced manufacturing. Then why have immigration then. Well our present political masters want to change our immigration mix back to unskilled for seasonal agricultural work & still no creation of highly productive manufacturing jobs.

    This is all too disfunctional for me as I believe immigrants are suppose to add creatively to job creation process & create jobs in advanced manufacturing. They all want aussie education, ausssie infrastructure, yet still no inventors/manufacturers to keep Australia at the cutting edge. We will wait and see. I predict Australia will end up like Timor. Catholic dominated & a big difference between rich & poor. Smart Singapore incorporated will hold onto advanced manufaturing(like a petroleum hub) & leave Australia for dead.

    wbddrss

  • 12
    Captain Planet
    Posted Wednesday, 11 January 2012 at 9:59 pm | Permalink

    @ WBDDRSS

    In what alternate reality does a “petroleum hub” constitute advanced manufacturing?

  • 13
    RamaStar
    Posted Thursday, 12 January 2012 at 10:04 am | Permalink

    @SB
    I think this goes to demonstrate that you really do not know what you’re talking about and that you do just make sh*t up.
    Australian car manufacturing is not a national security issue, as it is not essential to our defence or defence material production (nor to steel production as you assume wrongly that Australian built cars source Australian produced steel).
    Australia has a highly evolved and deep defence industry. The development and production of Bushmaster vehicles for the army was done completely independent of Australian automotive manufacturing.
    I think you are living in the 1900 - 1960’s. Car plants are highly specialised and cannot be turned around to produce defense material like the 1940’s in the US
    So keep on talking bull-dust and digging yourself a nice loon hole.

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