A Hugo Kelly sealed section on February 24 predicting problems for
Geelong from the US FTA has sparked a debate among Crikey subscribers
about auto subsidies.

WILL GEELONG BE FTA’D?

From the first Feb 24 sealed section

The
PM is all set to rush off to FNQ, armed with hundreds of millions of
taxpayer dollars, to try and placate angry sugar farmers left out of
the Free Trade Agreement.

What seems clear is that the
sugar industry is no worse off by being left out of the treaty. But one
sector looking less healthy by the day is the nation’s automotive
manufacturing industry. Last week, the Oz reported fresh doubts have
surfaced over the future of Adelaide’s Mitsubishi car plant.

Now,
Mitsubishi has been tinkering with closing the Adelaide plant for years
– so Michael McGuire’s story was hardly earth shattering news.

A
little birdie has whispered a warning to Crikey’s Canberra bureau that
will send shivers down the spine of Steve Bracks and Mark Vaile.
“Ford’s Geelong engine plant is looking like a potential victim of the
FTA,” said our well-placed source.

This would be a
disaster for Bracks – especially given the Fin Review’s front page
report yesterday underlining the Bracks Government’s failure to lure
major projects to Victoria.

“Sure the local car industry has fantasies of exporting the good old Aussie Ute in their millions to theStates,”
says our revhead source. “But what happens when Detroit starts pumping
out engines to Australia in volume, as tariffs fall under the FTA? Why
would Ford want to continue making V-8s in Geelong when they could just
crank out export numbers from their home base?”

Why, indeed?

 ==============================

Contesting the FTA auto facts

A subscriber writes:

Dear Crikey

Your rev head source may have a point about the risks to the car industry under the FTA, however he got a few things wrong.

 

“Selling
utes in their millions” – who? Certainly not Ford who have no plans to
export very much of anything in the near future outside of Falcons to
NZ and Sth Africa in tiny numbers. Perhaps Holden may, but whisphers of
Holden Utes being sold to the US as Chevy Caminos are just whisphers,
and not in their millions, currently these sales would have to come out
of the 18,000 units already allocated to the Monaro/Pontiac GTO by
the GM Auto unions.

 

“The Geelong
factory pumping out V8’s” – no they don’t, the Geelong factory pumps
out straight sixes for Falcons and variants. Both Holden and Ford V8’s
currently come from the US, these may get cheaper for buyers or more
profitable for the makers under the FTA. The Falcon and more
importantly the new 4WD Territory are not designed to take any other
type of six outside of the increasingly rare straight six type, the
Territory can’t even take a V8. With Ford having so much $$ invested in
the Territory and the heavily upgraded six, and the Falcon with a
few years to run yet its highly unlikely they’d ditch this ‘gun’ of a
motor and re-engineeer both to take a version of Ford ‘world’ model
duratec V6 (which is the only engine Ford have that could replace the
local motor)..

 

My take on the
FTA and the Aussie Car Industry is thus, a great opportunity for makers
(namely the export driven Holden, Mitsubishi and Toyota) to move more
product in the US and Thailand markets. A chance for more US and Thai
built cars and trucks to come here at cheaper prices. (US models
swamping OZ should be no concern as few countries collectively build a
bunch of cars so unsuited to OZ tastes as the yanks.) However Ford
should be worried as they have no significant export plans to take
advantage of either the Thai or US FTA, but their business model is
based on profitably building a truckload of Falcons and Territory’s for
the local market.

 

Your rev-head source doesn’t exactly fill me with confidence in his predictions.

 

Cheers, Richard the revhead

 
V8s come in from Canada already

 

Crikey,

Just
a correction to the Geelong FTA item. Ford already imports its V8s
from Canada. Infact the engine made its world debut in the BA Falcon
range if I am not mistaken.

Also, the “Australian” content of
Aussie cars is interesting. The most “Australian” of Aussie cars is the
Toyota Camry with about 75-77% of its components being classified as
Australian Made.

Currently, the Commodore V6 engine is only
assembled in Australia not made in Australia. There is a subtle but
significant difference in the wording. This will change with the new
engine plant however coming on line towards the end of the year.

Current Commodore transmissions are also imported (from Mexico). The Gen III V8 is also an import.

Toyota also imports the V6 engines in the Camry and Avabomb … er sorry Avalon from Japan.

Mitsubishi also imports from Japan. Large amounts of money in its case.

The
interesting thing is that because of Holden’s rear wheel experience
with the Commodore over the past 25 years, (most GM vehicles in the US
went front wheel drive after the 70s oil shocks) Holden will have THE
major development role in the platform for the next generation
Commodore, the VE due in 2006.

Refer here.

Eventually Saabs, Opels, Buicks, Pontiacs and Chevrolets could be
running around on an Australian developed platform. The Australian
engineering expertise will be utilised in GM plants around the world
and eventually one of the overseas built cars on the Holden developed platform could even come to Australia……

As the Commodore.

Regards, The Car Driver

Stop subsidising these foreign car companies

 

Another subscriber writes:

As
you know, all four of our “local” car manufacters are foreign owned,
and about all they’re good for is providing jobs to (primarily)
low-skilled workers.

Mitsubishi runs one of the world’s least
efficient & profitable car plants in Adelaide, and it’s high time
the Australian tax payer stopped subsidising their inefficient
operation.

I’ve heard the only reason Shitsubishi were given money last time
they threated to leave (which, if I recall correctly, was more than was
needed to keep Ansett afloat and saved less jobs), is because cars are
part of the CPI and airlines are not.

Holden sources most of
its “grunty” (fuel inefficient) motors from the USA.  There’s no
real technical innovation going on there.

Good sales pitch to the blokesinutes “office bogan” market though. I
am annoyed that the Victorian state government gave $500million to
Holden to “create” 400-500 jobs at their engine plant.  Surely
there
are better ways to create jobs.

Toyota does some
impressive bookwork to ensure that they don’t make a “profit” on any
car they make here (over pay for a Japanese made engine), as company
taxes being so much lower in Japan…

Ford are making a
reasonable local comeback and they do make a reasonable V6 here, but
that doesn’t mean they deserve a handout either.  I need to chat
to my contact in the local car industry to find out the current Ford
gossip

I’m sure you’ve seen the “Trade & Assistance Review
2002-03” from the Productivity Commission.  Very interesting
reading. The farmers get stuff-all government help compared to the four
foreign owned car manufacturers.

Let’s not forget that a lot
of the Australian Design Rules are a hidden form of car tariff, given
that most European and Japanese cars are significantly safer and more
fuel efficient than the Australian made ones.  (I won’t claim the
European cars are more reliable; they’re not.  Japanase cars
are.)  There’s an
side rant about why it took so long for
Toyota to get Australian Design Rule approval on the Prius, which boils
down to “it generates less fuel taxes so it’s bad”.

Luke The Subaru Driver 

Peter Fray

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