The car manufacturing industry is an industry which the Australian public likes to have. Somehow it’s a symbol of confidence and virility. Take it away and it would seem like the country had lost its underpants. So there’s not much hostility to it receiving some form of government assistance.

It has always been a rollercoaster industry; ups and downs, comings and goings, dependent on overseas parents, exchange rates, intense international competition in a world of over-production.

In the era of high protection it had too many manufacturers producing too many models of too high a price and often of poor quality. The 1984 car plan had a number of objectives: lowering tariff protection, reducing the number of manufacturers, improving quality and encouraging exports were amongst them.

23 years on most of these objectives have been met but the industry still suffers from ups and downs and times like the present when uncertainty seems to dominate discussion.

For the industry, poor sales and poor profits are the benchmarks of gloom. For the public it is more falling levels of employment that attracts attention and concern. So when GMH sacks 600 more production workers in Adelaide people wonder where the industry is going.

The 1984 car plan did not set employment targets. At the time the Unions accepted that if the industry was to survive direct employment was likely to decrease with the introduction of new technologies and production methods. Indirect employment in other industries and service sectors is not so badly affected.

In the past few years, sales of locally produced vehicles have declined from about 276,000 in 2003 to 202,000 in 2006. This has been due to higher petrol prices, environmental concerns, probably model changes by two of the major companies and the value of the Australian dollar. In February 2007 the sales outlook for the locally produced models looks better. And yet jobs are lost. It’s about new and more efficient assembly lines.

In a small market like Australia exports are the key to bigger and more efficient production runs. Here Toyota is doing well with a projected 90,000 cars exported this year and GMH is planning on 30,000 to 50,000 cars into export markets in the next year or two. Ford seems constrained by its parent company from large scale exports and Mitsubishi by circumstances.

The Industry Minister Ian Macfarlane says he is committed to retaining a viable automotive industry in Australia. This is not I believe just because of public sentiment. He knows that the industry has huge ramifications in terms of its engineering and design skills and its reach into other industries. The technology of things as remote as medical devices flows from the automotive component sector. So do some defence technologies.

The challenge to the industry, currently buoyant with gloom from the uncertainty of a harsh world, is to try and keep at the cutting edge of automotive technology. Some companies are already designing cars for overseas markets and exporting their engineering skills. Others instead of designing new gizmos might spend more time in reducing model weight and fuel consumption. There is, I am told, much which can be done if the industry accepts the challenge of continuing to nurture its skills and imagination.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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