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.

Peter Fray

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