Talk about your two-speed economy. Australia’s car industry is on two tracks: one a speed-unlimited highway, the other a pot-holed goat track that has broken-down cars moving at a crawl.
Ford announced more job cuts at its Victorian plants today — 440 more workers to go from Geelong and Broadmeadows, despite a $103 million injection of federal government funds in January.
And yet new car sales figures out today point to a buoyant industry. As Crikey reports, sales data for June hit new records across all key categories, marking the first time ever that monthly total car sales went over 100,000.
So what’s going on? We’re buying more cars than ever, just not the sort of cars Ford is making. Smaller is better — fuel-efficient medium-sized vehicles are in, gas-guzzling sedans are out.
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Ford saw the trend long ago, of course. Propped up by taxpayer funds, it’s begun to adapt to changing consumer demands. The company’s Australian president and chief executive Bob Graziano talked about hundreds of millions of dollars in investment in greener, cheaper vehicles in the pipeline.
The workers who will lose their jobs over the coming months will wonder why it took so long. Taxpayers may wonder the same.
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Bob talks the talk, pity about the walk.
The federal largess was widely acknowledged at the time to be a bad idea – why change when taxpayers will fill the wheelbarrow at the first hint of job cuts. Doesn’t mean the job cuts don’t occur afterewards.
Surely there were strings or conditions to the $100M or was it just dropped, shrink wrapped on pallets from helicopters as in Iraq?
I’m in favour of any scheme which doesn’t involve subsidising various players to compete against each other in a race to the bottom in which every participant loses, as at present. Would it be too much to ask for Australia’s three auto manufacturers, Toyota, Ford and GM, to work on one range of models which will be reasonably competitive against imported models?
The current situation is that a few sedans and derivatives are manufactured here by the Big Three, in numbers which are laughable on a world scale.
I know that many will see massive problems with this approach, but the current and previous 3- and 4-manufacturer policies have been expensive failures for decades. It’s time for a long, hard and emotion-free look at the waste that three manufacturers represents.
An alternative might be a long term contract arrangement, resulting in a single local manufacturer being entitled to federal support and to the right to use the name “Australia’s Car”.
Maybe another option is to support the import of fuel efficient, safe and adequate models from a narrow range of suppliers. At present these imports are subject to inefficiencies resulting from the small numbers sold. However, picking winners in this way is generally bad business for a government to get into, so maybe ongoing subsidy of Australian manufacturing should be conditional on the recipients offering economical ranges of smaller, smarter foreign sourced vehicles.
I nearly forgot: Public subsidy of models with huge power to weight ratios, 200+kph capability and go-faster styling makes no sense either. The Aussie V8 should be a thing of the past.