The disaster that is our country’s car manufacturing industry

No matter where you were in Australia last week I’m
sure you heard or read about

Ford’s announcement
that they would cease making cars in Australian
in 2016. This decision will lead to the direct loss of around 1200 jobs
due to the closure of Ford manufacturing facilities in Geelong and

The media then went into its myopic apocalyptic view
of this completely predictable event. ‘Manufacturing in crisis’ bleated
the various newscasters on the prime time television news as if 1200
jobs going over a three year period was some sort of   major dent to the
economy of Victoria. It seems the journalists who write this sort of
stuff don’t even bother to do their basic research.  

If they had done so they would have discovered that
between May 2009 and April 2013 the Victorian economy  

added 952 jobs
every week   so when you compare 1200 jobs lost
across 3 years, you gain some genuine perspective on the loss of these
jobs. Also consider that manufacturing employs around 980,000

This is not to trivialise the loss for each
individual worker of their job (for many of them, the only job they have
ever held) and the impact this will have on them and their families but
again let’s get some perspective on this. The Federal and State
governments have dashed in with various assistance packages for the
workers impacted, totalling $50 million.  

As you will recall both Queensland and northern NSW
have experienced significant natural disasters over the past three to
four years including hurricanes and floods. Collectively, many thousands
of seasonal (casual) workers would have lost their jobs in these regions
as tourists stayed away. What did the various governments do for these


The Age reported
, a total of $10 billion   has been tipped into
the local car industry over just the past seven years  in the form
of subsidies to keep a local car manufacturing industry alive.

You have to ask the question – why?  

Australian car manufacturing has always been
uneconomic, propped up for decades by high tariffs and local-quota rules
that ensured Australians paid way too much for cars that were not as
good as imported cars.  

As tariffs have come down and the Australian dollar
has gone up, local car buyers have voted with their wallets and deserted
locally made cars. Last month was an all-time low for the sale of new

Commodores and Falcons
with sales less than a quarter of what they
were only 10 years ago.  

The local car manufacturers have continued to shed
jobs with the Ford plant in Geelong employing just over 500 workers in
2013 compared to over 5,000 in the early 1990s.  

The local car manufacturers have all continued to
make hundreds of millions of dollars in

collective losses
every year   and there has been no realistic
chance of that turning around, yet governments on both sides have opened
the government coffers   whenever the car companies have whimpered about
how tough things are.  

What sort of moronic government invests in a
declining   industry, one with no chance of ever growing total
employment again?  

I am thankful the car industry gravy train is coming
to a close. It cannot come soon enough. Governments should stop ignoring
basic economic fundamentals and get on with the job of making it easier
for efficient   companies to flourish. They should also ensure the
various corporate compliance and corporate law enforcement agencies do
their job in ensuring the free market operates with integrity, fairness,
genuine competition and long term resource-use as its guiding
Imagine if that $10 billion had been invested in our
education sector or in growth sectors? How much better off would our
country be now? It doesn’t bear thinking about.

1 Comment

  1. SusanR on 29/05/2013 at 7:08 am

    Ross – you are so right!

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