Ford Quits Australia: After The Redundancies, The Hard Truth

THE LOSS of thousands of jobs, supplier industries included, is a terrible thing; but the decision by the Ford Motor Company to abandon Australia — aside from keeping a sales presence, and retaining a few designers — makes some deeply unpleasant realities impossible to continue to avoid.

It is difficult to point any exclusive finger of blame, except to say that governments at both state and federal level, of both Labor and Liberal persuasion, have all been hoodwinked into the ruse of industry assistance for the automotive sector — assistance that has delayed the inevitable collapse of the car industry, but not averted it.

I feel sorry for the car workers set to lose their jobs as a result of Ford’s announcement that it will close manufacturing plants in Geelong and at Broadmeadows, in Melbourne, in 2016; the only good thing to come of it is that the stated schedule at least buys those workers — and their families — time to plan, and reskill, and to look for work.

But the simple fact is that it is not feasible to economically manufacture cars in Australia.

The cost of manufacturing labour in Australia is astronomical, and in an internationally competitive automotive sector represents a millstone around the neck of the local industry.

The unions must shoulder a fair portion of the blame for this; automotive workforces in Australia are among the few remaining that are highly unionised, and far from improving the lot of their members, unions to a large degree have ultimately priced their workers, and by extension their products, out of the market.

I make the observation, though, that the agenda of unions is to increase pay and conditions for their members; I think they have done their people a disservice in this case because the end consequence was foreseeable. Others may and will disagree, but I’m not looking for a fight over the unions on this occasion and I encourage readers not to do so either.

Even so, the arrival some 20 years ago of Korean automotive giant Hyundai — with its cheap imported cars built by cheap Asian labour — was meant to signal the end of local car manufacturing: at the time, it didn’t.

But the arrival in recent years of Chinese cars such as Great Wall and Chery, and their parent companies operating with inexhaustible cheap labour, are a different matter again.

It can only be a matter of time until either or both of the remaining car builders — GMH and Toyota — follow Ford’s lead; there is an argument that without three major car makers the sector as a whole loses the critical mass required to sustain it at all.

It remains to be seen what effect Ford’s withdrawal has by way of a knock-on to supplier companies, their ability to profitably retain adequate workforces, and their capacity to supply product to Ford and Toyota on a cost-effective basis.

But with Mitsubishi and Nissan already gone — and Ford now going — it seems inconceivable that the others won’t follow.

Holden is only committed to remain until 2022, and at this point in time you would have to say that all bets on it retaining its manufacturing here beyond that are off.

It is interesting that there has been a clamour today for “emergency tariffs” to be slapped on imported cars in an attempt to “save” what’s left of the local car making industry: a kneejerk response quickly and properly dismissed by Prime Minister Julia Gillard, who pointed out that such a move — not guaranteed to even achieve its objective — would run the very real risk of trade reprisals against Australia.

And, frankly, it would be a case of “rightly so.”

The car industry — despite the abolition of tariffs — has nonetheless remained a subsidised and protected industry to a considerable extent.

For one thing, it has milked $12 billion out of government in Australia in the past ten years in the form of handouts, grants, and other subsidies dressed up as “support” for an industry that is not sustainable.

For another, the 33% tax on “luxury” imported cars — presently a vehicle with a GST-inclusive price above about $59,000 — is a measure that disadvantages overseas manufacturers in competing against some of the top of the range and larger vehicles manufactured in Australia.

And it’s obvious that if the local automotive industry can’t exist profitably with these advantages — high wages and cost base notwithstanding — the rate any tariff would need to be set at to be effective would be ludicrous.

The simple fact is that governments of all persuasions have tried, and tried hard, but despite their efforts car making in Australia is simply not a viable long-term proposition, and I think the withdrawal of Ford will be followed within ten years by the other two players, and that will be that.

At the outset, I said it was difficult to point the finger of blame, and to some extent it is; depending on which way you look at it, the Liberal and Labor parties have either fought to retain a valued industry in Australia, or have merely shovelled billions of dollars into the coffers of foreign companies for no eventual reward.

But they tried.

That said, I have to single out Victorian opposition leader Daniel Andrews for a kicking; he has claimed, for instance, that Premier Denis Napthine did nothing to try to save Ford jobs when in fact, Napthine intervened personally and was told by Ford that it didn’t matter what he or anyone else said or did, the decision was final.

Andrews criticised Napthine for failing to match the federal government’s contribution to a $39 million fund to support displaced Ford workers (Victoria is contributing $9 million). Never mind the fact the package was designed, jointly, by Napthine and Gillard working directly with each other.

And today Andrews took another pot shot at Napthine over the latter’s proposals to make retraining available to sacked Ford workers, on the basis Napthine “isn’t the man to retrain anyone” and who had done enormous damage to the TAFE sector in Victoria.

Never mind the fact Napthine was neither Premier nor Higher Education minister when changes were made to TAFE funding two years ago; never mind the fact some of the money cut from TAFE at that time has been restored since Napthine’s ascension to the Premiership eight weeks ago, and with the promise of more to follow.

I am singling Andrews out because he has chosen to play petty politics to score grimy, cheap points over an issue and at a time when everyone on all sides of the political spectrum are putting such differences aside.

Indeed, were it not for Andrews, I wouldn’t even be sinking the boot into anyone — readers will note there is no criticism of the federal government in this article, and only mild and qualified criticism of the unions insofar as the unintended consequence of doing their job has been an undesirable one.

Regrettably, the adolescent rhetoric and almost infantile public conduct Andrews insists on engaging in is becoming a pattern — and he has helped no-one, least of all himself, with his shameful utterances in the past 48 hours.

Daniel Andrews needs to grow up and stop acting like a child if he aspires to even remain the leader of his party, let alone seek the office of Premier of Victoria.

And perhaps he can go and speak to the devastated people of Geelong — not a hand-picked bunch of stooges but the ordinary people of Geelong, whose town is about to have a large part of its lifeblood drained and its history terminated forever — and explain to them why, when so many of their families face unemployment and hardship as a result of this decision, he’s the only one playing politics over their fate.