Well, the car industry plan has been announced. I haven’t had a chance to read the report yet, but it seems very much along the lines of what was suggested in the Bracks Review.
One thing to keep in mind is that two-thirds of the Aussie car industry is owned by Ford and General Motors. Those companies are in a whole world of hurt – they’re burning through over $2 billion a month in cash each at the moment – and they’re about to ask for a massive bailout from the US government. The potential consequences for their Australian subsidiaries may not be pretty.
Ford’s also ramping up production of gas guzzlin’ pickups.
Which leads to the obvious question: are the goals of an auto bailout and the clean energy push mutually exclusive?
Interesting question, not so simple answer.
In Australia, I’d go so far as to say yes. In the US, it’s not so straightforward.
Ford and GM are toast. When they go down, so will their Australian subsidiaries.
We’ll soon have one manufacturer, Toyota, and they don’t need any subsidies.
The fed govt gave Toyota $70m just recently, Spiros.
http://www.theaustralian.news.com.au/story/0,25197,23844878-601,00.html
Being given something by the government and not needing it are quite compatible statements SB. Just look at many recipients of individual largesse like the baby bonus.
I’d take free money if someone offered it to me.
That doesn’t mean they should.
Another obvious question: Has it anything to do with the unions digging deep into their pockets for the Howard-busting
My Right To A JobYour Rights at Work campaign, and payback-time? This is just more of Howard ruling from the grave, the unfortunate price we had to pay.It’d be alright if Carr’s cant about green jobs was true, but it ain’t.
I’m green, green with jealousy that jobs in my sector haven’t been subsidised to a quantum of the extent these guys and gals’s are.
I wonder what sort of a medical devices industry we could have kick-started with this sort of money? Have you seen how much smart technology hangs off a high-care bed?
I couldn’t give a stuff about whether I’ve had a top notch car at any time in my life, but there’s a good chance that when the time comes I’ll be very keen on having a Davros3K-Special Peripheral Systems Support Module, to be CNS-Socketted into.
A mate of mines son works in one of the London “milionare factories” and has a keen interest in vehicle manufacture in general.
Some of the major brands in Europe are already working 3 day weeks, given the incestous linkings between the companies a colapse by any of the majors would realy put the cat among the pigeons.
Heres a scanned version of the links, there are better out there but this will be enough for a casual glance.
http://tides.ws/wp-content/uploads/images/WhoOwnsWho/Who%20Owns%20Who.jpg
Myself, Im much more for allowing companies to sink or swim on their own merits, the best managed/run/innovators will continue after the dinosaurs are gone.
Be a bugger to get spare parts though.
Spending money on more medical products when the world is already massively overpopulated would not be very environmentally friendly. Investing in clean green transport options is a much better idea. I am yet to see the details of the plan, I hope it doesn’t amount to writing out a cheque to the big 3 but in principle the industry assistance is a good idea.
Howard ruling from the grave Danny?
The opponents (and conquerors) of Howard ruling from a graveyard near you: the cemetery of protectionism, sheltered workshops, and poorish products.
“Built for Australian conditions” must mean “built to attract Australian Govt subsidies”. And that includes the very tasty tax treatment of “novated leases” of vehicles, designed to cushion the local industry (retail, manufacturing) when the provisions of the Fringe Benefits Tax were about to decimate the demand for new “company cars”.
From here:
Rahmbo knows what to do (or at least thinks he knows).
I would think the big auto makers are stuffed until the cheap money / zero down financing reappears. No point making cars nobody can get a loan to buy.
Holden spent a billion dollars on the new Commodore which uses more fuel than the old model. (Doh!) I remember the motoring press falling over themselves to lavish praise on the new Family Thruster, and awarding it with every award they could think of.
The same motoring press ignored a breakthrough vehicle like the Prius at COTY time in 2005.
They all deserve to fail … but they won’t be allowed to of course.
P.S. What happens to the CDS contracts on GM’s USD600 billion in debt if they fold?
Carbonsink: to be fair, the various COTY awards are not good citizenship awards. Judged against the criteria of the awards – which include performance of intended function and value for money high on the list – the Prius doesn’t look so good. It’s a $37,000 car which is inferior in every way but one to a $21,000 Corolla.
From memory the year the Prius was up for Wheels COTY they gave it to something completely irrelevant like the Mazda RX8. Ugh.
If personal ground transportation does eventually become electrified (as we both agree it most likely will) which car are we going to remember 50 years from now? The latest incarnation of the Commodore, the RX8, or the Prius?
The world would not end if people were suddenly unable to buy Bommodores and Foulcans.
I heard somewhere that the best investment for stimulating the economy was CSIRO, because (on average since CSIRO was created), every dollar to CSIRO generated between 10 and 20 to the economy. Has anyone got more accurate figures on this?
(And hey, the gov could say that money to CSIRO was for “clever country”, “environmental research”, … whatever catchphrase comes to mind – so it would be an easy sell)
Awww, forgot, no-one has been doing B.Sc’s, they’ve all been doing B.Bus or B.Comm : so CSIRO couldn’t find anyone to employ even if they DID have the money.
Why should taxpayers bail out a short sighted and obviously badly managed multi national company?
They must have known the writing was on the wall re petrol, the environment for at least the last 10 years.
Remember GM Holdens hybrid car for the Sydney Olympics. The fact they did not go ahead with production should be explained, as they had stated they would. Bought off by the oil industry perhaps?
More socialism for capitalists. Jesus wept.
If these companies can not be competitive on there own merit then let the ‘market’ principles apply. Let them fail.
Govt money should be directed to renewable energy, and new green industries. Staff can be retrained or re-tooled for other industries. Ditto to the coal industry.
Kat: They would have lost a pile of money on the ECommodore.
Spiros is spot on. All this $A6.2B will do is maybe help GM and Ford’s bankers to get back an extra tenth of a cent in the dollar from the bankruptcy.
Which bankruptcy will, of course, be a thinly disguised one – they’ll call it a “restructure” or perhaps a “merger” when they make a firesale of the remaining assets to Toyota or the Chinese. I doubt those buyers will be interested in keeping uneconomically small factories producing unwanted cars in a remote corner of the world.
Robert the E-Commodore may not have made them money initially, but it would have positioned them ahead of their competitors.
I’m sure the Govt of the day were not keen for hybrid cars either. Johnny’s friend George would never have approved.
Now that failure of planning may spell the end for them. Why should they get our money, which given the current crisis could be far better spent.
Electric cars are 30% more efficient (in terms of greenhouse gas emissions) than petrol one, even taking into consideration coal-fired power generation.
The only sensible course of action for the coming decades (or maybe even the next five years) is to transition to electric drive trains. For those that need more range, a plug in hybrid would suffice.
However, at present, there are less than 300 electric vehicles on Australian roads, and about 500,000 world wide.
We have a long way to go. If only our stupid car industry and governments could see the opportunity.
PeterC: that’s not counting the tens of millions of electric bicycles clogging Chinese cities.
Lenore Taylor’s Oz Page 1 Comment says teh car industry is the direct employer of 65,000 people and ‘the largest non-resource exporter in the country”.
So, to a first approximation, 6.2 billion is a subsidy of almost $100,000 per car industry worker.
As to her 2nd claim: as of Feb 2008, the ABS reports education exports (being) worth more than all other Australian export industries in 2007 except coal ($20.8 billion) and iron ore ($16.0 billion). Unlike the car industry, we are internationally competitive in it, and that’s just with the strip-mining, cash-cow approach that has been applied to extracting dollars out of overseas students’ wallets with the least amount of inputs possible, ie in return for visas.
Imagine the returns if 6.2 billion had been spent on backing that industry up with programs to research and develop strategies to deliver real “elaborately transformed” value propositions for that industry. That’s a lot of Ph. D. scholarships and support for supervisors.
Oh that’s right, the car industry is heavily unionised, and those unions are “active” in teh party, and Kev owes big-time.
Education revolution my aunt.
With that sort of money the government could have given around 300,000 people/families in Oz a new car for FREE.
FXH: If they were styled stalinist ugly, like say an FX Holden, the types who would have been otherwise inclined to scream “Socialism!!!( to strains of Jaws)” at the First Car Buyers grant program you might be advocating, might refrain from doing so: you don’t hear anyone screaming cos pensioners can get Clark Kent glasses frames on the susso.
300,000… that’s more than one per hundred, sounds like about the scale of a neighbourhood vehicle (arterial-mass-public-transport-system-first-mile) feeder taxi fleet to me. Bump it up to maxi’s and you could be cooking with gas.
But that’d be a planned integrated program, and we know how that sort of thing scares Real Australian’s, totally anathema to the unalienable and self evident sacred right to behave as if “She’ll be right” … remember the reception Noodle Nation got?
What annoys me is that this is simply delaying the death of an industry destined to fail. we arent competitive, we never will be competitive yet we’re still throwing money at it! 6.2 billion dollars could go a long way to developing a renewable energy industry in Australia, an industry that actually has a chance to be competitive and provide jobs in the longterm. This package is a disgrace.
Both Ford and GM in Europe have been making state of the art diesel engined cars for years, plus turning out more efficient petrol engines but not here why? and now they need OZ Gov support to survive. A bit more forward/lateral thinking needed and not just USA input. They are both still turning out mega BHP/Torque vehicles in OZ as if there was no fuel crises. Other makers can turn out 2ltr/2.5ltr and 3ltr fuel efficient torquie cars why not us.
Bilko: because they can’t make small cars in Australia at a price competitive with Asian imports.
Ford is going to have another try with the Focus in 2010, if they last that long. I have my doubts; I once talked to a guy fairly high up in Ford Australia and he told me they couldn’t do it. Maybe the low Aussie dollar will come to the rescue. Maybe not.
It’s funny they get called inefficient but no-one in the same breath calls for longer working hours, scrapping union rights etc. I think 10% is probably not an unreasonable adjustment to allow them to compete on a level playing field, if we want them to stay afloat. And if we don’t, noting environmental concerns and others, that’s fine, but can we come up with a better way to retrain thousands of middle aged men who speak little English, mostly carry various back and other conditions from a life of factory work and have year 9 educations than merely putting them on newstart?
Armagny: discrepancies in employment conditions are to some extent issue in the uncompetitiveness of Australian car manufacturing, but a lot of it’s just simply economies of scale – we don’t make enough cars to get the costs down. Japanese factory workers are well paid, but they can still churn out cars cheaper than we can.
As to retraining, I agree with you – but I ask again, why is it that we agonize so much about car industry workers and so little about workers in other industries who have been hit equally hard by changes in the Australian economy?
Robert Merkel wrote:
Firstly it was a trophy industry (at least that’s my guess) – a hangover from the cold war when an active factory could be pointed at to say “look, making cars now, could be tanks or guns or ammunition later”. 1950′s thinking.
Then, under Hawke it was a swedish thing (look! Volvo and Saab making cars, why can’t we?).
Then under Howard I think it was just a long and inglorious series of blackmail attempts for a government that never operated on big margins of popularity.
” why is it that we agonize so much about car industry workers and so little about workers in other industries who have been hit equally hard by changes in the Australian economy?”
Happy for the same energy to go into any other area where there are thousands of people holding up whole communities, where a large portion of the workforce have poor English, poor education and a litany of health issues, etc etc.
No probs. The idea that they can all go retrain as java programmers or drive trucks in the Pilbara has gone out the window with the idea that Merchant Bankers can be trusted to make policy- oh wait, that one hasn’t sunk in on this side of the Pacific…
Armagny, a lot of good programmers lost their jobs around 2002-03. There was a whole world of pain in the industry. But because there’s no factory to point to, nobody outside it noticed.
Beats me. No-one gave a damn about non-resource exporters during the mining boom and the >90c dollar. No-one. Every man and his dog just cheered the AUD higher. Cheap imported widgets! Cheap overseas holidays! Lets all fart out another ten tonnes of CO2 on a shopping trip to NYC. Party on!
Now no-one wants our dirt. No-one wants our lard-ass family thrusters. Welcome to the downside of a dirt-based economy.
Perhaps they could put all that lovely money into the housing industry instead. After all, even more of us ‘have’ houses than have cars, and that employs a lotta people too. Maybe we could actually build better houses, and they, unlike cars, might still be useful in fifty years time.
Ay carumba!
Robert Merkel re 28 my thoughts were perhaps the global GM\Ford conglomerats could use european engines and xtmns at cost to OZ subs, the original commodore came from OPEL which incidently was my first car ever when stationed in germany in 57-59.
They all seem to have their hands out now. I wonder how much of a pay cut the heavies will take seeing that they can’t see beyound their noses.
Nice point by Carney in today’s Age:
“But if we were to shut it down tomorrow and rely on imported cars, where would they come from: Thailand, where the tariff on imported cars is 80%, or Brazil (35%),
or Europe (10%), China (25%)? Our tariff is 10% and under
the plan will fall to 5%. In all
of the above-named countries, domestic governments have
in place car industry assistance plans.
The point is that every government in the world makes economic choices. The notion that Australia’s car industry is somehow uniquely cosseted is a nonsense, as is the idea that governments of either political stripe are passive actors sitting on the sidelines when it comes to economic activity.”
“Nice point by Carney”
Actually, a bad point, as Andrew Norton notes.
Brilliant analysis by Norton, I must concede.
Dumb move to commit to a policy like this independently of whatever the US government is doing.
I wouldn’t miss the car industry, as I’ve said elsewhere, but consider the seismic impact within the ALP if the AMWU simply became an unemployed workers’ union overnight.
BTW – GM stock has sunk so low that the entire company could be had for less than $A6 billion.
Hmmm. There’s an idea for the Future Fund. Buy the entirety of GM!
Seriously, though, the market seems to be expecting the US government to bail out GM, and in the process wipe out the existing shareholders’ equity.