Why prop up a dead industry?

Dr B S Goh, Australian in Asia says:

07:28am | 08/11/12

The car industry is a critical sector of our manufacturing industry. If we let it die then we should plan on shutting down manufacturing in Australia.

Xavier should stop complaining, “So why is the government spending 5 billion dollars over 10 years to keeping the car industry going?” The Hon Combet had signed an Agreement at Cancun, Mexico to transfer TEN Percent of the carbon tax to UN. This is more than $1,000,000,000 PER YEAR ! Talk about waste of taxpayers money then focus on this utter waste of taxpayers money on on two grounds. Firstly the carbon tax does nothing measurable to solve global warming which is a global problem and not Australia’s problem per se. Secondly about half of that money we give to UN from the carbon tax will be totally wasted by UN.

Dr B S Goh, Australian in Asia says:

08:18am | 08/11/12

Readers interested in the details on how the ALP Govt will waste billions of dollars of the carbon tax by giving it to UN can read all about it at: http://au.news.yahoo.com/thewest/a/-/latest/8916664/carbon-tax-billions-to-help-poor-nations/

AFR says:

08:27am | 08/11/12

“The car industry is a critical sector of our manufacturing industry. If we let it die then we should plan on shutting down manufacturing in Australia.”

I’ve heard similar lines from others like this. I think we are romanticized into thinking we should be building stuff - but nobody seems to be able to truly explain why we have to,.

neo says:

10:37am | 08/11/12

Using government funds to help impoverished, starving nations by providing clean water, food, shelter and other life necessities!? THE NERVE! Clearly, they should be distributed among the Australian population so we can buy bigger plasmas.

Gregg says:

12:34pm | 08/11/12

@AFR
” I’ve heard similar lines from others like this. I think we are romanticized into thinking we should be building stuff - but nobody seems to be able to truly explain why we have to,. “
And so where do you reckon the government would get the dosh for all the extra welfare checks if they were happy for all of us to go and sit on the beach, at a bar or at the race track instead of working.

Maybe the Greeks could explain it a bit better for you.

PJ says:

01:28pm | 08/11/12

For every Car worker there are 5 associated jobs.

The Car Industry is a large employer of working class Australians.

If Labor abandon the car industry, they abandon the working man.

Dr B S Goh, Australian in Asia says:

01:32pm | 08/11/12

The Japanese used to believe in life long job security in their large companies. So they never sack people and create virtual work Departments where redundant people in a Company go and pretend to be working.

I just met an old Australian who has worked in Asia for more than ten years. He expressed great anxiety to go back and retire in Australia. He said that some people told him that Centrelink will not pay him a pension in Australia. So much for the recent hype on Australia and Asia if Australians cannot work in Asia and then retire as others in Australia

AFR says:

01:49pm | 08/11/12

Gregg, who is suggesting they automatically join the dole queue? If it is uncompetitive or we lack the vision to actually built what people want/need, then the nation should look at doing something else.

PJ, nobody is denying the auto industry employs a lot of people directly and indirectly. A lot of industries do - but does that mean we keep throwing more money at them instead of encouraging another industry that has a future?

acotrel says:

06:45am | 08/11/12

‘Welcome to being asianised with Julia Gillard.’
‘

Welcome to being globalised with Maggie Thatcher and Ronnie Reagan ?

Gregg says:

08:35am | 08/11/12

Exercising brains is one thing and having a productive country is another.

It does not require too big a think to know where a big future lies for Australia and that is in massive agriculture which needs a massive ammount of water harvesting and management infrastructure.
It might be better for the government to look at kicking in for that more rather than spending on industries that could well die and wasting much more on things like the NBN and education fanciful dreams.

Like if Julia has her way, she’ll have everybody doing degrees just so they can then have to look at actually doing some physical work, going on the dole or dying.

Gregg says:

08:41am | 08/11/12

A minute ago!, was that the minuteman missile?
But get with that new technology and clone a drone
I’m glad you feel we have plenty of Labor luddite wimps and Julia is an idiot.
Yep down with the clown.
But wait, she’ll have an old age degree for you to do.

And then you could always asianise yourself, maybe even make the move.

marley says:

09:24am | 08/11/12

@acotrel - “When was the last time Holden or Ford designed and built a really high quality motor - perhaps a 3 litre V6 with DOHC and four valve heads, with a decent engine management system.?”

Why would they invest big amounts of money to build an engine that very few people want?  If the future lies with cars at all, it lies with small cars, hybrids and the like, not with traditional engineering.

neil says:

02:21pm | 08/11/12

“When was the last time Holden or Ford designed and built a really high quality motor - perhaps a 3 litre V6 with DOHC and four valve heads, with a decent engine management system.?They are still acting as though they have tariff protection”

Well Holden builds about 600 of those everyday and ships them around the world. All alloy DOHC 4 valve direct injection from 2.8L to 3.6L and turbo charged variants. Some people are so ignorant.

http://en.wikipedia.org/wiki/HFV6

LC says:

12:18pm | 08/11/12

Except the eyesore isn’t going anywhere, it still fills an export niche in the Middle-East and America, and until that changes, it’s going to keep being sold here.

Ford on the other hand…

Anubis says:

01:39pm | 08/11/12

Just gotta clear this up KAren and LC - Holden Ugly Ford…..?

Sit Falcodore or a Commodon side by side and about the only aesthetic difference would be one has an oval badge and one has a lion badge. They are like the Labor Party and the Liberal Party - as bad as each other just with different names. As I already said in this thread - build a decent, quality car, something that people actually want and see the sales pickup. Charge a fair price not a “what the market will bear” price and see sale pickup. Build some quality and reliability in and see the sales pickup.

Continue to offer us a choice of Falcodore or Commodon or a generic box shaped 4 wheel drive whatever and watch your company gradually disappear in to oblivion.

LC says:

02:40pm | 08/11/12

The Falcon is doomed because the brass in America won’t allow it to be exported, because it would compete with their own offerings native to the country that it’s exported to. Thus their focusing their energy on that “generic box shaped 4 wheel drive” that’s selling better, so clearly someone wants it.

Whether the car is ugly or not is strictly a matter of opinion. In my book, the only ugly Aussie-built car I recall was the AU falcon.

As for your quality claim the quality of Aussie made cars did slump for a while at from the 80s to the 90’s, but the new models are definitely comparable to any similar Euro/Japanese car in terms of both how they drive and how they’re built. Look at The Middle East, Korea and China, where they love our Statesmans, and the US, who are ordering Statesmans as police cars, happily drove away in Pontiac-badged Commodores and Monaros, and build the Camaro on the Commodore chassis, and want to bring back the Commodore as a Chevrolet when the new model comes out in 2014. You don’t get this by producing a car of sub-standard quality.
Don’t judge one of these cars by your last trip in a taxi, which is a new model but with easily a hundred-thousand kays on the clock. Any car with an odometer reading like that will experience problems, yes, even your revered German makes (and at least the locals are cheaper to fix when something does stuff up). Take a new Falcon, Territory, Statesman, Commodore (and not the bare bones model for fleets) for a test drive from a dealer, I’ve seen and heard of more than one badge snob set straight from the experience.

Their only problem is sales of cars like them (the world over, mind you) are falling, as people want smaller cars and SUVs. They aren’t what the market wants in such large numbers anymore, but that on it’s own does not make them bad cars.

michael j says:

08:50am | 08/11/12

Why has China been so successful?’ Could there be any Truth the the Rumours floating around in the 1980’s that when China was being industrialised if you made a mistake on the Production line they simply took you out the back and Shot you,Then the next Worker was put into place and told not to make that Mistake?

A Concerned Citizen says:

08:11am | 08/11/12

This I agree with;
Firstly, bikes are simply not feasible unless you happen to already live very close to where you want to go (or close to transport that allows bikes)- many areas around Sydney offer neither.

Secondly, our ENTIRE budget going to the auto industry should have been solely to make an electric car that surpasses other designs and of course, funding car recharge infrastructure. Not to mention the auto-industry SHOULD have been forced to retain its domestic workforce as a condition of receiving a bailout.

scott says:

09:12am | 08/11/12

Why should the government fund research and development for private companies? 

$5bn over 10 years is pocket change, really.  And I don’t have a problem with it.  If the money wasn’t being spent to prop up the industry, then it will just be reallocated to Centrelink to pay the manufacturing workers their unemployment cheques.

This is a better outcome than all the manufacturing workers becoming unemployed.  You need to keep in mind that many of these workers are in regional centres, and the results of a plant shutting down is devastating to their local economy.  Propping up the industry keeps them employed, and the knock-on effect is that they have money to spend which keeps the economy going.

Why should the government fund research and development for private companies?

Mahhrat says:

10:15am | 08/11/12

@Scott:  Because Detroit. 

Companies only do R&D to make themselves money, not to improve the planet.  This article is proof of that.  These companies SHOULD be doing this R&D (seriously) themselves.  Instead, they’re actively resisting change, because doing what they do now (hand out, patent buying etc) is cheaper for them than the massive redevelopments they’d need to produce green cars.

Another example:  How many lives has the Black Box Recorder saved, from being able to investigate plane crashes?  Do you think a private entity would have researched that?

The government’s role is to use tax to build infrastructure and technology opportunities that private enterprise can then exploit.  That’s why they build the NBN and private companies won’t; no private entity is going to willingly provide a thing for a potential competitor to use, though they’ll certain use it once it’s provided by someone else.

There are certain technologies that just need to be public domain; things that benefit everyone.  We should lead the way in clean car tech, because that knowledge would be of great value to the rest of the world.  We can then have our private companies make it marketable and sell it, and make all the profits they’ll then complain about paying tax on.

PW says:

10:27am | 08/11/12

“Why petrol though?”

Because a viable alternative has not yet been found.

“bikes are simply not feasible”

They can be if you want them to be. 25km in an hour is no trouble if you’re even moderately fit. You’ll need a way to deal with constant abuse, though, at least until the oil runs out.

neo says:

10:42am | 08/11/12

Bikes scare me. They kill sperm.

Good point about electric cars though, hybrids are a good step forward.

Gregg says:

12:53pm | 08/11/12

@Mahhrat
” While I like the bike idea, cars will always be necessary - high mobility is a cornerstone of most western societies, and I don’t see that changing, especially in Australia where distances are so vast.

Why petrol though? “

You do live with some strange thoughts on society for all forms of automobiles have been something of a more recent innovation, not even a century of there having been even more reasonable and affordable ones and so whereas they are a modern convenience, they’re hardly a cornerstone and going around the corner in the next century they might even be somewhat extinct.

Yes, civilisation has changed, greatly in many respects and I’d not expect that there will be no changes in the future either.
Until there is a viable alternative to Petrol, well be stuck with it and maybe even before the next century there might be more charging stations about for electric cars but then there could also be far fewer of them about too unless significant improvements are made in regard to storage batteries and then even power stations rely on a huge ammount of petroleum products.

It could well be back to cycling, horse and cart days, steam locomotives and sailing ships.
We might even have to consult the Oxford dictionary to have a complete new meaning for Town Bike.

Life might just get one heck of a lot simpler again and those who cannot put in might just be left by the wayside.

scott says:

01:45pm | 08/11/12

@ Mahrat

“Instead, they’re actively resisting change, because doing what they do now (hand out, patent buying etc) is cheaper for them than the massive redevelopments they’d need to produce green cars.”

No.  They are not commercially viable, that’s why no manufacturers are aggressively targetting that market.  The current generation of hybrid and electric cars are just a gimmick.

“That’s why they build the NBN and private companies won’t; no private entity is going to willingly provide a thing for a potential competitor to use, though they’ll certain use it once it’s provided by someone else.”

No.  Again, it’s not commercially viable.

How would a company explain to their shareholders that they are going to invest $50bn in a project that will be obsolete by the time that it is complete and have a useful life of <15 years.

Mahhrat says:

02:11pm | 08/11/12

@PW: Hydrogen Fuel Cells.  Next.

PsychoHyena says:

02:53pm | 08/11/12

@scott, try to understand… the NBN won’t be obsolete by completion, just the transmitters/receivers, which can then be updated at a low cost and in a short amount of time. The only reason why it’s going to be ‘obsolete’ is because the technology should have been laid back in the 90’s when Telstra were waffling on about how they were introducing fibre to improve phone services, only a small area actually received that fibre.

Wi-fi will not be a viable alternative until it is no longer influenced by environmental factors.

A Concerned Citizen says:

08:16am | 08/11/12

I agree there- sadly an area being neglected.

Though I have noticed a number of potentially lucrative inventions (glassless 3D television) and high-expertise products (prosthetics) that should be given more attention.
Instead the government pays no attention, these people leave to offer their skills in the USA or Europe, and Australia’s brain-drain continues as normal.

scott says:

09:21am | 08/11/12

@ A Concerned Citizen

Why should the government bear the costs of research and development for a private company?  If someone with a brilliant idea cannot secure financial backing from an investor, then it probably isn’t going to be commercially viable anyway.

How do you propose this will all work?  Let’s take your glassless 3D television for example, and let’s say the government “invests” $100m into the research and development.  Will the government become a shareholder?  Or will this be treated as a grant to fund R&D for a private company?

Tubesteak says:

10:17am | 08/11/12

Concerned Citizen
Companies get a 125% R&D tax concession.
The main problem holding them back is funding. Australia doesn’t have enough people with enough money willing to fund experiemental technology. This is mainly due to market size. We simply aren’t big enough to have a lot of venture capitalists swimming around looking for things to invest into.
That’s why they leave and go overseas

aaaaaaaaaaaaaaannnnnnnnnnnnnnnnnnnddd that goes back to what I was saying the other day. Give greater priority to setting up our super industry and being a regional financial services hub. Attract the trillions of dollars that is sitting in the pockets of our neighbours and we’ll attract enough money here to grow a few more venture capitalists and this sort of research could be supported.

One thing leads to another.

I don’t want the government getting involved in funding things themselves. Their budget is stretched enough and government is never efficient at allocating resources especially when compared with the private sector. There’s too many bludgers in government. Too many greenie idealogues that will derail things just because they’re not made of renewable resources/unicorn farts/fairy wings. Too much bureaucracy.

neo says:

10:45am | 08/11/12

Glassless 3D doesn’t provide as much depth as glasses though. Comparing a Bravia + glasses to that LG glassless one anyway.

Rolls Canardly says:

08:00am | 08/11/12

Why then, do public servants haunt “The Punch” for their entire working days?

LC says:

10:38am | 08/11/12

If our vehicles are good enough for the yanks to want them as cop cars we gotta be doing something right.

willie says:

12:36pm | 08/11/12

I’ll start by saying we shouldn’t subsidise the car industry.

But ramases says

”  I would rather buy a car made in Korea or China or Japan than one made here as I know the it will be of better build quality, will be reliable, will have the most advanced technology and will ride smoothly and give years of satisfactory service and will be generally cheaper to buy and run than the Neanderthal vehicles made here.”

That is simply not true.
Some foreign cars are built better some worse, it’s a bit hard o compare the 2.5 Australian models to the hundreds of foreign ones.

In the reliability stakes the Japanese win followed by the Koreans then the Australians and Germans then way down the line past the Italians and Malaysians are the Chinese.  That is initial reliability which doesn’t mean much, in the long run I would guess it goes Japanese Australian Korean.

I’ll admit you can get all the fancy electronics in either the commodore or falcon but you can get the best engines, not to mention the worlds best LPG engine developed by ford Australia.

The biggest problem the Aussie cars have is that people want smaller or taller cars. The big sedan is dieing all over the world, it’s being replaced by jacked up station wagons. The other problem they have is people like ramases who exhibit some misguided cultural cringe.

The big Aussie sedans do what they are designed for very well, they are easily best in class, it’s just a bad class to be in. The only chance they have is moving upmarket and getting to get a bigger margin. This will be impossible in Australia because of people like ramases but they are trying it in the US.

neil says:

02:36pm | 08/11/12

“Why is it cheaper to buy one in the UK and import it back to Australia than it is to buy one from a dealer here in Australia?”

Simple, TAX!!
Tax on cars in Australia are much higher than most other countries, and you can’t being one back cheaper because you will still have to pay the tax when it gets here.

It costs Holden about $15,000 to build a Commodore and they make about $2,500 on each one, the government takes about $12,000 in tax and you have to pay GST on the tax, yes they tax you for the priviledge of being taxed, this is why they cost $37,000 on road.

LC says:

12:33pm | 08/11/12

There’s no reason why an Aussie icon and can work together. Just like when we had the Torana all that time ago, we can gain equally as much pride in the alternative offerings Holden have. And as Holden have asked for more local input into the next Cruze, there is only be more to be proud of. It would be really great though if Holden developed it’s own body-on-frame diesel 4wd though, that’d be a hit in rural Australia and an potential export goldmine.

Not that the large cars are doomed, at least until they cease being popular in markets in the Middle East and America, and if the Falcon goes under (which is looking like a certainty), Holden will pick up the slack in areas where the car is still relevant here to boot.

LC says:

02:09pm | 08/11/12

*There’s no reason why an Aussie icon and the free market can’t work together.

Simon M says:

02:18pm | 08/11/12

LC,

The Cruze is beaten in almost every aspect by european cars, in particular Germany. Holden has made a car that tries to do everything but fails at most. GMH need to aim for German levels, stop using an outdated Korean design , and above all make a performance hatch!
Ford has the Focus ST ( and RS and XR5 before it) and I know its not made here, but Ford has realised there is a market for it! Hell FPV could make a super hot version. Look at HSV, only big V8s, because apparently thats all Australia want. There is a reason VW do so well (think GTI and Golf R) Because they are such good Cars with a high quality build. GMH really need to look at that market, because currently
They have nothing

neil says:

03:01pm | 08/11/12

Simon M, the ignorance on this blog is astonishing. The Cruze was styled by Holden, the body was engineered by Daewoo and the chassis was engineered by Opel and is shared with the Insignia. The hatch back was styled and engineered by Holden and is unique to Australia.

The Ford Focus is made in Thailand.

LC says:

03:05pm | 08/11/12

“GMH need to aim for German levels, stop using an outdated Korean design”
Which is why Holden wants more input into the design of the next model. Despite this, it sells reasonably well here, as does it’s locally made and designed hatchback stablemate, so despite it’s Korean origins, it can’t be that bad (and I say this after having to drive my ex’s Korean-built Excel for a while!).

“and above all make a performance hatch!”
They know there’s a market for these sort of cars, HSV offered one when Holden sold the Astra. Currently, HSV are working on it,
but they’ll have to do it all own their own (no-one else offers a Cruze hot sedan or hot hatch), and that’s going to take time if we want a decent result, and they’ll need to feel they’ll sell enough to cover the development costs.

David V. says:

02:27pm | 08/11/12

Well said. Ford has never recovered from the EA Falcon debacle in 1988, while the absence of V8s for most of that decade hurt its performance image and made it something of an “old man’s car” in image. They threw away what they gained against Holden over two decades in one swoop.

The Aurion is actually a global project for non-Japanese markets. Toyota, for instance, builds the Kijang in Indonesia for local and other developing markets which is a case study of building a vehicle suited to local conditions.

Anyone who things that what Australia have built is crap, have never heard of the Austin Allegro, Morris Marina, Chevrolet Vega, Chevrolet Citation (which spun out of control if you applied the brakes hard), Ford Pinto, AMC Pacer, and countless other pieces of junk.

LC says:

03:38pm | 08/11/12

@ David.

They did that with the AU Falcon. That was a flop-and-a-half. Though the critics said all round it was better then the Commodore of the time, Ford learned the hard way that no-one wanted to drive a car they couldn’t stand to look at in their driveway every morning.

I drive an NC Fairlane Sportsman V8, basically, same car and color as this, but change the spoiler for a hood ornament. Very nice comfortable car to drive, especially when I hit the road to Goulburn, NSW, to visit family a couple of times a year. You can go for hours and hours and you won’t get tired, or uncomfortable, which is more than I can say for the other cars I drove long distances (the farm’s 78 Series Cruiser and my 1970’s Celica). It tows heavy loads as easily as if they were made of cardboard, and my friends capitalize on this regularly, just last week when I helped one with his bathroom renovation. It sucks up a bit of fuel (I usually take a motorbike to commute to work and back for this reason), but on the highway I get figures of between 9 and 10L/100kms, not bad for a 18 year old car.

All that said, I wouldn’t mind backhanding the idiot who thought it would be a good idea to put the handbrake where they did.

St. Michael says:

01:35pm | 08/11/12

“Strategic/protectionist trade will replace it.”

Er, that would be the economic principle known as comparative advantage.  Which is what free trade optimises.

Michael R says:

02:51pm | 08/11/12

@St. Michael, no, strategic trade brings other values (apart from individual wealth) back into the picture. Free trade, for Australia, is a demand-driven economy: huge demand for minerals directs labour to the mines, raises the dollar, and makes other industries uncompetitive. Ergo, China controls what industries that Australia has. Let me repeat that: China controls what industries Australia has. Do we all want to work in a mine? Hell no.

And there’s other reasons to have a manufacturing industry: for defence purposes, to give incentive to engineering careers, and to retain a broad base of skills which gives flexibility. We lose our entire industries just to save a few dollars. Is it really worth it? No. And Chinese goods are not cheap if we have to spend buckets countering their growing military and cyber war. That’s just a few examples strategic (values driven) trade. The free market does not always act in your interest.