Have Your Say: The Local Car Manufacturing Industry
We all know that our automotive manufacturing industry which served us so well for so long is now dead. While many articles have been written on the subject, reactions to a recent post on the QUINFO facebook page has again raised this issue, highlighting just how raw things still are.
So what caused its demise?
Over the decades the local car manufacturers (each with parent companies based in the U.S.) have received massive amounts of federal government (i.e. tax payer-funded) cash injections and incentives in an effort to prop up the local industry. Whilst on the other side of the equation, our successive federal governments have allowed cheaper imports from Asian countries to compete in the marketplace, when in reality the playing fields were less than level.
Labour costs and manufacturing costs in Asia are much cheaper than in Australia, so our ability to compete was always going to be diminished unless meaningful import tariffs were applied to motor vehicles manufactured overseas.
Other countries do it to protect their own interests, Australia not so much.
But then there are other considerations. The general buying public want choices when it comes to buying motor vehicles and they want to have the opportunity to buy not only Australian cars, but Asian cars too. Also, they are not prepared to pay $35,000 -$40,000 for a Korean car that costs $25,000 to $30,000 without significant import tariffs. So some of the blame has to lay with the Australian consumer.
In addition, Australian workers’ unions have historically pushed for higher wages and better conditions for their members, which ironically contributed to the non-competitiveness of the Australian manufacturers and the subsequent loss of jobs for the very workers they were trying to protect. So logically, some of the blame must also lay with the unions.
Federal governments of both persuasions have failed to solve this issue over many decades and whilst the final axe came down while the LNP coalition government happened to be in power, it could be argued that the outcome was inevitable and would have happened anyway under a subsequent Labor government.
In short, Australia was uncompetitive in an international landscape where free market competition, without governmental intervention, determines product price.
Take Hyundai’s business model for example. They purchase iron ore from Australia, ship it to South Korea in Hyundai ships, process the ore at Hyundai refineries which are located adjacent to the Hyundai car manufacturing plant.
The refined steel is then transferred to the Hyundai car manufacturing plant where it is made into Hyundai cars. The Hyundai corporation designs and manufactures its own petrol and diesel engines, manual and automatic transmissions, car radios and other components, thereby not being reliant upon third party suppliers. Then with the aid of modern technology they build Hyundai cars on efficient production assembly lines.
The finished cars are then transferred from the Hyundai car manufacturing plant on Hyundai trucks to a shipping port where they are loaded on to Hyundai ships which transport the cars to Australia. They are then unloaded, transferred eventually to Hyundai dealerships and sold to the Australian car buying public at very competitive prices and great profits for the Hyundai Motor Company.
How do we compete with that? Was the death of the industry inevitable or could something have been done sooner? Does the advancement of electric cars present an opportunity for Australia to have a fresh start and do it right?