The impact of Ford’s decision to end car manufacturing in Australia will ricochet throughout the manufacturing industry, writes Paul Bastian.
The shock announcement yesterday that Ford will stop making vehicles in Australia comes as terrible news for the 1,200 workers affected.
They will be gutted to learn that the company that has made cars in Australia since the days of the Model-T will close its factory doors from 2016.
But this is not just a shock for workers in the Ford plants in Geelong and Broadmeadows, it will be hard to take for car component manufacturers across the country and the thousands of workers they employ.
Each of our major car plants is at the centre of a web of suppliers and indirect workers that together number 200,000 employees.
Many of the parts that make up our Falcons, Commodores and Toyotas are also made domestically.
Car manufacturing drives everything from fashioning steel to developing cutting-edge technology in research and development facilities. It is a hub for innovation and skills development, a place that trains many of the skilled manufacturing workers the industry relies on.
That’s why yesterday’s announcement from Ford is such a kick in the guts to everyone involved in manufacturing.
In recent years the industry has been weathering the incredibly difficult economic conditions.
The high dollar is at the root of these challenges, as well as the actions of our trading partners, which have undermined any level playing field in car sales.
Major competitor Japan has printed billions of Yen to effectively devalue their currency by 25 per cent and kickstart their stagnant economy. Japan’s decision has been made after lobbying by major Japanese exporters including Nissan and Toyota.
Some people in Australia have little sympathy for a multinational that has accepted taxpayer subsidies over the years. But it has not a one-way street.
Government support pales in comparison with that of other nations with strong automotive industries. In per capita terms, Australia invests $US18 per annum. Compare this to the $US330 in Sweden, $US260 in the USA and $US95 in Germany.
Having the most open vehicle market in the world resulted in 86 per cent of all new cars in Australia being imported in 2011.
Twenty-one percent of these attracted no tariff as they entered the country and the rest attracted one of the lowest tariffs in the world at 5 per cent.
Eighty per cent of the vehicles imported into Australia come from four countries – Japan, Thailand, Korea and Germany.
Yet all of these countries maintain a mix of tariffs and non-tariff regimes protecting their car industries at significant higher levels than we do creating impenetrable barriers for our cars.
We are also being hit by overproduction overseas. A Toyota Corolla cost around $20,000 to import only a few months ago. Now the price tag is closer to $14,000.
If we want to maintain a car industry in this country, we need Governments to make co-investments with car companies.
These are not simply ‘handouts’ they are funds that are directed to specific projects, with specific conditions imposed on car companies.
Given the boost for associated jobs and industry and the massive flow-on in research and development, these investments provide tremendous value for money in relative international terms.
We also need governments to buy Australian made cars for their fleets, and reverse the decline in recent years.
Ironically after the global financial crisis, governments at all levels moved away from their commitment and began purchasing more imports.
Over the next 20 years federal, state and local governments will purchase around 1.5 million cars, with current trends only one third or less will be sourced locally.
Fixing this situation has the potential to boost sales by up to 400,000.
The car industry is at the centre of our manufacturing. If we lose critical mass in the car industry, much of our manufacturing sector will wither away.
The mining boom can’t go on forever. At some point we will need a diverse economy which includes manufacturing.
But if major car companies shut their plants and move overseas, our skills and capacity will disappear, and we won’t be able to rebound.
Governments, manufacturers, industry bodies and unions need to work together to develop to come together in this crisis, lay down what needs to be done and do it. And the key to ensuring works is bipartisan support across the nation.
It’s time to stop the auto sector being a political football and get down to implementing real solutions.
Today’s announcement by Ford marks a black day for the car industry, but we shouldn’t just throw our hands up in resignation – we should roll our sleeves up and stand up for Australian manufacturing.
If we are to remain a high-skilled nation that makes things, and defend a manufacturing sector that employs one million people, this is the time to do more, not less to support it.
Paul is the national secretary of the Australian Manufacturing Workers Union (AMWU)
The article originally appeared here: http://www.abc.net.au/unleashed/4709810.html