Are we “Holden” onto a Dream of Manufacturing?

Ford Australia announced they will cease manufacturing cars in Australia from 2016. Most recently, we hear of Holden straining to find a business model which enables them to afford manufacturing in Adelaide.

Are we witnessing the end a manufacturing in this country?  Volkswagen stopped making cars here in the late 1960s, Leyland in the 1970s, then Renault and Nissan pulled out in the 1980s. There would be a respite in such manufacturing decline until Mitsubishi stopped in 2008, now it is to be Ford that exits ‘stage left’. How long will it be until we realise that we are simply Holden onto a manufacturing dream.


The question that screams in all South Australian minds is: “When will it be Holden’s turn to quit our shores?” And Victorians will be asking the same about Toyota.

The high Australian dollar (now falling but still 40% higher than the halcyon days of Australian car exports in 1980s-90s) along with economies of scale from many Asian manufacturing locations are both blamed for Ford’s demise. Is this a problem or a fact of life that we just have to accept? In other words can anything be done that will make a meaningful difference?

My family have been involved in manufacturing, and while it is in a different sector – clothing – there are some similar issues involved. These include the way we value, or don’t value, those involved in manufacturing work; and also the way we view ‘competition’ from overseas sources.

When it comes to clothing manufacturing I have long believed that our society has looked down upon, and therefore degraded, the jobs of occupations like sewers and cutters. In devaluing their jobs, we have stripped such key roles of the dignity of their worth and this has meant that few new comers have been interested in taking on such jobs. Car manufacturing is not the same, but here too there have been many in our community who have gratuitously depreciated many roles that are key to making cars. It is not surprising therefore that many young people entering the workforce seem less than keen to consider careers in manufacturing.

Yet a job in manufacturing is worth so much more than a non-job on welfare – both to the individual and to the taxpayer at large. There are two unassailable facts about Australia in 2013 – first, if we truly believe that only mining and agriculture offer real income to our economy, then we will have to confront the fact that we are seriously overpopulated … for we would need less than half our current population to service the needs of those sectors at their current rate of activity. The blunt fact is that those sectors do not need high numbers of employees to till the soil or excavate the ground.

The second fact is that, given that we have a population of 22 million, manufacturing represents a key means of sharing the wealth of our nation amongst the largest number of people in a way that empowers – through acknowledging the dignity of labour – rather in the demeaning method of welfare payments.

So given that we will not be exporting surplus labour in order to reduce our population and that we would want to see the maximum number of people usefully and productively employed rather than on welfare, we confront the question: what should government do about manufacturing?

Government can’t walk away from being involved – yet on the other hand, its role must be ultimately helpful not harmful – back in the 1980s, the then Minister for Science, Barry Jones spoke of the Australian Trap in terms of the classic way government often helped industry – he said that too often government had nurtured new industry in the cradle only to move it to the intensive care bed where it became permanently dependent on government assistance for its ongoing survival. Private industry should not, cannot, survive on permanent government assistance – government must always have an exit strategy when it comes to how it best can assist industry – a bottomless bucket of ongoing dollops of money is not the answer.

On the other hand, government money – our tax money – can be used productively to ensure that manufacturing continues to produce and employ so that our tax money doesn’t get called upon in increasing amounts to make welfare payments to those formerly employed in manufacturing.

Many products we now buy are labeled Fair Trade – I strongly support this … I don’t want to see my spending making life worse for someone in some Third World country by abetting their exploitation. But Fair Trade works both ways. If Australia is to be a promoter of the principles of Free Trade through its involvement in the World Trade Organisation, it must do so on the basis that our manufacturing employees are not required to confront unfair competition. Unfair competition exists where our workers, guaranteed fair working conditions, are forced to compete in the profitability stakes against workers in other parts of the globe where the concept of the cheapest labour dollar exists and where no concern is paid to reasonable expectations of worker well-being and safety. This is not to say that we should demand equal pay and conditions for workers producing in competitor countries to those that apply here; that would be unreasonable. But within the cost economics of those countries, companies who seek to compete in our market place with their products should be expected to have followed labour practice that is fair and reasonable within the capacity of their one economies.

How could two-way fair trade be enforced? By requiring those that export their goods into the Australian market place provide evidence that, within the capacity of their economies of origin, they have followed equitable employment practice. If not, the provisions of dumping legislation should be amended to restrict imports that cannot provide such evidence.

There is then the issue of encouraging industry to innovate, to improve their productivity. I was surprised to learn that the long term rate of productivity improvement in Australian manufacturing is half that achieved by Australian agriculture. Agriculture in this country has survived in the world of brisk free trade by improving its productivity. Manufacturing can do the same – German manufacturing, in a high cost economy, has proven that point. But it is not sufficient to say this would automatically happen by just exposing local manufacturing to unfettered competition – no, the answer then would be ‘shut down and outsource’ as manufacturing jobs get exported overseas. The answer is for government to provide meaningful, targeted assistance to promote technological competitiveness and sustainable productivity improvement in our manufacturing sector.

Where does this leave the automotive sector? There are many who say that what I have promoted above can be achieved without such a sector in Australia. Yet the reality is that no country in the world today that has a viable and vibrant manufacturing sector does so without an automotive sector being a key part of it. Furthermore, the automotive sector that is talked about is much more than the ‘major car companies’, it also includes a host of component manufacturers who, in total, employ as many people as the big car makers combined.

South Australia’s economy has three legs to its table – mining, agriculture AND manufacturing. If the car industry is allowed to go to the wall, that third leg on our economic table will collapse. And if it collapses, are we ready to become a community heavily dependent on welfare payments?

Categories: Lachlan Clyne - Personal Life

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