The Guardian 18 June, 2008
Handouts to carmakers:
good money after bad?
Bob Briton
The future of Australia’s car industry is back in the news just as the federal government appears to be throwing it a lifeline. Rudd’s announcement from Japan that the first of his promised handouts from the $500 million "green car fund" projects will be a $35 million grant to Toyota to produce a hybrid Camry in Altona from 2010 has raised a lot more questions than it answers. This taxpayer gift to Toyota, the most profitable car company in the world, will likely be good money after bad given the history of car manufacturers in Australia. A likely scenario is that it will pocket the handouts, dump their workforce and simply move on to more profitable locations the same way Mitsubishi did just a few short months ago.
Are petrol/electric hybrid cars the best option for development? Will the fund’s $500 million be enough to spawn a new generation of more eco-friendly Australian-made cars?
No doubt it was hoped that the announcement would offset the effect of bad news stories lately about manufacturing in Australia. From the end of next year, Holden will cease production at its 4-cylinder engine plant at Fishermans Bend and shed 500 jobs. It claims that the affected workers will be absorbed into other operations and that all entitlements will be met. Requests from the Australian Manufacturing Workers’ Union (AMWU) for the company to make other products at the plant were rejected.
Car workers have little cause for optimism at present. Research by Professor Peter Beer of Flinders University in Adelaide reveals that the workers abandoned by Mitsubishi are struggling to find jobs. The ones that have are mostly in casual or part-time positions — 71 percent earn less than they did at Mitsubishi. The mining boom has failed to soak up the jobless.
"There is this myth being pushed around: don’t worry, the resources boom will pick up and look after these workers, and this study really shows this is not the case," AMWU National Secretary Dave Oliver said last week.
Mining companies prefer young workers from non-unionised sectors, not vehicle builders with hard-fought campaigns behind them.
And it seems the message is getting through to Labor’s parliamentary reps that the crisis in manufacturing, particularly in the vehicle industry, is getting past the point of being "manageable". SA Premier Mike Rann has called on the federal government to abandon plans to drop tariffs on imported vehicles from the present 10 percent to 5 percent in 2010 and zero from 2015.
Former Victorian Premier Steve Bracks is heading up a review of assistance to the car industry and it would be no surprise if the 2010 deadline on tariffs gets put back. Rudd himself is said to be sympathetic. But even if there was a reprieve on the tariffs issue when Bracks reports in July, the bigger question of what will secure the future of the strategically important car industry remains.
Even with 10 percent tariffs and $500 million worth of "assistance" from the Automotive Competitiveness Investment Scheme in recent years, locally made cars are losing out badly to imports. Local cars now make up only 20 percent of total sales.
Disappearing niche
Carmakers operating in Australia have focussed on producing bigger cars. Smaller vehicles have been dropped from model ranges and that segment of the market left completely open to imported vehicles. Demand for "family-sized" cars is slowing as fuel prices soar and few anticipate a return to favourable conditions for old-school fuel guzzlers. Exports of components and complete cars have been slashed by the high exchange rate on the dollar.
Not many commentators predict a major shift to the hybrid Toyota Camry. Sales of the Prius, which has been on the market for nearly a decade, have been modest. Buyers are cautious about the cost of replacing the very expensive batteries and the complexity of the technology involved. It will probably be saved by government and fleet sales. The Victorian government, which will match the Commonwealth’s $35 million cash injection for the project, is putting its hand up for 2,000 of the hybrids.
Some question the future Camry’s "green" credentials. Its fuel consumption is predicted to be in the range of the baby Yaris petrol model but it still uses petrol from dwindling worldwide oil reserves. Some say a diesel/electric hybrid — like the latest Peugeot offering — is a smarter choice. Others say that an all-electric car — like the ill-fated GM model in the US — would be the technological silver bullet.
Critics maintain that simply transfers the greenhouse gas emissions from the car’s tail pipe to the smoke stack of the coal-driven electricity plant. Bio-fuels have had the major side effect of raiding the food stores and arable land of the world’s poorest people.
Maybe a hydrogen fuel cell/electric hybrid would be the ideal? Whatever the future holds for the worldwide car industry, few predict major innovation flowing from the federal governments "green car" fund. The very conventional current model Commodore is reported to have cost $1 billion to get to market. In the meantime, locally based transnationals have been left selling the wrong cars for the times and it is the car buyers and local manufacturing workers who are going to pay for this decision.
Anger
Australians are justifiably angry about petrol prices. They are paying more at the bowser and more at the supermarket checkout as spiralling fuel prices are passed along throughout the economy. The anger would not be there if people saw that fuel prices were being raised to artificially high levels to cut down consumption of the precious resource for future generations. But that’s not the case. Government excise and taxes flowing from "world parity pricing" are not being used to find ways to change the economy’s heedless ways. They are being used to keep the ship of capitalism afloat.
Public transport is being run down and/or privatised for more profit-taking. The oil monopolies are swimming in super-profits. And while the federal government is sprooking the "green car" fund, calling for another $1 billion in private investment, the vultures are circling for another major operations closure. Ford or Holden or Toyota?
It’s time that this unaccountable and unplanned mess was brought under control with a major state-owned manufacturing sector producing, among many other things, more appropriate vehicles for our needs and for the environment. Public transport needs to top the infrastructure building agenda. Of course, a new sort of government would be required to set out on such a course and that change is becoming a screaming economic and environmental necessity.