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Issue #1533      1 February 2012

Car industry – battle for Australian manufacturing

The press’ business pages are full of predictions that Ford, GMH and Toyota will take their Australian car making operations offshore. Almost every columnist is taking a dry economist’s attitude to the prospect – that it’s inevitable and that governments should stop supporting the industry. The Opposition agrees. Speculation has been prompted by sackings at Toyota and a lack of commitment from Ford or Holden to produce vehicles in Australia when current models end their cycle. The jobs of 50,000 workers employed in the car industry hang in the balance along with the future of Australia as a country where people “make things”, to borrow a phrase from former PM Kevin Rudd.

Most Australians don’t agree with the neo-liberal stance taken by pro-corporate columnists. A survey by Essential Media Communications found that:

  • 79 percent agree Australia should retain its manufacturing sector
  • 68 percent support current levels of industry assistance to support jobs in the Australian car industry
  • 62 percent agree that other manufacturing industries should receive similar assistance

Decisions of this magnitude are not made by the Australian people, however. They are made in boardrooms in distant locations by companies determined to squeeze the biggest profits possible from their global operations. The car industry internationally has taken a hit from the capitalist economic crisis that appears set to worsen. Many sectors of the Australian economy are performing badly and workers’ purchasing power is down.

Fewer cars are being sold and people are scaling down the size of the cars they buy. Car making in Australia, for export in particular, has been rocked by the high exchange rate for the Australian dollar. Manufacturing workers will be forced to pay the price for all this chaos of capitalist production.

Assistance through the front door

Australia’s car making industry used to be supported by tariffs of up to 60 percent. The Whitlam government took an axe to protection of locally based manufacturers for a time during its term in office. The systematic reduction of tariffs began in the early days of neo-liberalism with the Button Plan – named after Bob Hawke’s Minister for Industry and Commerce during the 1980s.

The ultimate consequences of this policy of unilateral disarmament became so alarming to Australian governments in terms of reduced local sales and job losses that a new way to assist carmakers had to be found. Protectionism was still taboo for legislators committed to capitalist globalisation. “Industry assistance” – cash bribes to manufacturers to stay in Australia – became the by-word. The policy of cash grants didn’t prevent Mitsubishi deserting its Adelaide plants in 2008.

Undeterred, the Rudd Government unveiled a New Car Plan. Gillard cut assistance back last year as her government set out after another neo-liberal Holy Grail – a budget surplus. The Australian equivalent of the “cash for clunkers” program was taken off the table. Other cutbacks were announced. Nevertheless, the New Car Plan with its core Automotive Transformation Scheme is still worth $3.4 billion.

The poor carmakers

Toyota’s announcement of the sacking of 350 workers (or 10 percent of the workforce) from its Altona plant provoked an outpouring of official sympathy. Max Yasuda, the chief of Toyota Australia painted a grim picture. “The reality is that our volumes are down. What we assumed would be a temporary circumstance has turned into a permanent situation,” he said.

When the redundancies were announced, industry minister Kim Carr was feeling Mr Yasuda’s pain. “Ultimately, companies have to take the tough decisions based on commercial realities to ensure that their business model remains sustainable, and that is what Toyota has done today.”

He should be feeling sorry for the workers. Toyota did not honour commitments to the Australian Manufacturing Workers’ Union to make any redundancies voluntary. The redundancy packages have been trimmed back. The company is talking about how to make production at Altona more “competitive”, i.e. how to speed it up with a more “flexible workforce”. It made public its “regrets” that workers took industrial action last year after 16 years without any such action.

Workers are right to look to their own collective interests and be sceptical of company and government pronouncements. Mitsubishi workers were constantly being assured that the latest sacrifice was necessary, that the transnational was committed to its Adelaide workforce, and so on. When it finally closed its doors in 2008, the Rann Government offered a range of widely hyped “adjustment support”. The assumption made by the corporate media was that these workers would find new jobs as the invisible hand of the market worked its magic. Three years later a study revealed that most had not found suitable employment. Many had been bankrupted after taking on various franchised small businesses.

What to do?

The Gillard government is in a trap set by decades of neo-liberalism and commitment to capitalism in general. It would be an exceedingly difficult thing at this stage to establish a nationalised car industry to take over where Toyota, Ford and GMH leave off. The government is stuck with a policy of offering bribes to the monopolies to maintain their Australian base. It is right when it says the Opposition leader Tony Abbott’s threat to choke off assistance would be a deadly blow to local jobs.

A list of incentives is being drawn up. Holden may get between $100 million to $200 million to stay put for a while longer. The latest announcement was made at the Detroit Motor Show earlier this month. Ford will get $34 million of federal funds to improve fuel economy and emissions on its Falcon and Territory models. The amount was topped up by $19 million from the Victorian government and $50 million from the parent company to complete a $103 million total package.

However, even with this sort of investment, industry pessimists are in the majority. Industry Minister Kim Carr was accompanied to the US during his recent visit by the newly appointed SA Premier, Jay Weatherill. He was on a mission to extend GMH’s production at Elizabeth but his other courtesy calls give an indication as to the state government’s vision beyond the demise of local vehicle building. On his return, the Premier announced a new contract for BAE systems to make titanium components for the tailfins of the US Joint Strike Fighter.

Defence industries and uranium mining make up the government’s retrograde vision for the future of the South Australian economy and it appears other states and the federal governments are thinking along similar lines. Given the class allegiances Australian governments have taken up, it is unlikely they will engage in any planning independent of the transnationals. They will have to be forced to do so.

Australia has considerable manufacturing prowess. As has been noted, it is only one of 13 countries with the capacity to bring cars from the drawing board stage to full production. It could just as easily be a centre for industries making green energy and public transport infrastructure. The battle to force Australian governments to go down that sustainable path is now on. The alternative is bleak – a deindustrialised, deskilled country with few prospects.  

Next article – Editorial – Needed: a new system

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