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Issue #1589      April 17, 2013

Holden sacks 500, pockets subsidies

Giant US auto maker General Motors has admitted it has received $2.2 billion in taxpayer subsidies over the past 12 years to keep producing Holden cars in Australia. The timing of the revelation was unfortunate. The company had just announced a further 500 jobs would be axed from its operations – 400 from the plant at Elizabeth in Adelaide and another 100 at the design and engineering facility at Fishermen’s Bend in Melbourne. The South Australian Premier and other government spokespersons expressed anger and frustration at the move but nobody is threatening any real action. Adelaide workers are reminded of the long and costly farewell of Mitsubishi from the Australian manufacturing scene five years ago. Ford does not sound confident about its future and Toyota has also held the hand out for assistance.

Holden, Australia’s first car maker – a 1954 FJ ute.

Federal and state governments are coy about the exact nature of the deal they struck with GM to stay in the country but they insisted it was a good one at the time. In return for the latest $275 million cash injection, Holden was to release the new VF Commodore model and invest $1 billion in their next generation car due in 2017. A “guarantee” manufacturing would stay until at least 2022 was talked about. The VF was released but now the company is umming and ahing about its prospects. “I cannot predict the future,” GMH managing director Mike Devereaux said recently. “I can’t control what central banks do … I cannot control the values of other currencies that we compete with and I cannot predict what that will do to our business.”

It’s true that Mr Devereaux can’t control the exchange rate of the Australian dollar, whose stellar rise of late has been blamed for the relative lack of competitiveness of Australian manufacturing. The Commonwealth renounced control of the currency decades ago. But together huge transnationals have engineered the global economy so that if governments in countries like Australia don’t subsidise their profits to levels agreeable to them, they simply move to low wage centres, claiming international market forces left them no option. Governments might express their more or less genuine “anger” at the actions of companies but there is little they can do under conditions of capitalism. In any case, most of the occupants of Australian parliaments accept the profit first “logic” of the capitalist system.

Coalition sounds tough

The Coalition is trying to sound tough. Industry Minister Greg Combet’s opposition counterpart, Sophie Mirabella, says she would trim $500 million from the $1.5 billion to be spent under the New Car Plan from 2015. Somehow she would get more binding commitments from companies receiving public funding. She would refer support to the industry to the Productivity Commission. Free marketeer Tony Abbott says locally based manufacturers should lift their export performance in spite of the cripplingly high value of the Australian dollar. Hardly a confidence-inspiring “alternative” approach.

Unions are prepared to fight to ensure redundancies will be voluntary. The Australian Manufacturing Workers Union wants the Coalition to step back from its threat to cut industry subsidies. The union’s national president Andrew Dettmer has contrasted the actions of the Australian government to that of Japan in the face of a downturn in manufacturing. Japan has devalued the yen and car sales have jumped accordingly. “The Japanese government is completely unapologetic about its policy settings,” he said.

Sooner or later – nationalisation

Restoring controls over the Australian currency would be a positive step in the rolling back of decades of neo-liberal policy but, along with other similar tweaking measures, it won’t fix the underlying problem of private ownership of what is a strategic sector of the economy. Taken together, vehicle building and its allied industries still employ around 250,000 people in Australia.

Its presence is vital to the maintenance of a manufacturing base in the country, a feature that used to be acknowledged as necessary for the guaranteeing of living standards and even the sovereignty of the country. Its direction and priorities should not be determined in boardrooms in the US, Japan or elsewhere.

Sooner or later truly big decisions will have to be made about the nature of the resource, finance and manufacturing sectors. Public ownership under democratic control and a planned approach are the only way to fix the situation whereby transnationals pocket subsidies to maintain operations and jobs only to abandon local workers to their fate and head offshore in pursuit of higher profits.

Australia may not need so many of its manufacturing eggs in the vehicle industry basket. The production of public transport and other sustainable infrastructure might be a more viable option but the question will never be put if control of these vital community assets remains in corporate hands.

It will be an almighty battle but the fight back has to start somewhere.   

Next article – Editorial – NBN – near enough not good enough

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