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Issue #1595      May 29, 2013

Ford closure – time for a new direction for manufacturing

Industry Minister Greg Combet foresaw the end of Ford’s vehicle building operations in Australia even while spruiking the government’s $34 million “co-investment” bail-out in 2011. Blind Freddie saw it coming, too. The same fate is stalking Holden and Toyota. But the best “solutions” on offer from forces within the big two political parties are for more taxpayer dollars to be splurged to slow the transnationals’ departure, to cut local workers’ pay and conditions, reduce regulation or to erect tariff barriers high enough to guarantee corporate profits. Surely it’s time for an alternative vision.

In 2016, Ford will join the list of former Australia-based vehicle builders that includes Mitsubishi, Chrysler, Nissan, Leyland and Renault. Like the others, it will become a vehicle importer only. The final nail in the coffin for local manufacture came when Ford’s head office in Detroit decided not to re-equip local models with US-made V6 engines that would meet tightening European emission standards. It sounded like a reprieve for workers at the engine-building plant at Geelong. But it meant that Ford had given up on the idea of exporting Australian-built Falcon and Territory models to markets like Canada. In the absence of export markets, Ford concluded that vehicle sales in Australia are not high enough to sustain local operations.

Tough luck for local workers! They didn’t decide to persist with the production of big vehicles that austerity-wracked Australian workers can no longer afford to buy or run. They didn’t decide to keep building the in-line six-cylinder engine that couldn’t meet modern emission standards. But they will pay the price for those decisions with their livelihoods. Tony Abbott was keen to cash in on the announcement. He wants company tax rates reduced faster than Labor has already delivered and less “red tape” – less protection for local workers and the environment.

Holden has received $2.2 billion in subsidies from Australian taxpayers over the past 12 years. Ford will have soaked up $1.1 billion over the past decade. The maintenance of local jobs was the reason given for these sizeable cash injections though the end game, as we now know, was anticipated. It’s true the Australian car market is a tough one. Ford executives complain that there are 365 models competing for customers. Australian factories simply cannot match the economies of scale that are possible in other centres. The corporate media would like to suggest wages are to blame but the truth is that Australian wages lag behind their European counterparts, for example.

Back to the future?

Local members and NSW Senator Doug Cameron are calling for “emergency tariffs” to be put in place to stabilise the situation. “I support a safeguard action under GATT article XIX,” he told The Australian Financial Review, “and the other thing I’ve argued for is the RBA to reduce interest rates to reduce the dollar.” Prime Minister Gillard and ACTU national secretary Dave Oliver reject the idea saying its implementation could bring on all sorts of reprisals from our trading partners.

Trade skirmishes aside, the question is how high would the tariff wall need to be to protect locally-based vehicle production from the mega-factories producing world cars? How low would the dollar have to go? Former industry minister Senator Kim Carr wants an urgent inquiry into how governments could help car manufacturers stay in Australia. “I’ve always been of the view that we need an activist, interventionist policy, not a ‘set and forget’ approach,” he said.

Just about every approach to shoring up local car manufacture has been tried. It is seen as a “strategic” industry; vital to the maintenance of the country’s engineering and manufacturing capacity. It is a substantial employer, particularly when component manufacturers and other suppliers are added to the numbers. But despite the occasional, less-than-frank statements about this or that manufacturer being here “for the long haul”, nobody sees car-making in Australia’s mid to long-term future.

Alternative vision

The announcement of Ford’s looming closure has sparked a lively discussion in the columns of the corporate press. Some have come to the defence of state and federal governments for their substantial bailouts. They point out that just about every one of the 13 car-making countries “co-invests” in the industry to keep up the supply of relatively affordable cars. In other words, the private motor car is being heavily subsidised. This is despite the enormous damage the car does to the environment and the cost in lives lost through road accidents. The car has been promoted ahead of public transport and this has caused cities to sprawl making it harder to meet the communities’ public transport needs. Australians are said to love their cars but a large part of their affection stems from the inflexibility and low standard of public transport in our cities.

We don’t need an inquiry to find out how to bribe transnational corporations to keep making cars in the country. We need a commitment to alternative industries that could use the manufacturing capacity built up over the decades and the considerable skills base. Why not produce vehicles to meet our public transport needs? Why not produce the green energy infrastructure that we need so urgently? The transnationals won’t take up these challenges because they can’t squeeze the profits from them that they do from carrying on in their current, familiar and very destructive manner. Nationalisation of Ford’s, Holden’s and Toyota’s assets is thus a crucial element of any plan to maintain a strong manufacturing base in Australia.   

Next article – Editorial – What happened to that ring of confidence?

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