January 13, 2012

Horse 1267 - Throwing Bones at Lazy Dogs


His comments (Senator Kim Carr) came after The Financial Review reported Shadow treasurer Joe Hockey had told colleagues he will counter any move to reverse the cut not only because of its importance to the Coalition’s overall savings plan, but also out of concern at the mounting federal payments to the big car companies.

The decision escalates the political brawl over industry assistance as former Labor finance minister Peter Walsh warned the federal government against “propping up” the car companies if they could not sustain commercial operations in the long term.

Mr Hockey’s move is the first sign of a shadow cabinet showdown on the principle of industry assistance as his Opposition Leader and several colleagues speak out in favour of strong government support for car makers.
- The Financial Review, 13th Jan 2012.

In this case I agree with the Liberal Party.

The Australian Government in various guises has been kowtowing to the automakers pretty well ever since PM Ben Chifley and the then managing director of Holden Laurence Hartnett, practically begged and licked the boots of Detroit.

The idea that the Australian Government was throwing money at a company which had filed for Chapter 11 Bankruptcy in the United States I found pretty scandalous at the time and when you consider that Holden happily snapped up $149 million in taxpayers funds to "develop" a new small car which they'd already engineered and were then selling in other markets just defies description.

Detroit's attitude to manufacturing in Australia can best be described as contemptuous. It was Detroit who decided that the Holden Monaro could be sold in the United States and then when it failed to meet their expectations even after being a successful car in Australia for four years, they killed it off.
When Holden found an export market for the Commodore under the Pontiac badge as the G8, Detroit killed off the whole Pontiac brand.

Now Holden is building the Cruze hatchback, Detroit has decided in its wisdom that the United States will not get the Cruze in its hatchback form; thus killing off another potential export market.

It's not just Holden who acts this way. Ford at one stage promised to be building the then next-gen Focus Hatch in Australia by 2011 (which never eventuated) and Toyota was able to get millions to set up production of the Hybrid Camry in Australia. Both Ford and Toyota have at various stages threatened to close their Australian manufacturing operations.

Really I wonder what the actual intent of throwing money at what basically are foreign corporations, is about. Corporations like any other businesses exist to turn a profit and the underlying reasons for making a profit are largely to do with labour and materials costs.
Car makers time and time again prove that they're willing to up sticks and start building cars in places where wages are cheaper. The Toyota Hilux is built in Thailand, the Corolla is built in Pakistan, Vietnam, Venezuela, the Philippines etc. and even the Cruze itself is built in places like Kazakhstan, Brazil and Russia.

Holden could very easily shut its doors tomorrow, and just kill off the Commodore; it already imports every other car in its lineup except the Cruze hatch. Ford could do likewise, killing the Falcon. Toyota wouldn't even need to change its lineup, it would just change its sources.

Pray tell why do we continue to throw taxpayers' money at these companies?

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