November 16, 2013

Horse 1569 - The Australian Car Industry and Rollo's $1 Offer To Ford

- Stolen from AOL

The final episode of Top Gear for 2013 as the photograph above as the photograph above shows, had a gathering of vehicles currently built in Britain, which overflowed The Mall in London.
Okay, the soundtrack was deliberately designed to be a flag waver and with Union Flags all the way down both sides, that was more than adequately. However, as an Australian, I feel infuriated and a little sad that this sort of thing, could not be done here.

Suppose that a similar thing were done here. If all the vehicles that are currently built in Australia, then how many would there be? The list is actually more surprising than you'd think. It's probably not a comprehensive list though because I'm sure that there are other garagistas out there.

Holden - Commodore Sedan (4 engines), Wagon (4 engines), Ute (3 engines), Cruze (hatchback)
Toyota - Camry, Aurion, Camry Hybrid
Ford - Falcon (4 engines), Ute (3 engines), Territory (2 engines)
Volgren - NGS, CR228-SW, CR228-LW, CR228 Artic
Bustech - VST, SBV, SBM, MDi, XDi, CDi, ADi
General Dynamics - ASLAV Light Armoured Vehicle, M1A1 Battle Tank
Elfim - MS8 Streamliner, MS8 Clubman
Bolwell - Nagari
Minetti - SS-V1
Victa - 10 Models of Ride-On Mowers

I've counted 51 variants of motor vehicles produced in Australia. Whilst that sounds like a lot, if they were parked in the same place as the cars in the episode of Top Gear, they would probably stretch only a quarter of the way down the road.
In general, manufacturing as a sector amounts to less than 10% of Australia's GDP. Whilst it is true that I do know people who work in trades, the only person I can say that I know who works in an industry which actually makes produce , works for a bread factory... a bread factory of all things.

We currently have a Industry Minister in Ian Macfarlane who told ABC Local Radio that "There's a possibility that the industry is not able to be saved in terms of the level of support it might require" and that "The truth is that Australia is just not very good at making cars". I would have provided a link, but I have as yet found one.

Now I don't know if the latter is true but I do know that every single car manufacturing facility in the world is at least bailed out or subsidised in some capacity by their government, a truth even admitted by Ian Macfarlane to the Australian Financial Review¹. 
With the news that Holden is seeking to pay its workers the bare minimum that it possibly can, Toyota looking for extra concessions before 2015 and Ford announcing that it will cease manufacturing operations entirely in 2016, the future is incredibly bleak indeed.
Yet I ask myself a simple question. Why is it that Great Britain which as to import all of its steel from elsewhere, is still able to produce so many cars? Is it purely a matter of taxation concessions? Admittedly the standard rate of Corporation Tax in the UK is only 23% as opposed to our 30% but when motor manufacturers deliberately set out to create writable tax losses, this is a little academic.

I wonder about the Mr Macfarlane's statement that Australia isn't good at building cars. The truth itself is that was Holden who developed the Cruze and not Chevrolet or Daewoo, they developed the Zeta platform upon which the Commodore sits as does the Chevrolet Camaro and Ford Australia developed the Ikon and then Figo for India and the Bantam bakkie for South Africa as well as the next model Ranger.
If Australia isn't good at building cars then why are both the Camry and Commodore which are built here exported? To be totally frank, Australian built and developed cars are usually better built and better lasting than most other cars built elsewhere in the world.
There is an argument to be made that the Commodore isn't as refined as say a Mercedes-Benz but all cars are built to a price point and to that end, there isn't really a logical reason why Holden shouldn't be able to produce all of the Cadillacs in the world except that Detroit won't let them. 
If cars like the Falcon and Commodore are on the slide in terms of sales, them it would make sense to change production and build something else. Ford openly refused to let Geelong or Broadmeadows build the Focus and Fiesta and GM don't want to let Holden build terribly many more Cruzes. Therein lies a problem.

The big problem that we have in Australia when it comes to the motor industry, has nothing to do with government policy here but the control which exists from Detroit. If the government really wanted to save the motor industry here, then it could do what France did and just take some of it over.
As it is, 2016 probably marks the death of the car industry in Australia for two reasons:
1. We have a government who honestly doesn't believe in manufacturing in Australia because the voters and backers of political parties choose to make money through other means like property investments.
2. Australia's car industry is and always was controlled from overseas.

The awful truth is that there never really was an "Australian" car industry. None of Ford, Holden or Toyota are listed on the ASX and Australians don't usually own shares in them.

So then, what's the solution?
I've said this before and I'll say it again... but this time to Ford.

If Ford wishes to cease production of cars in Australia, then I'm willing to offer $1 in exchange for the Australian Operations and I'm laying it on the table now. There's your offer. I know that I could have Australia's biggest car company in five years for the simple reason that Australian workers building cars for Australian conditions do a better job, and I think that the general public appreciates this.

¹AFR 1st Nov, 2013:

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