By on April 30, 2013

Jac Nasser, the former head of Ford, is warning that Australia’s car industry has passed the point of no return, and expects to see it die within the next few years.

Nasser placed the blame at the politicians doorstep, citing a dearth of state subsidies for the auto industry and a lack of clear vision on the part of politicians for the decline of Australia’s domestic car industry, which employs some 224,000 people. While Holden, Ford and Toyota are the big name vehicle assemblers, the vast majority of jobs come from parts suppliers rather than the manufacturers themselves. The Australian quotes Nasser as outlining the challenges ahead for Australia

“The signs aren’t good,” he said yesterday. “You’ve got an exchange rate at a 30-year high, you’ve got higher costs in Australia, you’ve got excess capacity in the motor industry worldwide, you’ve got a very weak currency in Japan and you’ve got a weak euro. When you put that mix together, it’s very difficult to expect a relatively small but talented Australian auto industry to work its way.

As soon as you have a reduction in the scale of domestic manufacturing – let’s assume one of the three decide to exit Australia in terms of manufacturing – then you end up potentially with sub-scale supplier infrastructure…Once that happens, I think it’s a domino effect. It would be a very sad day for Australia but unfortunately it looks like it could be inevitable.”

One of the major issues cited by many observers (as well as the B&B) is that of tariffs. A report in the Australian business publication BRW states

Australian tariffs on imported motor vehicles fell to 5 per cent by 2010 from 10 per cent in 2005. Where Australia has a free trade agreement, there is a zero tariff. Industry bodies such as the Federation of Automotive Products Manufacturers (FAPM) say the hurdles on entry of foreign vehicles are much lower than those imposed by other car manufacturing jurisdictions and the country should demand reciprocity on tariffs with other producing countries.

The reduction in tariffs is often cited as a reason for the freefall of traditional Australian-made vehicles like the Ford Falcon and Holden Commodore. The big Australian iron has been replaced at the top of the sales charts by vehicles like the Mazda3 and Toyota Corolla and Hyundai i30, as well as the Toyota Hilux and Nissan Navarre pickups, all of which are made offshore. At the end of the quarter, the Commodore was just barely hanging on in 9th place, while its perennial rival the Falcon ranked a dismal 37th in the sales standings.

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81 Comments on “Ex-Ford CEO Says Australian Car Industry Is Dead...”


  • avatar
    Onus

    As much as i hate this guy. Because i do. He presided over one of the worst time period of ford here in the us. He wasted all the money they were earning to buy Aston, Volvo, Land Rover, at the expense of producing good cars for Domestic production.

    But, besides that i think he is right. Its is quite hard for other countries to reduce the value with their currency to be competitive. unless you outright manipulate it like the us is doing the last couple years with QE. Which is causing these problems for countries like Australia, and Canada in the first place.

    • 0 avatar

      I do believe you’re right Onus. On all counts.

    • 0 avatar

      Jac Nasser didn’t buy Aston. Henry Ford II did. It made sense at the time and they did well with it. (Buying Jaguar, on the other hand, didn’t make any sense at all.)

      Otherwise, yeah.

      • 0 avatar
        Onus

        Your correct Nasser didn’t buy Aston. I was thinking more along the lines of Premier Auto Group.

        Now Aston was bought in first in 1987 and the purchase was complete in 1994 under Alex Trotman.

      • 0 avatar
        SoCalMikester

        to me personally, it took jaguar from a brand i never saw to a brand i sometimes saw on the streets. semi-affordable and possibly kinda trustworthy. a coworker had an x-type that looked very jaguarriffic.

        Now, a few coworkers have range rovers and all i can wonder it if they are leasing

    • 0 avatar
      corntrollio

      I’m not entirely sure that quantitative easing is the same as currency manipulation. The US wishes to increase US demand with monetary policy. In effect, the quantitative easing is replacing credit destruction, which would cause deflation. This has an incidental benefit of making US goods more affordable on the world market.

      China, on the other hand, is buying up foreign currency (to keep the Yuan down), and it was trying to reduce domestic demand by raising interest rates and specifically increase foreign demand.

      The effect might be similar in some cases, but the intent is different. In any case, a lot of the discussion behind this stuff is just politics.

      • 0 avatar
        RobertRyan

        “quantitative easing” is another name for printing more money and it is part of the currency manipulation process.

        • 0 avatar
          corntrollio

          Well then almost every government is a currency manipulator. That’s not really a helpful definition.

          • 0 avatar
            RobertRyan

            Or would like to be currently. The “Printing of Money” by the US and Japanese Governments is having an adverse effect on countries like Australia. Do we start printing money?

    • 0 avatar
      RobertRyan

      He has not been much of an asset for BHP Billiton in Australia either. Far from inspirational for BHP and Ford.

  • avatar
    Lichtronamo

    Well duh. The AU market is too small to support an independent industry. Without tariff’s everyone is able to import product from other facilities at lower costs and their high currency makes export of products prohibitive.

    • 0 avatar
      RobertRyan

      Actually most of South East Asia has very high tariffs to protect their industries. Thailand hits imports with very high tariffs, but supposedly has a FTA with Australia. Ford Australia found that Thailand has just implemented a new Tax that its vehicles like hits Ford Territory that has just begun to be exported to Thailand.

  • avatar
    ash78

    I’m a practical man and know this is probably accurate.

    But it makes me incredibly sad. As an American, I always enjoyed looking at Australia as our bizarro-twin, a place where large spaces and relatively cheap fuel prices allowed them to develop and continue a market with larger vehicles and bigger engines, while much of the world (with tight urban spaces and high fuel prices) inevitably marched towards homogeneity and finding ways to squeeze out maximum hp/litre (and L/100km) by any means necessary.

    Plus, utes! I rest my case.

  • avatar
    danio3834

    If the Australian market can get their costs (entitlements) under control, they may be able to save some local production for vehicles with high enough volume to justify a plant. Like Canada, labor and operating costs are now higher compared to most.

  • avatar
    Speed3

    He is right, a strong currency, small domestic market, high labor costs all work against Australia. Unless it makes sense to export a certain model and get an economies of scale I think the auto industry is toast. However, there are so many other cheaper places to build cars. I don’t think government subsidies are the answer either.

    It all evens out in the end though. Those directly working in the industry will have a tough time, but Australians as a whole are enjoying cheaper than ever automobiles.

    • 0 avatar

      Exactly. It was the same thing in Japan, too. If deflation didn’t happen, there would’ve been poverty like in Africa. Strong yen was the only thing that let Japanese get rice on the table. The debasement of currency may help certain export-oriented companies, but isn’t going to help the society.

      • 0 avatar
        baggins

        are you speaking of some sort of post ww2 event? Because if you are talking about the present, Japan has a long, long way to fall to reach African level poverty.

        According to the World Bank, Japan’s GDP was 33 times higher than that of Ethiopia in 2011.

    • 0 avatar
      icemilkcoffee

      Government subsidies doesn’t have to mean cash subsidies. It could just be a return to 10% tariffs.

    • 0 avatar
      RobertRyan

      @Speed3
      The strong currency will eventually have a very negative impact on the economy making those “cheap” cars from Asian increasingly unaffordable.

  • avatar
    Gardiner Westbound

    Canada’s auto industry is on its way out too. It has similar issues plus a union that’s partying like it’s 1999.

  • avatar
    Felix Hoenikker

    No Austrailian car industry!!
    What will Mel Gibson drive in his remake of the Road Warrior?
    I jusy hope it’s not some hooptied toyonda.
    Damn you Ben Bernanke.

  • avatar
    Volt 230

    If not for the Feds and Fiat, our own auto industry would be down to one player as well and who knows if they would have decided to move to Europe as well?

    • 0 avatar
      28-Cars-Later

      I agree. I would like to speculate though on what may have happened…

      -Chrysler would almost certainly have been completely liquidated and Jeep either sold outright or somehow spun off.

      -GM would have been broken up (a la the Ma Bell split) into separate divisions (GMAC, Powertrain, etc) and for manufacturing the dominant group being whichever one owned/given control of the Chinese operations. Some brands would have been sold or liquidated (inc Opel, Holden, and Daewoo) and I could see only three (possibly four) being kept in N.A… Cadillac, Chevrolet, GMC (possibly as commercial only), and either Pontiac or Buick, under direction from China.

      -Ford would have still folded Mercury and sold PAG, and either eventually introduced a new luxury brand in place of Lincoln in NA, or just give up on the segment.

  • avatar
    28-Cars-Later

    I’m going to draw a parallel between the Australian and Canadian economies if I may. Both have become heavily dependent on commodities for growth in recent years and this shows no sign of abating. So when commodities/demand are up, both will experience growth, and when they off, growth suffers. If Australian auto manufacturing is shuttered I would say Canadian manufacturing is severely threatened at the very least.

    • 0 avatar
      Onus

      I was thinking of this and the one domestic with nearly no automotive plants in Canada is Ford. They only have oakville assembly left. Those make suv’s that people gladly will pay the premium for.

      It’s turning into the next uk. Just producing engines for the plants in the south.

  • avatar
    Larry P2

    I rode around in a Holden Ute for a few days in New Zealand in 2007. It was basically a Holden Monaro with a pickup bed. It was a GTO without the hot motor and the six speed manual available on the Americanized hot rod.

    TTAC despised the GTO (it is built by a GM subsidiary). Real Ute and GTO owners universally love them.

    This is a sad day.

    • 0 avatar
      danio3834

      I’m not sure how anyone could legitimately hate on the GTO. Aside from the 4/3 Cavalier styling (subjective), they’re great cars.

      • 0 avatar
        Joe McKinney

        By all accounts the GTO was a nice car. The generic, Cavalier styling was a drawback, particularly after Ford introduced its all-new, retro-styled Mustang in 2004.

        GTO sales were also hurt by the fact that the car was only available with a V-8. Six cylinder models have always accounted for a significant percentage of Mustang sales. The same was true for the old Camaro and Firebird which the GTO essentially replaced. Not offering a the GTO with a V-6 was a mistake which GM did not repeat with the new Camaro.

        The third strike against the GTO was that its innitial MSRP was around $10k more than a Mustang GT. The car was supposed to have cost much less, but was a victim of currency fluctuations.

      • 0 avatar
        bumpy ii

        Anecdotally, the interior and suspension bits on the GTO (and the G8) don’t seem to be made for the long term.

        • 0 avatar
          APaGttH

          Speak for yourself on the interior.

          For the suspension – the VE design work was done largely by poached BMW engineers. The Commodore/G8 had dimensions and performance numbers almost identical, the the fraction of the second and/or millimeter to the BMW 5-series (or 5 M depending on flavors). Apparently that was less than an accident.

          The VE Commodores and various variants appear to suffer from the same issues that BMWs suffered of the era on the front suspension, front LCAs that don’t hold up well under generally speaking, more aggressive than day-to-day driving.

          The 2009.5 version of the G8 GT and all GXPs (all GXPs are 2009.5 models) had these short comings addressed with slightly different ball joints and improved LCAs.

      • 0 avatar
        corntrollio

        The Cavalier styling was the biggest detriment for some. The new GTO never looked like a muscle car here and instead mimicked a cheapo econobox. I grant that the Monaro also has a cheapo econobox look too, but they should have done more with the sheet metal.

  • avatar
    Big Al from Oz

    I would love to see GM and Ford retain production in Australia. The only way I can see this occurring is to have vehicles produced that are in the prestige and luxury bracket to take on the likes of Mercedes Benz, BMW, Audi etc.

    But even then why would you build in Australia when you can go to countries that have low wages like some Euro/Asian and NA countries.

    I don’t believe in subsidisation as that money is better spent on projects that will reap better rewards.

    We may be able to produce components like engine/drivetrain parts. But vehicle assembly isn’t high tech it’s becoming like the agri business.

    Vehicle production in our region will be in Asia. We can supply all of the commodities for them.

    Australia is one of the best in one area of the vehicle manufacturing industry, that is vehicle design. That will be retained.

    • 0 avatar
      RobertRyan

      @Big Al from OZ,
      Wages are not really a big part of the equation but a lack of a level playing field and a very high Australian dollar that is effecting a lot of economic activity in Australia adversely.

    • 0 avatar
      Athos Nobile

      Al, I agree with your first paragraph wholeheartedly. The opportunity for exporting to Asia is there. Why build here? skills, or why do you think Thailand is courting our suppliers to go and invest there.

      Vehicle assembly IS high tech.

      Agreed, vehicle design and engineering has to be retained here. But that will be increasingly harder to achieve without some manufacturing footprint.

  • avatar
    Larry P2

    The “new” Mustang looks like the old mustang because the old mustang was a sharp new shape that didn’t look much like anything else in the Ford lineup at the time.

    GTO’s always have been a hotted up Tempest, basically a big engine in a generic mid-size car. A V-6 would have been a disaster, a corruption of the original idea of a plain body with a big V8 engine. Historically then, the Aussie GTO is more in tune with its ancestry than than the new “retro styled” mustang. I.E. Mustangs have variously been a hotted up Ford Falcon, a Pinto with an attitude, and the best darned Ford Fairmont ever built. A purpose built Mustang is an anomaly.

  • avatar
    Volt 230

    This is the perfect opportunity for the Chinese automakers to move down under and under price everyone else.

  • avatar
    yankinwaoz

    When I lived in Oz, I could never figure out why Holden and Ford hadn’t shipped their assembly to Indonesia. Just like the US and EU car companies put their plants in Mexico for the US market.

    Perhaps the differences make it impossible. Mexico can send the cars to the US via rail. And I suspect that Mexico might be easier to work with than Indonesia. Especially considering the politics in the region (East Timor succession, Bali bombings, sea claims, etc).

    • 0 avatar
      RobertRyan

      I think you answered your own question. Indonesia was not only unstable, but increasingly militaristic.e Timor Invasion, the Borneo insurgency.
      “shipping their assembly” to Indonesia would have affected many local suppliers. Indonesia is not a “cheap” place to build cars in.

  • avatar
    tresmonos

    Too bad this ass-hat’s attempts at global product all failed. We shouldn’t be listening to his ideas about economies of scale.

    I hope his one-off leather trimmed focus has no-start issues due to a bad engine harness.

    Interesting article, nonetheless.

  • avatar
    dusterdude

    Gardiner Westbound,

    The one thing that will save the Canadian auto industry, is if the Detroit Three fully pull out, Canadians will react with there wallets accordingly. (even though Canadians are known to be “passive”, they wouldn’t be that passive as to continue purchasing Detroit Three cars at current levels, without any local footprint.

  • avatar
    jimbob457

    Lotsa ‘economic wisdom’ on this thread from people who have never been to Oz.

    Australia is a geographically remote first world country that exports almost entirely raw materials, mostly from the mining sector. These are sent mainly to Asian markets these days. When Asian industry booms, commodity prices are high, and the A$ is strong. It also works in reverse.

    The Yen/A$ cross exchange rate had been 80 or below for about a decade. Then, over the past 18 mo. it has moved up to about 100. This meant an additional 20% cost advantage to Japan.

    The local car making business is a good thing to have when the A$ is weak and struggles when it is strong. They do drive on the left side (as do the Kiwis), so their imports (both new and used) tend to be larger vehicles from Japan.

    Sounds to me like Nasser is actually arguing for some Aussie government help as long as the Yen/A$ cross rate stays around 100. I can’t imagine that will go on all that much longer. This kind of lobbying is just a normal part of doing business in almost any industry.

    • 0 avatar
      RobertRyan

      Problem is the Minerals industry is a surprisingly small percentage of the whole economy, but the impact of it on investment and the exchange rate has been way out of proportion to its size.

      • 0 avatar
        jimbob457

        For any country its export sector largely determines exchange rates. If the whole country is mired in backward subsistence agriculture, the GDP accounts will show exports to be a big percentage of output – e.g. Mongolia. In a first world country it is just the opposite.

        • 0 avatar
          RobertRyan

          Here exports as a whole are falling everyone including the mining industry is hurting, but the Australian Dollar keeps on getting stronger. Complete opposite of what Economists were expecting.

          • 0 avatar
            jimbob457

            I only have two thoughts.
            1.Maybe there are some capital flows we don’t know about.
            2. Oz has a tight oil play (fracking) near Coober Pedy that has had some genuine results recently. The ultimate potential of this stuff really might be just as huge as its promoters say. I am a second generation expert in this industry. When it comes to fracking: Can you say ‘source rock’? If you reduce imports, it is the same as increasing exports when it comes to exchange rates. The Saudis are contemplating cutting oil prices to see how much of this tight oil can be driven back in the ground. If you don’t believe tight oil and ‘fracking’ just check out US oil production over the past 24 months.

          • 0 avatar
            RobertRyan

            “Maybe there are some capital flows we don’t know about.”
            That what I have mentioned before. Investors(Chinese and Russian) are pulling money out of the European market and investing fairly huge amounts in shares and property in Australia. The relatively high interest rates are a main attraction.

        • 0 avatar
          Big Al from Oz

          The Australian economy is seen as a safe haven and its currency along with the Swiss Franc are seen as alternatives to the USD, Euro, Yen and Pound Sterling.

          Combine that with our commodity currency status and you have one powerful currency that is larger than most countries.

          The AUD is now the fifth most traded currency in the world. I think around 10% of currency transactions globally. It will only increase and supercede the Pound Sterling since we will be trading in the Yuan with the Chinese. The trading in the Yuan will affect the USD as most sales to China from Australia were converted into USD then into Yuan.

          Coal is also sold in AUD around the world and more commodities are gradually being traded in AUD.

          I think for the forseeable future the AUD will be strong.

          Australia has to make a decision, we can’t deflate our currency (print money) or we will increase inflation and overheat the economy or we can go down our current path and try to find ways to overcome our curreny’s strength.

          I read an interesting article called the CASSH economies, that will be the economies that will rise above the US/Euro/Japanese economies.

          Canada, Australia, Singapore, Switzerland and Hong Kong according to the article will be the lucky countries of the future.

          For my sake I hope this is true, but I do hope the rest of the OECD can resolve their problems and improve.

          • 0 avatar
            RobertRyan

            True and that is the problem as well. The Australian Economy is attracting a lot of investment because of its “safe haven” aspect. Unfortunately the investment is more of a “quick buck” variety like a short term money loan. Only way this rather destructive practice can be broken is by devaluation of te Australian dollar, which has the downside of even lower interest rates that are too low to stimulate internal investment.

  • avatar
    schmitt trigger

    If Australia were like the Chinese, which decided that if one wants Neodynium, then one has to manufacture the magnets there, it would decide that if they want access to the Australia’s rich mineral deposits, they would have to have some sort of local industrial activity which employs said minerals, and provides a value add.

  • avatar
    chicagoland

    “GTO’s always have been a hotted up Tempest, basically a big engine in a generic mid-size car. A V-6 would have been a disaster, a corruption of the original idea of a plain body with a big V8…”

    Someone who gets it, and also why the bae V6 G8 flopped. The fan boys wanted a car that “looks like the old GTO’s”. But, they forget that the original GTO package did not include unique bodyshells from other A body Pontiacs.

    And, for Holden to “do something with the sheet metal” would have added even more Aus $, which many would not pay.

    Regarding the story, looks like the PPV Caprice will have to find a new plant.

    • 0 avatar
      RobertRyan

      The PPV Caprice is going nowhere they already have production of that covered.

    • 0 avatar
      corntrollio

      If your argument is that the Pontiac Tempest was better looking than a Cavalier, you’ve got no argument from me. Ugly is still ugly, and the Monaro-based GTO would have sold better if it didn’t look like a riced-out J-body.

  • avatar
    Athos Nobile

    Too many players in a too small market. With no one, and I mean NO ONE being able to crack 50K units of a single model line it will be very hard to maintain the industry.

    Add to that that people is moving away from traditional segments, the high dollar, the costs (energy, manpower, etc…), lack of investment from some of the players, even price wars in some segments and you have a perfect storm brewing.

    And then there’s another issue brewing, and it’s the whole chain. No one is making a penny. I’ve heard that over the last year (an couldn’t believe it) and goauto confirms it in their latest issue.

    It may be good for choice, but it is just ridiculous that there are 47 brands competing for a piece of the cake. As it is this is a sharks tank.

    • 0 avatar
      RobertRyan

      Compared to the US there is vast amount of choice, but too much choice to make manufacturing viable without even the other factors coming into play. When the tariffs were higher a lot less choice but still a pretty reasonable amount of choice.
      An export orientated industry should have been the basic model for all the manufacturers here whether it be full vehicles or parts. Ford does not have any sort of export model. It has been struggling to get anything going after they tried to sell the awful Capri convertible in the late 1970′s. Now the vehicles are vastly better but they are stymied by Head Office in NA from doing anything, unlike Holden and Toyota.

    • 0 avatar
      Compaq Deskpro

      Sounds like the solution is Geo-style rebadging.

  • avatar
    Joss

    What does Canberra woman drive – ebike? Time for Howard Holt swim.

    Down under a knight fallen on sword. Mel & Syd shovel hungry red dragon raped commodities. Frothy golden shores swamped by neighbours. The largest island will lay forgotten by pomes & yanks. That includes Hobbit economy cross the water.

  • avatar
    Spike_in_Brisbane

    I agree with Mr. Nasser. In the last 30 years so many things have changed in the world of auto manufacturing and all of them work against local production of cars in Oz.
    1. The unique Aussie car for unique local conditions was a requirement when we had many unsurfaced roads and American cars were too soft as they had not yet invented road holding.
    2. Japanese cars were crap and the Chinese and Korean manufacturers were not here. Now all those cars are much, much better.
    3. High tarriffs kept the furriners out. In the last decades we have seen the arrival of Seat, Lexus, Kia, Opel, Infiniti, Skoda and many more I cannot think of right now.
    4. The family road trip was THE AUSSIE holiday. These days the kids would rather play with their phone. In fact, they would rather walk over hot coals.
    5. Nobody but the Yanks made a competitor to the full size family sedan. Now I think the Corolla is approaching that capability as everything has grown.
    6. Shipping was expensive. Today, 100,000 ton container ships bring loads of Asian cars and trucks for pennies. Spares follow.
    7. Car manufacture was high tech and labour intensive. Today they are turned out like washing machines.

    We should not be subsidising industries just to support jobs that are ultimately doomed anyway.

    • 0 avatar
      RobertRyan

      Many people in the US thought when GM and Chrysler went bankrupt they should have stayed that way. The US Government(of both stripes) knew that if te situation was to persist it would be disastrous for the whole US economy. The Australian manufacturing base is very similar in relative size to our economy.

    • 0 avatar
      pacificpom2

      What you have to ask is why? Why did the Prime Minister of the day invite GH to create a manufacturing base in Australia? It certainly wasn’t to create jobs and compete with the imports of the day, it was to increase the base skills of Australia so that it could have an engineering skill set just a good as Europe and America. Upto that time Australia was riding on the sheep’s back and dig holes in the landscape for coal and iron ore. When the car companies go the way of the light manufacturing sector we will be back to the wheat, wool, iron ore and coal primary industries of yesteryear. We will have the two stage economy back and Australia will be poorer for it. Now you can say good riddance to the car industry and it’s government backed subsidies, but, as you know that each employed person supports another six people in support industries. So when Holden lays off 400 people that 2400 potential job losses, Add to that the potential loss of Ford and Toyota the effect on the economy will be devastating.

      In a laissez faire economy the ups and downs of business would be tolerated and possibly encouraged and a sort of natural selection would ensue. People would know no better and accept that, but when you have had a regulated economy/industry sometimes you have to prop it up for the good of the county. In this case perhaps the “local” manufacturers should be “leaned on” a little bit longer as the have already accepted the governments money.

      But the main reason is that we cannot bear to lose Ford/Holden is that a FWD fusion/Malibu as Falcon/Commodore replacements. Sacrilege I say.

      • 0 avatar
        jimbob457

        As I recall, the motor vehicle making business in Australia is mostly centered around Adelaide – Crow Eaters and Port Power. I see no earthly reason Australia should give it up entirely whatever the current terms of trade. These terms fluctuate.

        Twenty-five years ago the Pommies looked finished in the car business. Their government sold off the dregs to the Germans and Americans. Now, as a nation they ran a substantial surplus in that sector just this year. Who woulda thunk it.

        • 0 avatar
          RobertRyan

          Now they make more cars for other people than when they had their own industry. Yes things do change and can do that dramatically.

        • 0 avatar
          Athos Nobile

          The equivalent “Motown” down here is Melbourne, not Adelaide.

          Melbourne hosts: Ford, Toyota, Paccar, IVECO, Holden (engine plant and R&D facilities) and (I think) the majority of the main suppliers.

          And that goes without including the importers, which are more evenly distributed between Melbourne and Sydney with a bit in Adelaide.

      • 0 avatar
        Athos Nobile

        @pacificpom2

        I think part of the problem is that people has taken things for granted… and forgot how this country came to be what it is.

        But that’s just my (very particular) personal impression. I am still a n00b down here.

      • 0 avatar
        Big Al from Oz

        @pacificpom2
        Import engineering into Australia? For our size we have proportionally exported more technology than we have imported.

        Australia has had engineering since 1788 as good as Europe and NA.

        Australia at the turn of the 20th century had the highest or second highest standard of living.

        Australia has never been a third world country.

        Australia has been at the top in many disciplines and professions for over 150 years.

        This was caused by Australia’s isolation, Australia has never been a historical exporter of manufactured goods. We used to be a large exporter of agriculture and still are. Agriculture and minerals exports represent over 8% of our GDP. We live in a post industrial society.

        Australia used to have a very protected market with high tariffs to protect manufacturing. In the 70s NSW was the 2nd most socialist government in the world after Sweden. Australia was going backwards. Since the late 70s this has reversed and Australia economy has been liberalised. It is now the 2nd freest economy in the world.

        Our tax as a portion of GDP is very similar to the US.

        We might not like the demise of Ford and Holden in Australia, I wish they could stay. But at what cost? Should we have a socialist protected and as heavily subsidised economies like the US/Euro/Japan. Look where that has gotten them. Corporate welfare has done them no good.

        I believe to let market forces decide what Australia is good at. We obviously are good at making cars, but who will be able to afford them?

        If most of us could go out the back and dig up a wheelbarrow of cash and take it to the bank we would. That is Australia, and it seems it will be that way for a number of decades, we better get used to it.

        I read a blog in this article on the oil find near Cober Pedy. They figure this find will hold as much oil as the Saudi’s have, 270 billion barrels, enough to supply the US for over 20 years. I read even if the find is smaller it is still huge.

        • 0 avatar
          RobertRyan

          @Big Al from Oz,
          Trying to shift reliance on a Mineral Boom to a new oil dependent one, is just switching horses, it does not benefit the economy as a whole(look at Venezuela, Nigeria). It is better to have a balanced economy, sort of what we had before the mineral boom and GFC. The liberalization has worked, but we are not as Paul Keating used to say in a “Level Playing Field”.

          • 0 avatar
            Athos Nobile

            Oil has even more intoxicating effects to the economy than mining. The money involved is orders of magnitude higher. Specially if you’re serious about exporting the stuff, and with a hungry for energy Asia…

            And I am worried that the refining capacity is slowly fading away. So again, exported raw without adding any value.

            And since you mentioned Venezuela… Vzla was mostly an agricultural nation up to the mid 1920′s, when the oil discoveries and industry started gaining some serious momentum. It had the best coffee and cocoa of the world and some of the best cattle too. After the oil boom, the country became addicted to the easily found wealth and to this day, and all that was lost. That addiction is a big part of its woes.

            And after Chavez and its non-sense socialist revolution and controls, it can’t even produce the basic goods to feed its population.

          • 0 avatar
            RobertRyan

            I am worried about Australia becoming a “One Trick Pony”. It needs to have a vital diversified economy to allow it to smooth out the ups and downs of primary resources market.

        • 0 avatar
          jimbob457

          I gotta go mostly with Big. Oz is a first world country. The so-called ‘resource curse’ only applies to the less-developed world, and I not sure how valid it is even there.

          Finding new oil in South Australia probably just means the country will again become self-sufficient. The notion of anyone exporting very much ‘tight oil’ or even ‘shale gas’ is fanciful since almost every country has the appropriate source rock. It’s not just the US and Australia.

          If the A$/Yen cross rate stays where it is now for the next decade, the Aussie motor vehicle making business will become toast. I see that like gold at 3,000 USD per oz. Count on it chump!

          Those who think that Oz is too dependent on mineral exports don’t understand the principle of comparative advantage. You go with your best shot. For example, Denmark’s comparative advantage is in agriculture. Can you say ‘Danish Ham’?


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