Ex-Ford CEO Says Australian Car Industry Is Dead

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.

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.

@pacificpom2 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.

@jimbob457 Now they make more cars for other people than when they had their own industry. Yes things do change and can do that dramatically.

@jimbob457 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.

@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.

@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.

@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".

@RobertRyan 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.

@Big Al from Oz 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'?