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No easy answers on GMH subsidy

By Malcolm King - posted Monday, 22 October 2012


Devereux said he was confident there was a “path forward” for the Australian operations, which now produces the Commodore based on an Australian-designed vehicle platform. The company’s Cruze four-cylinder car is a fully global platform manufactured in Adelaide and six other countries.

John Button, the former Minister for Industry and Commerce under the Hawke Government, who dropped the tariffs on the automotive industry in the 1980s, would be rolling over in his grave at the thought the Australian taxpayer was subsidizing vehicle manufacturers. The whole idea was to get them to compete.

Nicholas Gruen, CEO of Lateral Economics, has been involved in car industry policy from various different positions since his involvement in developing the Button Car Plan as Advisor to Senator John Button in 1984. Gruen said it’s about time that a definitive decision was made on where the sector should be headed.

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“Global downturns are the fault lines around which our automotive industry has always reinvented itself. In theory, managers should restructure their businesses and businesses should change hands whenever it improves productivity. Alas human nature intervenes. Corporate dreams are dreamt and restructuring is delayed…until the alternative is collapse,” he said in the Technology Spectator recently.

The main problem for the automakers is that buyers are buying smaller and cheaper imported cars. This has forced the local manufacturers to continue the cycle of cutting factory output and jobs to match the lower demand for their vehicles.

The ‘wages subsidy’ has given GMH workers, ten years to retrain or find work in an allied field, because on current sales trends, GMH won’t be in Australia in 2022.

The GMH workforce at Elizabeth is well educated and well trained. Not withstanding the insulting tabloid portrayal of some ‘down and out’ families in Elizabeth and surrounds, the majority of people are hard working, educated to years 11 or 12 and keen to pursue apprenticeships and trades.

The real question is whether Holden will upgrade its facilities and honour the ten-year time frame. Mitsubishi at Tonsley Park in Adelaide was happy to take government handouts but knew that the writing was on the wall in 2008 when it closed down throwing 1000 workers on to the dole. The workers at Elizabeth deserve better than that.

There are strong rumors that Ford will withdraw from Australia in 2016 even though it has invested $103 million in its Melbourne and Geelong operations. The Government kicked in another $34 million. Fords Falcon sales fell 36 per cent in 2011.

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Unless Ford, GMH and Toyota find new buyers or their vehicles become wildly popular, within 5-10 years the remnants of Australia’s car manufacturing industry and associated parts makers, will have gone. That would be a disaster for Elizabeth and South Australia.

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About the Author

Malcolm King is a journalist and professional writer. He was an associate director at DEEWR Labour Market Strategy in Canberra and the senior communications strategist at Carnegie Mellon University in Adelaide. He runs a writing business called Republic.

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