In the last essay on Adelaide, I discussed how the a disengaged public and the reality denying techniques employed by some media has created a fools paradise in South Australia, as an economic blight of colossal proportions slowly builds.
The working class in Elizabeth in Adelaide's north know more about what is happening in the economy than Adelaide's intelligentsia - who are still talking about skills shortages - as they are getting a shovel sized taste of it first hand. Now we turn to some economic problems in 'Crow Land'.
Holden, AWD and the Valley of Death - 2017
Holden and a significant part of the auto parts supply chain will close down in 2017. Experts put the job losses at about 15,000 people – mainly 'factory out-of-workers.' Less than one third of Holden workers will find a job again in SA.
Now consider this. The last vessel of the Air Warfare Destroyer (AWD) program – which is running $300 million over budget - goes in the water in 2019, but the workforce will start to wind back in 2016. Holden will also start to retrench its workers around then too. Unfortunately the future submarine project will not start until the early 2020s, if at all. So the state may lose that workforce and skills base.
This is the 'Valley of Death'. The time between shutting down one large government contract and the possible start of another. There are thousands of people in the state's defence industry. Estimates put total job loses at about 10,000 workers, from welders, pipefitters, etc, right through the supply chain.
The state would lose about $6 billion in GSP. The collapse of both Holden and the Valley of Death scenario would create an emergency and the mobilization of welfare not seen since the Depression. No sector in the state would be immune.
'She'll be right, mate. Have an ice coffee', say the locals. Actually, no. It will not be right by a long shot. Manufacturing is currently about 8 per cent of GSP. It pays $5 billion in wages and feeds in to both construction, wholesale and retail trade. Those sectors would slump hard.
Here's the killer. The economic contraction will drive down the value of dwellings in Adelaide currently valued at $7.5 billion. That's only perceived value. It's not real. The Valley of Death and Holden job losses could wipe up to 10-20 per cent of the value of property in the north and west of the state.
Even the burghers in the eastern suburbs would begin to understand the interconnectivity of revenue flows in a capitalist system. Many of these genteel folk have never been to Elizabeth. Now, their futures are inextricably tied. No jobs. No future and Adelaide's dreaming.
The Ring of Fire
While Crow Land is ground zero for dodgy surveys and polls on the prowl for a headline, in March 2013, Insight Economics did some official modeling for the SA Government. It predicted four scenarios based primarily on Deloitte data and global economic conditions. It stated that it was "reasonable to expect that future economic growth in South Australia will be at least as strong as in the past and there is a good chance it will be better." How it came to that conclusion is baffling.
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