More Holden Woes

[dags41v]

Thoughts from Adelaides thinker in residence.

The state's manufacturing future should not include car makers such as Holden, our Thinker in Residence says.
Goran roos, an expert on manufacturing innovation said the economies which grew rapidly last year after the financial crisis, such as Germany, Switzerland and Sweden, all had a large share of high-end manufactured exports.

"You have a lot of manufacturing companies in South Australia, and that's actually a good thing," he said. "You should be a manufacturing state ... (but) you need to have high value-added manufacturing where the cost of the product is not important compared to the value it generates for the buyer," he said.

He said Australian manufacturers were brilliant problem-solvers but were not as good at "strategic" innovation for the long-term.

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While governments propped up dying industries such as car manufacturing to protect jobs, this was just delaying the inevitable, SA's 20th Thinker in Residence said.

Instead, governments should use their (public procurement) buying power to push industries to create innovative products and solutions, inviting them to go "5 per cent beyond what you can presently do".

Holden recently announced it would add 100 new staff, on fixed 12-month contracts, for its Cruze production - though only 25 per cent of the parts are from Australian suppliers. The automotive sector has reportedly shed 5000 jobs in nearly a decade.

"Each car produced in Australia is subsidised to the tune of approximately $3000 by the government. Why? The industry is not competitive and you have to let it go," he said.

That did not mean the death knell for the many parts suppliers. Those businesses in the parts supply chain needed to "migrate" their knowledge and skills to another "higher value-added" end client with a strong future, such as medical device manufacturing, a growing sector in SA.

Stephen Myatt, director of the Australian Industry Group SA, said the auto industry had been through tough times but was in a stronger position today that 18 months ago.

Prof Roos, who held his first workshop with 10 local manufacturers last week and who is here to advise the government on the state's fabrication future, will deliver a free public lecture at the University of Adelaide's Elder Hall at 6pm tomorrow.

He will tell his audience not to believe statistics showing manufacturing was dying. He said in countries, such as Australia, it is "increasing, but just changing form".

[pottery beige]

thinker in residence..... few of those around here.......

[SpoolMan]

Originally Posted by dags41v

Holden recently announced it would add 100 new staff, on fixed 12-month contracts, for its Cruze production - though only 25 per cent of the parts are from Australian suppliers. The automotive sector has reportedly shed 5000 jobs in nearly a decade.

"Each car produced in Australia is subsidised to the tune of approximately $3000 by the government. Why? The industry is not competitive and you have to let it go," he said.
.

The tax payer pays $3000 to assemble a car and only 25% of parts are sourced form Australian suppliers.

[aussie muscle]

yes, spoolman. money well spent...

[burnz]

Originally Posted by SpoolMan

The tax payer pays $3000 to assemble a car and only 25% of parts are sourced form Australian suppliers.

it doesent say that!!
the cruze will use 25% local content

ford, holden, toyota are subbied to $3000 per car..

[Brazen]

Pfft $3000 per car was a lot less than I was expecting. The GST on the vehicle itself would almost cover that, let alone the income taxes paid by the employees, the stamp duties, land taxes, payroll taxes, GSTs etc paid by the manufacturers and suppliers who build the car.

Its a fact of life that there will be some sort of subsidy provided to private companies in providing something important and meaningful to a nation. Private companies in defence get subsidised to develop weapons, private hospitals are subsidised to provide beds, private schools are subsidised to provide places, private transport companies are subsidised to provide transport, farmers are subsidised to harvest crops, mining companies are subsidised to invest in regional areas...

The subsidies given to local manufactures pale into insignificence compared to other industries. The local manufactures provide jobs, manufacturing techonologies, engineering partnerships with universities, manufacturing economies of scale for other industries such as defence and medical. These attributes are just as important as the cars rolling off the line for a country like Australia. The auto industry invests massively into Research and Development in the country, the kind of skills and technical development which are developed from the R&D have wide-ranging positive impacts on other parts of the Australian economy and skill-set.

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

The biggest losers of the local manufactures closing apart from the workers, would be the universties and high-tech specialist manufactures, as well as the technical and skill set of the nation itself.

[Struggo]

Originally Posted by Brazen

Pfft $3000 per car was a lot less than I was expecting. The GST on the vehicle itself would almost cover that, let alone the income taxes paid by the employees, the stamp duties, land taxes, payroll taxes, GSTs etc paid by the manufacturers and suppliers who build the car.

Its a fact of life that there will be some sort of subsidy provided to private companies in providing something important and meaningful to a nation. Private companies in defence get subsidised to develop weapons, private hospitals are subsidised to provide beds, private schools are subsidised to provide places, private transport companies are subsidised to provide transport, farmers are subsidised to harvest crops, mining companies are subsidised to invest in regional areas...

The subsidies given to local manufactures pale into insignificence compared to other industries. The local manufactures provide jobs, manufacturing techonologies, engineering partnerships with universities, manufacturing economies of scale for other industries such as defence and medical. These attributes are just as important as the cars rolling off the line for a country like Australia. The auto industry invests massively into Research and Development in the country, the kind of skills and technical development which are developed from the R&D have wide-ranging positive impacts on other parts of the Australian economy and skill-set.

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

The biggest losers of the local manufactures closing apart from the workers, would be the universties and high-tech specialist manufactures, as well as the technical and skill set of the nation itself.

Excellant post Brazen

[PHANTMXR6]

Originally Posted by Brazen

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

Have you got some figures to back up this post?

Holden is small compared to the mining companies.

[Lotte]

When it comes to R&D automotive companies tend to (and this is just a general statement) have a lot more with each new vehicle they bring out, considering they bring out different models and variants and each one is heavily developed, you can only imagine the money spent on R&D each new series.
I worked on *insert product for Holden here*, as part of the supplying company last year, and currently work as a production support/test engineering student for the same company.
The amount of money spent on the R&D of individual products as a supplier (and we have to make a profit, so GMH has to spend more than that), can be quite large.

The concept of the auto industry dying out in Australia is very real, especially from a manufacturing pov, and that's noone else's fault but the major auto companies, due to their sourcing from overseas.

[phillyc]

Originally Posted by Brazen

Pfft $3000 per car was a lot less than I was expecting. The GST on the vehicle itself would almost cover that, let alone the income taxes paid by the employees, the stamp duties, land taxes, payroll taxes, GSTs etc paid by the manufacturers and suppliers who build the car.

Its a fact of life that there will be some sort of subsidy provided to private companies in providing something important and meaningful to a nation. Private companies in defence get subsidised to develop weapons, private hospitals are subsidised to provide beds, private schools are subsidised to provide places, private transport companies are subsidised to provide transport, farmers are subsidised to harvest crops, mining companies are subsidised to invest in regional areas...

The subsidies given to local manufactures pale into insignificence compared to other industries. The local manufactures provide jobs, manufacturing techonologies, engineering partnerships with universities, manufacturing economies of scale for other industries such as defence and medical. These attributes are just as important as the cars rolling off the line for a country like Australia. The auto industry invests massively into Research and Development in the country, the kind of skills and technical development which are developed from the R&D have wide-ranging positive impacts on other parts of the Australian economy and skill-set.

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

The biggest losers of the local manufactures closing apart from the workers, would be the universties and high-tech specialist manufactures, as well as the technical and skill set of the nation itself.

Excellent post. Yes, i remember reading that GMHolden are the highest spender on R&D over the past decade. Much of it for VE. Ford in the last few years has really invested heavily too. Think about the FG, the new Terri, the new Ranger, additional testing facilities and you might find they have invested more in the last few years than anyone.

Car manufacturing is near the peak of the pyramid for engineering/manufacturing and design. It really is massively important.

[bobthebilda]

Originally Posted by Brazen

Pfft $3000 per car was a lot less than I was expecting. The GST on the vehicle itself would almost cover that, let alone the income taxes paid by the employees, the stamp duties, land taxes, payroll taxes, GSTs etc paid by the manufacturers and suppliers who build the car.

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

The biggest losers of the local manufactures closing apart from the workers, would be the universties and high-tech specialist manufactures, as well as the technical and skill set of the nation itself.

The problem is that 40% of the cars made in australia are sold overseas. So these cars dont earn any nett GST or stamp duties for australia at all. But more importantly, it doesnt matter if the car comes from australia, or thailand or japan, once the car is SOLD in australia, then the relevant government gets it GST, gets it stamp duty and gets all its other bits and pieces.

Take Toyota for example. 70,000 cars made for export, 40,000 cars made for local sales. If every car in australia is subsidised to the tune of $3000, then toyota is sending $210 million of australian money overseas each year.
At 110,000 cars a year, they are basically being subsidised to the tune of $330 million to employ 3000 workers (plus 12000 at suppliers). So 15000 workers paying $10,000 tax each year ($150 million) are being subsidised to the tune of $330 million a year. Doesnt sound like very good economics.

Then we come back to the old catch cry, but it provides jobs. At a $22,000 subsidy per worker per year, you could either keep doing it for 40 years, and subsidise them to the tune of $880,000 each, or bite the bullet and pay them to look for another job (and we are at near record low employment rates).
Gee, over a 40 year period, you would only subsidise a dole bludger to the tune of $400,000.

As for Holdens being the biggest spender on R&D, as PHANTM says, have you got the figures to back this up. VE planning was its hey day, but that R&D did finish in 2006.

[Joe5619]

The sooner people in this country (& forum) realise that the Australian government "hands" out the least (or one of the least) amounts of money to the automotive industry the better!! If other countries that have much much bigger manufacturing plants & hundreds of thousands of cars built still need more government money that Australian ones, what hope do ours have when people with no idea kept saying to cut it!!

If you want to live in a country that imports everything go live in a different one... I’m proud of what we manufacturing here in Australia (not just cars) & we need to keep as many of them as we can.

[bobthebilda]

Originally Posted by Joe5619

The sooner people in this country (& forum) realise that the Australian government "hands" out the least (or one of the least) amounts of money to the automotive industry the better!! If other countries that have much much bigger manufacturing plants & hundreds of thousands of cars built still need more government money that Australian ones, what hope do ours have when people with no idea kept saying to cut it!!

If you want to live in a country that imports everything go live in a different one... I’m proud of what we manufacturing here in Australia (not just cars) & we need to keep as many of them as we can.

Good onya Joe, thats what we need, more australians who are proud of what we manufacture in australia. All we need is to convince them of the hypocisy if they dont actually buy the stuff.

I keep saying to people that if we dont stop imports, then we wouldnt have jobs for the 7 million people that we have imported over the years.

By the way, could you please provide details of a developed (and I think it fair to stick with developed) country that subsidises its auto industry to the tune of $3000 a car.

[Joe5619]

Originally Posted by bobthebilda

Good onya Joe, thats what we need, more australians who are proud of what we manufacture in australia. All we need is to convince them of the hypocisy if they dont actually buy the stuff.

I keep saying to people that if we dont stop imports, then we wouldnt have jobs for the 7 million people that we have imported over the years.

By the way, could you please provide details of a developed (and I think it fair to stick with developed) country that subsidises its auto industry to the tune of $3000 a car.

I will as soon as you provide details for all the numbers you quoted in your posts!! You want to talk hypocisy, just read your posts on this page quoting lots of different things & numbers with no detials.

P.S here is my source!!
http://news.drive.com.au/drive/motor...204-1afuu.html

[bobthebilda]

Originally Posted by Joe5619

I will as soon as you provide details for all the numbers you quoted in your posts!! You want to talk hypocisy, just read your posts on this page quoting lots of different things & numbers with no detials.

P.S here is my source!!
http://news.drive.com.au/drive/motor...204-1afuu.html

So your source is an auto journalist who says.

They fail to note that Australia already has the lowest levels of assistance offered by any of the 15 countries around the world that can produce an entire vehicle, from the concept to the finished product

The problem here is that - Australia doesnt even come in the top 20 of manufacturers. In fact if you look at
http://en.wikipedia.org/wiki/Automotive_industry

you will notice they have Belgium (at number 20) at 522,000 cars, and Australia in 2009 only produced 223,000. So I assume australia is even further down the list.

But Mr Porter is talking about Making cars from go to whoa (including planning stages etc), so there maybe some wiggle room out of that one.

But lets look at what Mr Porter is tryng to point out with his ill defined facts. He is saying "lowest level of assistance". Ie Australia is giving assistance of 223000 cars @ $3000 each = $669 million dollars. Japan might (and I stress might, as Mr Porter hasnt provided any facts), give $1 billion dollars in assistance to its car industry.ie a higher level of assistance.
The problem then lies in that australia is subsidisng each local car to the tune of $3000 each.
But japans $1 billion must be spread amongst the 7.9 million cars they made in 2009. Ie receiving a subsidy of $126 per car.

If you require any numbers or facts, just refer to the one you want, and I will provide.

[Joe5619]

Originally Posted by bobthebilda

So your source is an auto journalist who says.



The problem here is that - Australia doesnt even come in the top 20 of manufacturers. In fact if you look at
http://en.wikipedia.org/wiki/Automotive_industry

you will notice they have Belgium (at number 20) at 522,000 cars, and Australia in 2009 only produced 223,000. So I assume australia is even further down the list.

But Mr Porter is talking about Making cars from go to whoa (including planning stages etc), so there maybe some wiggle room out of that one.

But lets look at what Mr Porter is tryng to point out with his ill defined facts. He is saying "lowest level of assistance". Ie Australia is giving assistance of 223000 cars @ $3000 each = $669 million dollars. Japan might (and I stress might, as Mr Porter hasnt provided any facts), give $1 billion dollars in assistance to its car industry.ie a higher level of assistance.
The problem then lies in that australia is subsidisng each local car to the tune of $3000 each.
But japans $1 billion must be spread amongst the 7.9 million cars they made in 2009. Ie receiving a subsidy of $126 per car.

If you require any numbers or facts, just refer to the one you want, and I will provide.

Wikipedia as a source is just as good (or maybe I should say bad) as a journalist.. Trying getting through uni as Wekipedia as your soucre!!

It is not a per car thing, it is a total amount thing!!

[SteveJH]

Also remember that the Automotive industry also has follow through to other industries.

Plus, and this is going to sound a bit out there. If for whatever reason we could not import cars, or if we needed to enlarge our military, where are we going to get the vehicles to move them?

Going back to WW2, you have Car manufacturers producing Tanks, Trucks and even Aircraft.

[Fireblade]

I'd rather the prop ups to the Auto industry than paying people the dole who just don't want to work and do nothing for the money, or helping out overseas where we see no real benefit from our money. The prop ups keep tens of thousands of people in jobs around Australia.

[vztrt]

Originally Posted by F6 FOON

I'd rather the prop ups to the Auto industry than paying people the dole who just don't want to work and do nothing for the money, or helping out overseas where we see no real benefit from our money. The prop ups keep tens of thousands of people in jobs around Australia.

Agreed
..........

The economy always does very well when unemployment is high. No one looks at those figures. /Sarcasm

[svo supporter]

Originally Posted by F6 FOON

I'd rather the prop ups to the Auto industry than paying people the dole who just don't want to work and do nothing for the money, or helping out overseas where we see no real benefit from our money. The prop ups keep tens of thousands of people in jobs around Australia.

Hit the nail on the head.

Next there'll be a quote from some Journo in VIC saying the same thing about the car manufacturing plants in VIC.

To me, it's another Gov't employee trying to justify their job and the BIG pay packet that goes with it.

[pottery beige]

Originally Posted by Brazen

Pfft $3000 per car was a lot less than I was expecting. The GST on the vehicle itself would almost cover that, let alone the income taxes paid by the employees, the stamp duties, land taxes, payroll taxes, GSTs etc paid by the manufacturers and suppliers who build the car.

Its a fact of life that there will be some sort of subsidy provided to private companies in providing something important and meaningful to a nation. Private companies in defence get subsidised to develop weapons, private hospitals are subsidised to provide beds, private schools are subsidised to provide places, private transport companies are subsidised to provide transport, farmers are subsidised to harvest crops, mining companies are subsidised to invest in regional areas...

The subsidies given to local manufactures pale into insignificence compared to other industries. The local manufactures provide jobs, manufacturing techonologies, engineering partnerships with universities, manufacturing economies of scale for other industries such as defence and medical. These attributes are just as important as the cars rolling off the line for a country like Australia. The auto industry invests massively into Research and Development in the country, the kind of skills and technical development which are developed from the R&D have wide-ranging positive impacts on other parts of the Australian economy and skill-set.

In fact Holden is the biggest spender on R&D for a private company in Australia. Thats right, Holden spends more on research and development than BHP Billiton, Rio Tinto, Boeing, Tenix, Qantas, Telstra....etc. Add in Ford and Toyota and you can see how important this industry is for Australia.

The biggest losers of the local manufactures closing apart from the workers, would be the universties and high-tech specialist manufactures, as well as the technical and skill set of the nation itself.

bhp, rio or woodside dont call it r&d... more like feasability studies... these run out to hundreds of mills and when the big boys move the projects run out to many of bills.....