Economists in Reverse Over the Car Industry

[mik]

Originally Posted by superyob

Agreed, but I think in Oz there is an 'If we don't think about it, it will never happen' mentality. In a day and age where negatives have been abolished, this was bound to be the result...

Spot mate, there i think is an over whelming thought process in this country that good old US of A will come and fight our battles for us if it hits the fan.

No doubt as long time allies they would do their best to help us out , but economically US is still struggling, and if media reports are true they are as we speak down sizing the military because it is a case of have too , they will not always be able to fight our battles for us, and neither should they be expected to.
People here need a bit a bit of a wake up call.

[Road_Warrior]

http://www.watoday.com.au/comment/au...205-321mo.html

Auto report is a fantasy tale with a tragic twist

John Legge

The Productivity Commission's damning verdict on the car industry has no basis in reality.



Lewis Carroll's poem Jabberwocky has fascinated children and adults alike for 140 years. The words sound like English and there appears to be a story, but it is still a nonsense poem.

The Productivity Commission report Australia's Automotive Manufacturing Industry has a lot in common with Carroll's poem, but it probably won't be fascinating people 140 years from now. It seems to be written in grammatically correct English but it belongs to a totally imaginary universe.

In the imaginary universe, the Productivity Commission prognosticates there is no such thing as unemployment or idle capital: in their view, once the closure of the automotive industry is complete, the workers affected will find new, better-paying jobs and the capital released by the closure will be put to more productive uses. Down here in reality we know no more than a third of the workers made redundant by the end of the industry will find equally good or better-paying jobs and a third will never work again.

Some of the capital employed will be in machinery, most of it specialised to the automotive industry, and if it is redeployed there is no reason to expect it to be redeployed in Australia. The rest of the physical capital will be no more than scrap metal.
Advertisement

A substantial part of the capital of the automotive manufacturing industry is in the skills of its workforce. Human capital does not appear on company balance sheets, and quite properly not; but without it, neither companies nor the Australian economy as a whole could function. Human capital is like specialised machinery: it is valueless if it can't be used in the industry for which it was developed. It too is headed for the scrap heap.

The basic methodology used by the Productivity Commission belongs to a universe where the laws of mathematics are optional. And we know any gypsy in a showground tent will be at least as good at forecasting as the Productivity Commission. The commission's crystal ball tells it China will keep increasing its imports of iron ore and coal, even though China's output of steel per capita is already the highest in the world; even though China already has more than half the world's high-speed rail, more than half the world's metro construction projects and has complete cities of unoccupied apartment blocks. As soon as China's demand stabilises - it doesn't have to fall - the price of coal and iron ore will come down and Australia will really miss its largest value-adding exporting and import-competing industry.

The Productivity Commission is as immune to history as it is to logic, but a few facts are worth stating.

The commission uses a discredited concept from the 1970s to come up with a scare headline - car industry protection cost $30 billion, how horrible! - to justify its scorched-earth recommendations. When importers face a tariff barrier they absorb a lot of it: tariffs are one of the few taxes a country can levy where foreigners meet half the cost. Additionally, a point ignored by the Productivity Commission is that the crucial problem facing the automotive manufacturing sector is volume, not direct cost.

In the past Australians may have bought Commodores and Falcons when in some other universe they might have bought imported cars; but there is not and never has been any evidence that the price they paid for a local product was raised by the amount of the tariff or by anything like it. While the Button plan guaranteed Australian manufacturers a fair share of our market they operated profitably; the plan never envisaged an Australian dollar rising above US70¢, and the rising exchange rate has done far more damage to the Australian industry than tariff cuts have.

The commission pretended to analyse the value of incentives offered by governments outside Australia, and trawled the literature until it found a report that ingeniously divided the government assistance per vehicle by 45 (times, not per cent) in Canada and more than 50 in France. This sort of argument is more often found in carnivals, where the gullible are skinned by thimble and pea trickery, than in serious government reports. The commission may have egged the pudding further by ignoring cars produced for export by Toyota and Holden.

To return to reality, the first, and possibly the fatal, nail in the coffin of the Falcon came when the US state of Michigan promised Ford almost $500 million to locate its next-generation engine plant there. Ford Geelong makes a fantastically efficient but very heavy cast-iron engine, and with no money to move to an aluminium or magnesium block the Geelong factory was doomed. Without a local engine Ford couldn't see much point in running a local body plant, so Broadmeadows is redundant to Ford's global operations as well. Australia had the chance to outbid Michigan and chose not to; and it was government money, not workplace flexibility, that forced the issue.

Holden asked for a trivial level of ongoing assistance and was ridiculed in the Australian Parliament for waiting for the government's answer. To rub the issue home, Tony Abbott tore up a recommendation to use enhanced Holden Commodores for the VIP fleet and ordered BMWs. The Productivity Commission has seized on a press release from General Motors denying political considerations affected its decision to withdraw from manufacturing in Australia; if you can believe that, you can believe anything. The Productivity Commission is a complete waste of money at a time when we are assured that the government must make savings: whatever question is asked of it, the answer is known in advance. Any report the commission produces, the IPA will produce the same answers for free.

Abbott, when asked about the Holden workers who will lose their jobs, said they should be grateful they were being liberated from slaving on an assembly line, moving to living off Newstart and Work for the Dole. If this sort of liberation will suit Holden workers on $60,000 per year including overtime, how much more delightful it should be for Productivity Commission analysts on three times that. It can't happen soon enough.

I have some issues with the above piece in that it glosses over some of the factors that have led to the demise of Ford and Holden, but in general I agree with the sentiment.

[ryeman]

Originally Posted by Big Damo

Ah well at least when it turns to **** you can blame the Libs for it as its happened on their watch.

Interesting how the Hun declined to report a member of the govt calling the PM a "liar" and then when challenged to be consistent hiding it away bottom left of page 2 today under the heading saying the Abbott wouldn't be "revisiting" the SPC issue.....No mentio of the PM being a liar as a sensational heading.....strange......
No, predictable.

[Road_Warrior]

The Hun :

[ryeman]

So why did the transnational company Cadbury get a handout.....?.
The imminent Tasmanian election of course.
Imagine the outcry from Tony if the other mob had done that.
I guess it's asking too much for consistency.
Can we expect the mining diesel rebate to be axed?.
Yeah right

[BHDOGS]

Its a sad day when workers and there entitlements are trashed and spat on like spoiled children crying over there golden diamond encrusted bowls of soup so the government has an excuse to pick and choose on ideological grounds what industry's it supports and what it doesn't. Its a very sad day for australia when the government is so out of touch with real life it wont even fight to save aussie jobs because being on the dole will save alot of money? But there already complaining there's to many people on the dole so they got to cut it to save costs? Because taking money out of the economy will help it some how? ive never understood economics and i dont pretend to but this is just b.s

[Maka]

The real tragedy for AUSTRALIA imo will be if our best workers go to work in those countries that are the beneficiaries of our lost industries.

We may well be open for business but the "CAN DO" part could kinda be under threat in the near future....

cheers, Maka

[Grunter]

Interesting.....

In the can: Beetroot farmers join forces to open cannery in Lockyer Valley

As SPC Ardmona awaits the fate of their fruit processing facility in Victoria, a group of Queensland beetroot growers are making bold plans to build a new cannery in the south-east corner of the state.

Shareholders and directors of the company Lockyer Farmers United met this week to discuss plans for the factory in Grantham, west of Brisbane.

Mr Dorber, who is a founding member of the industry association behind the bold new project, says the $40 million dollar project will be at full capacity within two years, providing up to 100 new jobs and boosting the region's economy.

"Within two years we'll be in a two shift basis; so around the 50 figure at mid 2015 and 100 figure by mid 2016.

"It's not only going to be a cannery and providing other forms of packed materials for national retailers in Australia; our goal is that we will have our own brand and we are going out to attack the rest of the world."

"We've got 5 vegetable products that will be processing or producing in a fresh new way already," Mr Dorber said.

The cooperative started looking into the feasibility of opening a cannery that would serve local growers and producers in the south-east Queensland corner after Heinz closed their facility in 2011.

"We conducted an international feasibility study, which cost a lot of money; it produced fantastic information which allowed us to move to the next stage, which was a business case and financials."

"We know that, subject to getting everything right and to establishing long term relationships with national retailers in Australia, that we will operate a viable entity in the Lockyer Valley," Mr Dorber said.

Up until 2011 the Lockyer Valley region 90 per cent of the beetroot grown in Australia, which was canned by then Golden Circle before it was acquired by Heinz.

Mr Dorber says the cooperative is committed to making the processing facility viable to all vegetable growers in Queensland.

"We've got to walk before we can run [but] anything we can do that helps a vegetable grower in Queensland, we're going to try and do it," Mr Dorber said.

Home grown cooperative not seeking government funding

Mr Dorber says the cooperative approached both Federal and State Governments of all persuasions in the last two years seeking an interest bearing loan to help build the capital.

But he says when a modest grant fell through with the changing of the guard, the group changed tactic.

"We've learnt a really bitter lesson in recent times; if we are going to do this, we are going to have to do it by ourselves.

"I agree with Joe Hockey. We can no longer run around holding out our hands asking for the tax payer's money.

"We're going to do this with private investment; we're going to make it work and deliver to our community," he said.


Modern facilities key to success

Dr Dorber says he has every confidence the new cannery will succeed, even in the face of SPC Ardmona fate.

"They are paying the price, as I understand it, that any company will pay if they don't put money aside for new technology, better work practices and state of the art equipment."

"The reason we can succeed is that we're going to use tried and tested modern technology, focused on the bottom line every step of the way and we start from position of being able to use a factory that is brand new.
"Most of the current canneries in this country are between 40 and 50 years old."

http://www.abc.net.au/local/stories/...05/3938590.htm

[ryeman]

As has been said before, manufacturing is a fundamental part of any first world country.
In times of international stress, whose going to convert to say, tank maintenance and consumables not to mention navy and airforce.
Once the message has been received, no one will do mechanical tech subjects if there a v few positions available.

[mik]

The pollies sent us down this path decades ago, we are as guilty as they are, a patriotic buy Australian policy implemented and we would not be in this position.

[Angeldust]

Originally Posted by Maka

The real tragedy for AUSTRALIA imo will be if our best workers go to work in those countries that are the beneficiaries of our lost industries.

We may well be open for business but the "CAN DO" part could kinda be under threat in the near future....

cheers, Maka

its already happening, but not so much with skilled process workers, but with real proffesionals like engineers, scientists etc

It doesn't leave much for the next generation to aspire too.

[ryeman]

Originally Posted by BHDOGS

Its a sad day when workers and there entitlements are trashed and spat on like spoiled children crying over there golden diamond encrusted bowls of soup so the government has an excuse to pick and choose on ideological grounds what industry's it supports and what it doesn't. Its a very sad day for australia when the government is so out of touch with real life it wont even fight to save aussie jobs because being on the dole will save alot of money? But there already complaining there's to many people on the dole so they got to cut it to save costs? Because taking money out of the economy will help it some how? ive never understood economics and i dont pretend to but this is just b.s

............

Fairfax has exposed the v real featherbedding at Cadbury in Tasmania ....funny, I didn't hear Abbott even mention that.
Once again no consistency.

[Bill M]

Originally Posted by mik

The pollies sent us down this path decades ago, we are as guilty as they are, a patriotic buy Australian policy implemented and we would not be in this position.

The pollies may have sent us down the path but they were voted in by the public. Some of the responses in the manufacturing threads here give you a fair idea of the thought process or lack thereof.

[Angeldust]

Hanging up their labcoats: Australia's new brain drain

http://www.abc.net.au/science/articl...16/3926579.htm


This alos applies to the rest of the real world, not just the academic sector.
and very very interesting comments.

[jpblue1000]

Originally Posted by Angeldust

Hanging up their labcoats: Australia's new brain drain

http://www.abc.net.au/science/articl...16/3926579.htm


This alos applies to the rest of the real world, not just the academic sector.
and very very interesting comments.

I must just point out the real world also includes the academic sector, they are real people with real jobs doing what they can to survive. Most of us may not understand what they do but that does not make it invalid or any less real
However you are absolutely correct, I and my partner did exactly the same thing during the last recession, left this country to seek better employment elsewhere, we were gone the best part of a decade before returning for family reasons. If things don't get better we are going again as we don't have the reason to stay anymore.

JP

[Wretched]

Originally Posted by jpblue1000

I must just point out the real world also includes the academic sector, they are real people with real jobs doing what they can to survive. Most of us may not understand what they do but that does not make it invalid or any less real
However you are absolutely correct, I and my partner did exactly the same thing during the last recession, left this country to seek better employment elsewhere, we were gone the best part of a decade before returning for family reasons. If things don't get better we are going again as we don't have the reason to stay anymore.

JP

Whilst not in the science field myself I and my partner are both contemplating relocating either this or next year through a relocation program with the company I work for.
This would open up my career further and for my partner, she will be able to have better availability of roles within the field she wants to get into.

[jpblue1000]

Originally Posted by Wretched

Whilst not in the science field myself I and my partner are both contemplating relocating either this or next year through a relocation program with the company I work for.
This would open up my career further and for my partner, she will be able to have better availability of roles within the field she wants to get into.

I have to tell you it was the best 10 years of our lives and since returning the worst time of our professional lives. Plus what an adventure.
I believe about 50 percent of my graduating class have spent significant time or are still elsewhere, proving that in Australia a university degree means little to so many.
However, I probably think the brain drain moniker is a bit sensationalist. Though Id like to know what the actual figure of Graduates and other highly skilled members of the workforce actually do leave. 10 percent is Probably OK, 50 percent is damaging to a country, well maybe not australia as educated people don't live n the real world and wouldnt know our whatsits from our doodads and hence are useless here.
Hmm makes sense why we left...

JP

[Angeldust]

Originally Posted by jpblue1000

I must just point out the real world also includes the academic sector, they are real people with real jobs doing what they can to survive. Most of us may not understand what they do but that does not make it invalid or any less real
However you are absolutely correct, I and my partner did exactly the same thing during the last recession, left this country to seek better employment elsewhere, we were gone the best part of a decade before returning for family reasons. If things don't get better we are going again as we don't have the reason to stay anymore.

JP

I agree with you. As a chemist (read NOT pharmacist) i was just trying to point out that its an extremely difficult career path with limited opportunities and security. In my workplace, a team of 12, there are 2 senior research positions, so yes, the real world is also the acedmic world.

[jpd80]

We are at more risk of heading into stagflation, the government is relying on a increased business activity,
but if manufacturing jobs keep heading over seas, we could see rising prices, stagnant work force and no reduction in debt.

That spells big trouble for all of us...

[tranquilized]

Well at least we'll have the tourism industry to help us out.

Oh hang on, dredging in the reef, de-listing of Tassies forests, killing sharks in WA....

Nope, we're screwed there too.

[ryeman]

Originally Posted by jpd80

We are at more risk of heading into stagflation, the government is relying on a increased business activity,
but if manufacturing jobs keep heading over seas, we could see rising prices, stagnant work force and no reduction in debt.

That spells big trouble for all of us...

I've got an idea, how about a media supported diversion ?
Time for bread and circuses.

[Bossxr8]

Couldn't help but laugh at Abbott on tv the other day being asked about the loss of Ford jobs, and he was basically saying it will be ok because his government is going to create lots of new jobs.

What a laugh, all I see is jobs going left, right and centre and basically nothing new coming in. Is he living in a fantasy world?

[jpblue1000]

Originally Posted by Bossxr8

Couldn't help but laugh at Abbott on tv the other day being asked about the loss of Ford jobs, and he was basically saying it will be ok because his government is going to create lots of new jobs.

What a laugh, all I see is jobs going left, right and centre and basically nothing new coming in. Is he living in a fantasy world?

Not defending anyone, nor attacking anyone either.
At an economy scale job losses are a beneficial mechanism for inflation reduction which in turn has benefits cost of living etc. etc. etc.

Of course at the employee scale it sucks balls.

Governments will engage different policies to speed up or slow down an economy in an attempt to maintain a status quo. Unemployment may be one of those policies.

JP

[bobthebilda]

Originally Posted by Bossxr8

Couldn't help but laugh at Abbott on tv the other day being asked about the loss of Ford jobs, and he was basically saying it will be ok because his government is going to create lots of new jobs.

What a laugh, all I see is jobs going left, right and centre and basically nothing new coming in. Is he living in a fantasy world?

Coles the another day said they were spending $360 million (1/3 of that in geelong), on expansion plans, creating 3500 jobs. It will provide employment for checkout chicks, builders, IT specialists etc etc etc. They may require a bit more training, but surely the guys on the assembly lines at the car manufacturers can learn to work on the checkouts.

[BHDOGS]

yup all they will have to do is give up there houses and dreams and live of coles wages what a boon for them

[jpblue1000]

Originally Posted by BHDOGS

yup all they will have to do is give up there houses and dreams and live of coles wages what a boon for them

Unfortunately yes. But that's life.

JP

[b0son]

Originally Posted by BHDOGS

yup all they will have to do is give up there houses and dreams and live of coles wages what a boon for them

Other than wage expectations, why give anything up? Auto workers get generous redundancy provisions, and they had plenty of warning of the impending closure. Loads of time to plan for it and adapt. More than most people get.

[ryeman]

Originally Posted by b0son

Other than wage expectations, why give anything up? Auto workers get generous redundancy provisions, and they had plenty of warning of the impending closure. Loads of time to plan for it and adapt. More than most people get.

Not as good as Cadbury workers conditions apparently, better than SPC.

[Franco Cozzo]

Originally Posted by Bossxr8

Couldn't help but laugh at Abbott on tv the other day being asked about the loss of Ford jobs, and he was basically saying it will be ok because his government is going to create lots of new jobs.

What a laugh, all I see is jobs going left, right and centre and basically nothing new coming in. Is he living in a fantasy world?

You know what made me laugh even more? When he was going on tours through the manufacturing facilities before the elections, promising everything to anyone and shaking hands getting pats on the back.

The lol is on them, considering a lot of people in those places would have voted for him.

Now they wont have jobs.

[Auslandau]

Please ...... most of the conversation has been good but showing your allegiance to one party or another just shows too much bias and does not make for a balanced discussion.

It is both parties, all sides that have an impact to what is going on in the country. To say it is the Libs when some decisions are made year(s) advance, even the the labor party in their term would have been affected by decisions made by the Libs before hand ..... and so on.

This is why political discussions are avoided on this Forum. It just shows up those with an agenda for one side or another and a total bias where the balance gets lost and just becomes an anti Libs/Lab propaganda speech. Some who state their bias are worse than a politician.

Please ..... just watch where this discussion goes thanks and watch the individual party bashing.