Falling value of the Australian dollar

[Syndrome]

The president of the company I worked for was having sleepless nights when the AUD was the same as USD. Now with AUD at low levels and destined to go lower, at what level would it have made continuing production of cars in Australia viable?

[antisocial]

There are probably a lot more factors than just currency to consider. But I reckon if Broadmedows were building Rangers they would be flat out.

[Dr Jekkyl]

It is my understanding that a high AUD was one of the biggest issues facing the local auto industry.

One figure I heard was that for every 1c increase over 50c it added $250 to the cost of local production.

[Bill M]

I work in the Medical devices and instruments field, yeah we manufacture and build them here, the threshold I was told was around 0.82 cents. That was by a senior manager who traveled OS to get work for us.
Bill.

[cheap]

The low AUD is relevant to exporting stuff especially back into the USA. However, even with a very low value AUD, Ariosto officials within GM found every excuse under the sun in not selling our Commodore (rebadged Chevrolet SS) back on their turf.

[CyberWasp]

Is there any gain in a low AUD in Holdens case, where they had to buy the LS Motor is USD anyway.

I still think that not selling the Ute in the USA was a huge mistake.

[383hq]

Originally Posted by Syndrome

The president of the company I worked for was having sleepless nights when the AUD was the same as USD. Now with AUD at low levels and destined to go lower, at what level would it have made continuing production of cars in Australia viable?

All is not what it seems with a simple foreign exchange rates.

depends on many things, i.e.
- % mix of input costs for goods/services sold
- Financial engineering (Off shore tax avoidance reduction schemes i.e. financing, leasing, Pricing arrangements, office locations, forex hedging etc)

Simple example - If the company you work for has off shore treasury/office, (say for example in the USA), you can now buy a lot more Aud labour for the same USD money when compared to 2012 !

This would matter if a large % of your costs were Aud labour....

The company I work for has many finanicial offices in countries such as Luxembourg, Lichtenstein, Panama, Canary Islands, BVI, Singapore ......
Looking at the ATO list of top 1500 companies, I don't think they've paid more than 3-4% tax on Aud revenues any time recently

Looking at the tax (not)paid by the top 1500 countries with a presence in Australia, It seems the GovCo Strategy/Result is that tax receipts are best collected from the individual

[jpd80]

Actually that's changing and the ATO is going after more companies trying to off shore profits,
it's a hard road because the larger corps have barrages of lawyers and paperwork that slows delays, stops
the pursuit of these errant entities. Some of the $4 Billion surplus this year is coming from more tax being paid
but what they're not telling you is that some of that is now coming from the ATO chasing down corps where they can.
(they're getting bigger budgets to go after them)

Some of the scams are Chinese sending out young people to Aust dressed as "students", setting them up in houses. they caught a few last year transferring regular amounts into lots of accounts, trying to avoid the old
$10k threshold but the new software looks for lots of transfers and amounts that are less obvious.
It's all aimed at getting money out of China and covertly buying lots of property here.

[Syndrome]

Originally Posted by jpd80

Actually that's changing and the ATO is going after more companies trying to off shore profits,
it's a hard road because the larger corps have barrages of lawyers and paperwork that slows delays, stops
the pursuit of these errant entities. Some of the $4 Billion surplus this year is coming from more tax being paid
but what they're not telling you is that some of that is now coming from the ATO chasing down corps where they can.
(they're getting bigger budgets to go after them)

Some of the scams are Chinese sending out young people to Aust dressed as "students", setting them up in houses. they caught a few last year transferring regular amounts into lots of accounts, trying to avoid the old
$10k threshold but the new software looks for lots of transfers and amounts that are less obvious.
It's all aimed at getting money out of China and covertly buying lots of property here.

The dodgy practice of transfer pricing needs to be investigated.

[MITCHAY]

No domestic volume let alone export volume. Dollar would be a factor for imported materials and exported cars but when noone is buying them here anyway, the battle is lost.

[mick taylor]

Originally Posted by Syndrome

The president of the company I worked for was having sleepless nights when the AUD was the same as USD. Now with AUD at low levels and destined to go lower, at what level would it have made continuing production of cars in Australia viable?

Making cars in Australia was never viable from even 1949, that's what we had Tariffs and most Aussies are to stupid to understand that when they reduced the tariffs the money just had to be collected from another way from the Government and then the stupid public only started complaining.

But that advantages were there from 1949 to get people jobs and create skilled workers for the future.

All in all if one was to look into the whole thing as to jobs and everything who knows it may of not been all that bad, but you can not find such a study in detail at all. the powers that be do not want to show you that, because they are under orders from the New World Order who are unelected creeps who pull all the strings.

Holden were going to export the VE-F and planed to sell half of what they made to USA but Obama being a total good for nothing idiot went and printed money like the moron he truly was and that made him look good to fools who did not know that he was truly only selling out the USA like the traitor he truly was and that drove our dollar up and so this hope fell through for Holden's plans.
If we were around 80c to 90c in a USA dollar all would of been fine.

[roKWiz]

Yet we build Kenworth trucks here with ever increasing sales here, S. Africa and NZ with something like 80% local content in them.

[Dr Terry]

Originally Posted by roKWiz

Yet we build Kenworth trucks here with ever increasing sales here, S. Africa and NZ with something like 80% local content in them.

The local content % is an accountancy trick.

The biggest input in building vehicles is labour. Labour content is counted as local content.

To get to 80% they purchase whatever is available locally, things like glass, batteries, trim, paint etc. add labour & hey presto 80%.

Dr terry

[Work Horse]

Originally Posted by Dr Terry

The local content % is an accountancy trick.

The biggest input in building vehicles is labour. Labour content is counted as local content.

To get to 80% they purchase whatever is available locally, things like glass, batteries, trim, paint etc. add labour & hey presto 80%.

Dr terry

Kenworth have manufactured trucks in Australia for years. I believe engines and bogies come from the States and we build the rest. It is not an accountancy trick.

[Dr Terry]

Originally Posted by Work Horse

Kenworth have manufactured trucks in Australia for years. I believe engines and bogies come from the States and we build the rest. It is not an accountancy trick.

I didn't say we didn't "build" them here. My point was that if the local content is 80%, then that means that only 20% of the parts are imported, which is patently incorrect.

If the drivetrain, bogies & obviously a lot of other minor items are imported that sounds like more than 20% of the vehicle to me.

We had the same issue with cars during the 70s. Cars like Mitsubishi Galants, Volvo 240 & Peugeot 504 came to Australia in CKD packs & were assembled here & they claimed that they were 75% local content to escape our import duties & tariffs. As I said batteries, glass, tyres & some trim was sourced locally, but to claim 75% "local content" a fairly high content of labour was included.

There is a big difference between "building" a vehicle & "assembling" a vehicle.

Dr Terry

[roKWiz]

Originally Posted by Dr Terry

I didn't say we didn't "build" them here. My point was that if the local content is 80%, then that means that only 20% of the parts are imported, which is patently incorrect.

If the drivetrain, bogies & obviously a lot of other minor items are imported that sounds like more than 20% of the vehicle to me.

We had the same issue with cars during the 70s. Cars like Mitsubishi Galants, Volvo 240 & Peugeot 504 came to Australia in CKD packs & were assembled here & they claimed that they were 75% local content to escape our import duties & tariffs. As I said batteries, glass, tyres & some trim was sourced locally, but to claim 75% "local content" a fairly high content of labour was included.

There is a big difference between "building" a vehicle & "assembling" a vehicle.

Dr Terry

Nope your wrong Kenworth trucks manufacture most of the parts here in Australia, did you get that, Kenworth trucks manufacture most of the truck in Australia, they are not a knock down kit. Cabs are a totally Australian design and build, U.S trucks are nothing like them in looks or design. interior is all made in Oz, fuel tanks, exhaust system is locally manufactured, aluminium pieces the cabs are made of are OZ made, even the glass, battery boxes, mirrors, ladders and fibreglass roof cap are made by local Melbourne companies, the frame rails are BHP made.

The drive line is essentially U.S. Eaton, Fuller, Rockwell, Cummins.

[Dr Terry]

You're missing my point. I'm not saying that Kenworth does not make trucks in Australia.

I'm saying that the local content is going to be a lot less than 80% if the entire drivetrain (i.e. the most expensive parts) are fully imported. Other expensive items such as A/Cond compressor, audio systems etc. are also going to be imported.

It's a bit like the later Commodore V8s, they have their entire drivetrain & many other parts fully imported. However the steel panels etc. are all pressed here & most other stuff locally sourced. There are no tyres & very few batteries made here anymore either, the local content has diminished over the years.

Even GM-H "local" suppliers (e.g. Pilkington glass & market hoses & mounts) source their parts overseas (China I'm guessing) are they counted as Australian content ?

I still reckon it takes a lot of accountancy trickery to make that anything like 80% local content.

Dr Terry

[hayseed]

Originally Posted by Dr Terry

I still reckon it takes a lot of accountancy trickery to make that anything like 80% local content.

Dr Terry

I'm inclined to Agree.

I have sitting on my Desk a fairly recent (November '18) Quote for a brand new Kenworth T409 Prime mover.. Which (in round figures) is $245,000 Plus GST.
I'd be absolutely gobsmacked if the Wholesale (let alone retail) price of the Imported components is $49,000 (or less).

Iveco , Claim up to %55 local content in their trucks..

NFI on the Volvo/Mack local content. though they are the only local Truck Manufacturer to use the "Australian made" Kangaroo logo.. if that means anything.

[Work Horse]

Originally Posted by Dr Terry

I didn't say we didn't "build" them here. My point was that if the local content is 80%, then that means that only 20% of the parts are imported, which is patently incorrect.

If the drivetrain, bogies & obviously a lot of other minor items are imported that sounds like more than 20% of the vehicle to me.

I think you have the wrong end of the stick Dr Terry.

You are getting bent out of shape about local content percentage.

It is very true that some car manufactures used "accountancy tricks" to dodge Government tariffs or qualify for Government handouts.

Kenworth Trucks operate in a zero tariff environment and get no government money.

Originally Posted by Dr Terry

We had the same issue with cars during the 70s. Cars like Mitsubishi Galants, Volvo 240 & Peugeot 504 came to Australia in CKD packs & were assembled here & they claimed that they were 75% local content to escape our import duties & tariffs. As I said batteries, glass, tyres & some trim was sourced locally, but to claim 75% "local content" a fairly high content of labour was included.

There is a big difference between "building" a vehicle & "assembling" a vehicle.

Dr Terry

I don't agree, Kenworth make "Australian" trucks for Australian conditions (although they do export some). No one makes road trains to handle outback Australian roads in other countries. They are custom made here by Kenworth.
Kenworth are an Australian manufacturing success story. Not sure why you want to put the slipper into them.

[Dr Terry]

I'm not "getting bent out of shape about local content percentage", I just responding to the comment from rokWiz where he says that Kenworth build here with 80% content.

Just called BS on the 80% claim.

I'm not "putting the slipper" in either. If Kenworth can build here without Govt subsidy & still make a profit in the current financial climate, then that's great.

Then again they don't have to compete in a market dominated by cheap imports where retail prices are less than they were 2 decades ago (in real $ terms).

Dr Terry

[anobserver]

Originally Posted by mick taylor

Making cars in Australia was never viable from even 1949, that's what we had Tariffs and most Aussies are to stupid to understand that when they reduced the tariffs the money just had to be collected from another way from the Government and then the stupid public only started complaining.

But that advantages were there from 1949 to get people jobs and create skilled workers for the future.

All in all if one was to look into the whole thing as to jobs and everything who knows it may of not been all that bad, but you can not find such a study in detail at all. the powers that be do not want to show you that, because they are under orders from the New World Order who are unelected creeps who pull all the strings.

Holden were going to export the VE-F and planed to sell half of what they made to USA but Obama being a total good for nothing idiot went and printed money like the moron he truly was and that made him look good to fools who did not know that he was truly only selling out the USA like the traitor he truly was and that drove our dollar up and so this hope fell through for Holden's plans.
If we were around 80c to 90c in a USA dollar all would of been fine.

The Button report that proposed the progressive axing of tariffs was the beginning of the end. Throw in some fuel crises, novated leasing, global manufacturing overcapacity and multinational disinterest...

A refusal to acknowledge local market needs meant poor product decisions were taken, like engineeeing the turbo into the territory instead of the diesel it needed years earlier. Then we got the old and laggy landrover engine with a single turbo.

Plant closure was a national tragedy, however i look at it. In anticipation of closure, the fg and fgx and vf commo were all starved of development funds, which further stymied sales, all while advertising of tne big two virtually ceased.

So now oz has become a 'we think, they sweat' economy, which is fine if you have a job. For many of those factory workers it will be the last job they ever had.

Progress, bah humbug. All that good work that Polites did in tbe early noughties, all gone. Why couldnt we have had a 'buy an Australian car' program, instead of the school halls, ceiling batts and nbn we had to have?!

Instead we make money selling houses to each for increasingly higher prices, while our dropping currency makes us poorer every day. Not hard to see where this ends up.

[Dr Terry]

Originally Posted by Work Horse

Kenworth Trucks operate in a zero tariff environment and get no government money.

Are you sure about the zero tariffs ?

I know cars from Europe attract 5% import duty, I would have thought trucks would have been the same.

Dr Terry

[hayseed]

Originally Posted by Dr Terry

Are you sure about the zero tariffs ?

I know cars from Europe attract 5% import duty, I would have thought trucks would have been the same.

Dr Terry

Here's a Quote from a Speech Andrew Hadjikakou, Managing Director of PACCAR Australia, Gave at the handover of the 60,000th KW..

“The heavy-duty truck market in Australia is one of the most competitive in the world,” Andrew stated. “In an industry with no tariff protection, no government financial assistance and often volatile exchange rate movements, Kenworth successfully maintains its status as the market leader against imported brands from the US, Europe and Asia"


More here..

https://www.paccar.com.au/2017/12/07...oduction-line/

[outback_ute]

Contrast the trucks with buses - a lot of Chinese ones coming in there.

[Work Horse]

Originally Posted by outback_ute

Contrast the trucks with buses - a lot of Chinese ones coming in there.

Hey John

What about a Kenworth bus!

[Sprintey]

Originally Posted by anobserver

The Button report that proposed the progressive axing of tariffs was the beginning of the end. Throw in some fuel crises, novated leasing, global manufacturing overcapacity and multinational disinterest...

A refusal to acknowledge local market needs meant poor product decisions were taken, like engineeeing the turbo into the territory instead of the diesel it needed years earlier. Then we got the old and laggy landrover engine with a single turbo.

Plant closure was a national tragedy, however i look at it. In anticipation of closure, the fg and fgx and vf commo were all starved of development funds, which further stymied sales, all while advertising of tne big two virtually ceased.

So now oz has become a 'we think, they sweat' economy, which is fine if you have a job. For many of those factory workers it will be the last job they ever had.

Progress, bah humbug. All that good work that Polites did in tbe early noughties, all gone. Why couldnt we have had a 'buy an Australian car' program, instead of the school halls, ceiling batts and nbn we had to have?!

Instead we make money selling houses to each for increasingly higher prices, while our dropping currency makes us poorer every day. Not hard to see where this ends up.

Amen.

https://www.caranddriver.com/feature...save-ford-now/

[Sprintey]

Originally Posted by Work Horse

Hey John

What about a Kenworth bus!

Or a Kenworth Ute, a modern design brief of the old XH Outback ute ;)

[Syndrome]

Originally Posted by Sprintey

Amen.

https://www.caranddriver.com/feature...save-ford-now/

Was never part of 'One Ford' and the US didn't want to be embarrassed by a satellite operation. Plus the dollar at parity at that time would have made any business plan difficult to justify.

[Bossxr8]

Originally Posted by Syndrome

Was never part of 'One Ford' and the US didn't want to be embarrassed by a satellite operation. Plus the dollar at parity at that time would have made any business plan difficult to justify.

Global rwd would have brought them all together, mustang, falcon, territory, lincoln continental etc. GFC killed it though. Would have been the saviour.

[CyberWasp]