Car industry subsidies in news again...

[2011G6E]

After Toyota says it will sack workers because of the high dollar and other excuses, one thing stood out very clearly.

All the car makers here say they simply cannot survive without subsidies, and lots of them.

This leads to the question "What's so magical about car manufacture in Australia that we simply must subsidise them endlessly"?

Looking at it pragmatically and without emotion, there's really no reason we need to build cars in Oz. We're a tiny population and an even smaller market. You can't in all economic sense appeal to "tradition" or something as to why we have to keep doing it, when other industries have been let fall over as the government shrugs and says "Oh well, if they can't tand on thier own two feet in a competitive environment, too bad, we can't use taxpayers money to support uncompetitive and unrofitable industries".
Also, if we keep telling other industries...like those that feed us and make other goods and services...that it is "unfair" to world free trade to support them, then why does the car industry get special consideration?

Job losses are constantly mentioned, but if the industry here became one of screwing together CKD kits from parent companies overseas, then really how many jobs would be lost? Then of course, the government doesn't seem to care about job losses, sometimes quite large, in other industries when things get tough.

So why is the car industry here so uniquely deserving of ongoing and never-ending taxpayer assistance?

[Falc'man]

Why not, government is rich.

[sbcb]

Taxpayer money goes in, pays wages, which get taxed, Ford gets taxed, Car parts and suppliers get get taxed, car sales get taxed. Pretty sure the Gov would do alright out of their 'investment'. There are a lot of jobs riding on the part suppliers who supply to a range of local brands. There are some industries that provide so much more follow on that it is definitely in the gov's and the peoples interest to keep going.

[cs123]

Originally Posted by 2011G6E

Looking at it pragmatically and without emotion, there's really no reason we need to build cars in Oz. We're a tiny population and an even smaller market. You can't in all economic sense appeal to "tradition" or something as to why we have to keep doing it, when other industries have been let fall over as the government shrugs and says "Oh well, if they can't tand on thier own two feet in a competitive environment, too bad, we can't use taxpayers money to support uncompetitive and unrofitable industries".

It's is about maintaining the capability to do those things. If you don't have the ability to do it yourself then you are compelled to buy from someone else.

Same with other manufacturing capability that we are letting waste away.


Industry here should be protected. We have all the natural resources we need. We should be making stuff too. It's madness IMO

[Wretched]

I am all for assistance but not handing out money willy nilly.
If these organisations want money they need to prove why.
It should be completely incentives on innovation and advancements in car design. Can't keep just dealing money out to loss making products that the market has been turning away from for a long time.

The money handed out should also have to be matched by the parent company that way the organisations should not be relying soley on government handouts.
As a tax payer I believe a re think of the way organisations are given grants is needed.

[Mad_Pom]

Originally Posted by Wretched

I am all for assistance but not handing out money willy nilly.
If these organisations want money they need to prove why.
It should be completely incentives on innovation and advancements in car design. Can't keep just dealing money out to loss making products that the market has been turning away from for a long time.

The money handed out should also have to be matched by the parent company that way the organisations should not be relying soley on government handouts.
As a tax payer I believe a re think of the way organisations are given grants is needed.

Do you not think that there is an application and review process?
Do you not think it is co-contribution?

Lets take the latest Ford announcement
Here is the Ford press release - http://www.ford.com.au/servlet/Satel...=1248936039906

With the following details -
The environmental initiatives are expected to reduce the CO2 footprint of the Falcon by up to a further 5.3 per cent. These initiatives will include:

• Improved body aerodynamics: A reduction of 7.5 per cent in aero drag through a series of engineering and design enhancements.
• Advanced low resistance tyres: A rolling resistance reduction of ten per cent through improved tread compound, more advanced hard inner lining and improved tyre technology to provide more even pressure distribution.
• A new high technology transmission: A new high-technology six-speed transmission will reduce mass and weight as well as provide better acceleration values through significantly reduced reaction times, reduced vibrations and fuel consumption through improved torque conversion, and adaptive shifting which analyses the driver's personal driving style and driving conditions and implements optimal shifting accordingly.

This looks to be the justification that was given to the government on "Where are you spending the money"

and
http://theage.drive.com.au/motor-new...110-1psav.html
Total investment for Falcon and Territory $103M of which the government has chipped in $34M - sounds like co-investment to me.

So the money is more than matched - 2:1 from Ford
and is justified in what is delivered in return.

[Wretched]

Originally Posted by Mad_Pom

Do you not think that there is an application and review process?
Do you not think it is co-contribution?

Lets take the latest Ford announcement
Here is the Ford press release - http://www.ford.com.au/servlet/Satel...=1248936039906

With the following details -
The environmental initiatives are expected to reduce the CO2 footprint of the Falcon by up to a further 5.3 per cent. These initiatives will include:

• Improved body aerodynamics: A reduction of 7.5 per cent in aero drag through a series of engineering and design enhancements.
• Advanced low resistance tyres: A rolling resistance reduction of ten per cent through improved tread compound, more advanced hard inner lining and improved tyre technology to provide more even pressure distribution.
• A new high technology transmission: A new high-technology six-speed transmission will reduce mass and weight as well as provide better acceleration values through significantly reduced reaction times, reduced vibrations and fuel consumption through improved torque conversion, and adaptive shifting which analyses the driver's personal driving style and driving conditions and implements optimal shifting accordingly.

This looks to be the justification that was given to the government on "Where are you spending the money"

and
http://theage.drive.com.au/motor-new...110-1psav.html
Total investment for Falcon and Territory $103M of which the government has chipped in $34M - sounds like co-investment to me.

So the money is more than matched - 2:1 from Ford
and is justified in what is delivered in return.

That's fine but if a product keeps failing should it really be up to us to prop it up?
If there is a sales issue wouldn't it be prudent for the organisation to try and arrest the slide?

I am satisfied with the way Ford have introduced Diesel to Territory and EcoBoost and EcoLPI to Falcon and that is how the money should be used as I did say. However if the sales keep sliding what are they to do just ask for more money? They should be looking at exporting like many other makes to increase market share and sales.

[Mad_Pom]

Originally Posted by Wretched

That's fine but if a product keeps failing should it really be up to us to prop it up?
If there is a sales issue wouldn't it be prudent for the organisation to try and arrest the slide?

I am satisfied with the way Ford have introduced Diesel to Territory and EcoBoost and EcoLPI to Falcon and that is how the money should be used as I did say. However if the sales keep sliding what are they to do just ask for more money? They should be looking at exporting like many other makes to increase market share and sales.

There is no money to be had in export with our relative cost of manufacturing resources, when compared to the local region, compounded with the strength of the Australian dollar and the huge amounts of tax relief and incentives offered around the region.

In my opinion the options are to co-invest or let it die.

[bobthebilda]

Originally Posted by Mad_Pom

Do you not think that there is an application and review process?
Do you not think it is co-contribution?

With the following details -
The environmental initiatives are expected to reduce the CO2 footprint of the Falcon by up to a further 5.3 per cent. These initiatives will include:

• Improved body aerodynamics: A reduction of 7.5 per cent in aero drag through a series of engineering and design enhancements.
• Advanced low resistance tyres: A rolling resistance reduction of ten per cent through improved tread compound, more advanced hard inner lining and improved tyre technology to provide more even pressure distribution.
• A new high technology transmission: A new high-technology six-speed transmission will reduce mass and weight as well as provide better acceleration values through significantly reduced reaction times, reduced vibrations and fuel consumption through improved torque conversion, and adaptive shifting which analyses the driver's personal driving style and driving conditions and implements optimal shifting accordingly.

This looks to be the justification that was given to the government on "Where are you spending the money"
and
http://theage.drive.com.au/motor-new...110-1psav.html
Total investment for Falcon and Territory $103M of which the government has chipped in $34M - sounds like co-investment to me.
So the money is more than matched - 2:1 from Ford
and is justified in what is delivered in return.

I think you may have come across the first ever statement released by a coporation that didnt contain a self serving statement to try and justify something. But just to help me not to look at this with complete sarcasm, can you please tell where in Australia Ford will be making these low resistant tyres. Oh just for the hell of it, tell me where in australia anyone makes tyres, or even anywhere in the world Ford makes tyres.

Me and my 4 wives, two concubines and 7 mistresses would be interested in your answer (oh yeah, just because someone writes it, doesnt necessarily mean its true).

[Gobes32]

Originally Posted by 2011G6E

So why is the car industry here so uniquely deserving of ongoing and never-ending taxpayer assistance?

Take Toyota for insatnace, 350 people paying an average of $250 a week in tax equals $87500, money the government will no longer receive, and if they go on the dole, then it is a double whammy. As to why the car industry in particular is so special, I honestly don't know........

[last fairlane]

Cast your mind back to 1987
when Nissan went from being a car maker in Clayton
to a car assembler
they went from being in the top 5 to who knows where
when the parent co pulled the pin
how many suppliers lost money or went completely under
because of the decision by Nissan Japan
it almost sent GMH under
because their engine and gearbox supplier pulled out
Im talking VL Commodores
it took lots of money from Toyota and the Hawke govt
to turn it around
If a manufacturer evolves backwards into a CKD assembler
no one wins
Im talking from experience
I used to have a truck delivering seats from Bridgstone
to Ford and Nissan
when half of my income disappeared (Nissan)
that was it
I had to go and get a job on wages which in turn took money away from my tyre man and mechanic and so it goes
talk about the ripple effect
just the effect on me with one truck
imagine if Coke pulled out Linfox would have a 1000 trucks sitting idle
Thanks John

[2011G6E]

Originally Posted by cs123

Same with other manufacturing capability that we are letting waste away.


Industry here should be protected. We have all the natural resources we need. We should be making stuff too. It's madness IMO

That's the point...plenty of other industries have been let fall over, plenty of other manufacturing has been allowed to just close down and moved overseas despite asking the government for assistance, but for some reason the building of our own cars (not the car industy as a whole) is somehow special.

It's not about "having the capability to build cars"...anyone can "build a car", it's not exactly high tech stuff, and to be blunt, other places do it far better than we do in far higher production numbers.

It really does look like it's simply unions having a large amount of pull with governments and the location of electoral seats rather than any economic reasons...

[Mad_Pom]

I do not believe Ford of Australia will be making the tyres and you are also correct that they not be made in Australia, but the engineering to re-tune the suspension ride and handling will need to be completed in Australia. The Durability testing required, will be conducted in Australia. The re-tuning of the DSC system will be conducted in Australia. Re-homologation Australia.

An OEM just can't slap a new tyre on a car and push it onto customers, that's the job of after market !!

[Wretched]

Originally Posted by Mad_Pom

There is no money to be had in export with our relative cost of manufacturing resources, when compared to the local region, compounded with the strength of the Australian dollar and the huge amounts of tax relief and incentives offered around the region.

In my opinion the options are to co-invest or let it die.

Well then this is where a decision needs to be made on the direction the company should take.
How low will all three go with the sales of local made products before it isn't viable? What then? Keep sucking off the tax payer teet? Judging by a lot of the comments in this thread there is even a divide between the hardcore Ford fans as to who will look at buying a new Ford this year (local). I know it isn't a good way to gauge the prospect of sales this year but as the supposed hardcore fans of local product it doesn't look good when a lot are not even considering it.

How many components are Aussie made?

From an engineering point of view we can compete with the best of them and there is no reason we cannot continue that as we do work for other markets. It is the manufacturing that is under question.

[johnydep]

There is not enough money in manufacturing for every country to do the same thing.

Intellectual patents is where the money is, followed by the service industry.

Take APPLE as an example; the company builds nothing in the US, yet it is one of the worlds richest companies. It pays someone in China $1 an hour to manufacture, and pays it's US designers and service industry exceptionally well.

Last year the US registered 75% of the worlds patents.

We can keep using our Tax dollars to fund companies and watch them go the way Leyland, Chrylser, Nissan and Mitsubishi went. This will only last while there is money available to allocate, if we run into severe financial difficulty the money will be gone and we will be left in with very few options.

Or we can think smarter and look at better ways to spend our Taxes to ensure that we maintain our exceptional way of life, and stay ahead of competing countries.

We need industry that can innovate, invent and design new products and services for the world. We also need an industry that can service these products and ideas across the world. Get that into place, then we can subsidise important industry that find it hard to compete out in the world.

[Luke Plaizier]

Yay! So we too can have high tech products built in China and help contribute to the Chinese suicide rate!

Sorry, point taken, I just wanted to get that anti-Apple sentiment in there.



Lukeyson

[cs123]

Originally Posted by 2011G6E

That's the point...plenty of other industries have been let fall over, plenty of other manufacturing has been allowed to just close down and moved overseas despite asking the government for assistance, but for some reason the building of our own cars (not the car industy as a whole) is somehow special.

It's not about "having the capability to build cars"...anyone can "build a car", it's not exactly high tech stuff, and to be blunt, other places do it far better than we do in far higher production numbers.

It really does look like it's simply unions having a large amount of pull with governments and the location of electoral seats rather than any economic reasons...

The other industries shouldn't have been left to fail.

And it's not that easy to design and build cars. Not many countries actually do it. Korea implemented protection for their fledgling car industry to protect it and built it up to what it is today.

Australia's direction is to keep digging up rocks. What is our capability to do other things?

[prydey]

this thread clearly started by someone not in the industry.

the amount of people employed directly and indirectly to the automotive industry is quite substantial. the industry still makes the govt plenty of money/revenue.

how about the govt do more to 'protect' our local industry rather than prop it up. why does australia play 'nice guy' and reduce tariffs when every other car building nation increases import taxes or tariffs to protect their own??

the auto industry is important to australia and should be protected.


imports are cheap because they are made by a workforce that has an hourly rate a fraction of what australians do. hands up anyone prepared to take a cut in their pay rate!! (cue crickets and tumbleweeds)

[bobthebilda]

Oh well, you gotta hand it to Mr Carr. If all the stuff you talk has amounted to nothing, then you resort to the final step of back peddling as fast as you can.

http://www.abc.net.au/news/2012-01-2...s-carr/3789832

The Federal Government says there was nothing it could have done to prevent job losses at Toyota, because it doesn't "do bailouts".
The Japanese carmaker has announced it will have to slash 350 jobs from its Melbourne plant, largely because of falling overseas sales due to the high Australian dollar.
Manufacturing Minister Kim Carr says the company told him last year of the serious problems it was facing, but says the Government will not give direct assistance to save jobs.
"The company doesn't operate on the basis of asking for a handout or a bailout or any of the other words that are used," he said.
"That's not the way it works, we don't do that. What we do is provide support to encourage new investment for new products.
"It's not the Government's job to tell them how to manage the plant. Governments do not run the car companies."

[prydey]

so the govt wants to be seen as the hero when jobs are kept, but cut all ties when jobs are lost.

yep, sounds about right.

[johnydep]

Originally Posted by prydey

this thread clearly started by someone not in the industry.

the amount of people employed directly and indirectly to the automotive industry is quite substantial. the industry still makes the govt plenty of money/revenue............

Statistics please.

The figures were on the radio this morning, you will be very surprised at how low it is now.

[prydey]

Originally Posted by johnydep

Statistics please.

The figures were on the radio this morning, you will be very surprised at how low it is now.

i think you'd be surprised at the amount of industries and people supported INDIRECTLY by the auto industry. it could be as seemingly insignificant as the snack shop on the corner near the factory. just because each factory only employs x amount of workers doesn't mean that will be the extent of the damage if they shut down.

would you be happy for your industry to close up? what if you knew that the same industry in other countries was protected but your own govt didn't offer that same protection?

[johnydep]

Originally Posted by cs123

The other industries shouldn't have been left to fail.

And it's not that easy to design and build cars. Not many countries actually do it. Korea implemented protection for their fledgling car industry to protect it and built it up to what it is today.

Australia's direction is to keep digging up rocks. What is our capability to do other things?

How do you force an industry not to fail?

Mitsubishi Australia was given multiple millions of dollars by Federal and State Governments, then they went and designed a car they couldn't sell. Leyland did the same.

If our car industry can not build a car that sells well to the public, how can they survive? Take the Government and Fleet sales out of the equation and what are the figures.

For a car manufacturer to be viable they need to produce 300,000 vehicles per year.

The Government needs to do more than just handing out money, they need to start picking a winner and back it to produce large quantities for export.

The problem with that? None of our favourite car companies are in the ball park; except for Toyota.

[johnydep]

Originally Posted by prydey

i think you'd be surprised at the amount of industries and people supported INDIRECTLY by the auto industry. it could be as seemingly insignificant as the snack shop on the corner near the factory. just because each factory only employs x amount of workers doesn't mean that will be the extent of the damage if they shut down.

would you be happy for your industry to close up? what if you knew that the same industry in other countries was protected but your own govt didn't offer that same protection?

The figure included the snack bar owner. The figure is the lowest it has ever been due to the majority of components coming form overseas.

Other industries have taken over, that's why Politicians are starting to get brave and are talking about this issue.

I want us to have a car industry, because I beleive we build good cars. But I also want us to export triple the amount we sell internally. Can the Government negotiate that?

[prydey]

i don't think exports are the answer. the aussie dollar is as strong as its ever been (give or take) and most other nations have access to other ford plants that produce cars much cheaper.

same with toyota. camry and aurion are made overseas already so why buy from australia when the same product is produced elsewhere for less.

holden exported commodore and lost money hand over fist over the last few years.

its about changing your operations to be able to produce substantially less cars and still remain viable. if you need 100000 locally made units to remain viable then all 3 are doomed but i believe that figure is based on old ways. it assumes toyota, holden and ford are just continuing the same as they ever have without trying to improve their viability at lower numbers. i don't believe this is the case at all. most, if not all businesses are constantly looking at ways to improve economies of scale.

i work in the printing industry. these days we aren't just competing with interstate but also overseas. believe it or not, you can get material printed overseas and delivered here cheaper than we can do it. there is risk involved but the industry also has iso standards so even in india and china, they print to the same worldwide standards.

where i work has had to change and adapt. we are probably the biggest in adelaide in our segment. its not just the auto industry that has increased competition and i thing its naive for many to think the auto industry is just going about things like they always have.

thats just my view.

[burnz]

Originally Posted by johnydep

How do you force an industry not to fail?

Mitsubishi Australia was given multiple millions of dollars by Federal and State Governments, then they went and designed a car they couldn't sell. Leyland did the same.

If our car industry can not build a car that sells well to the public, how can they survive? Take the Government and Fleet sales out of the equation and what are the figures.

For a car manufacturer to be viable they need to produce 300,000 vehicles per year.

The Government needs to do more than just handing out money, they need to start picking a winner and back it to produce large quantities for export.

The problem with that? None of our favourite car companies are in the ball park; except for Toyota.

USA 11.6 million sale's from 32 brand's..

AUS 1.035 million sale's from 62 brand's..

this is what we're up against..62 different company's with a cheaper product versus the local 3..

[Luke Plaizier]

I don't see anyone backpedalling. I see someone trying to break the stupidity of the journalists who use the term 'Bailout' - which is what the US Government did with bankrupt General Motors - and 'Handout' - whioch implies they are not getting their money back - as opposed to new-product-development co-investment. In fact, it's the very misuse of these terms by journalists that are turning the public support away. And yes, I have never seen the Australian government bailout a bankrupt car manufacturer, or give money that they thought they would not get back in taxes.

I do see someone trying to use the term 'backpedalling' to artificially denigrate the conversation into dumb journalist terms though.

On the subject of Mitsubishi - didn't they have to pay back it's last lot of grant or co-investment money when it decided to end local production? I remember reading something about that.

The big challenge here is, Johnny, what is it that would sell in huge numbers, and make enough of a profit, and beat all the other competition, while being profitable? Large car? Small car? SUV?

Up until the last few years, Aussie large cars have been all of that, WITHOUT access to export markets, and that's for whatever reason. Lots of excuses here, and I'm not happy either, but they often include the Crown Victoria, the local I6, trade barriers (China, Thailand, Japan etc) and now the high dollar.

Toyota are doing a better job than Ford Oz, let's face it. But Ford can do the same if they are given access to RHD 'Niche' large car export opportunities in One Ford. And as I recall, the government HAS been trying to negotiate export deals for Falcon and Territory, as they have been for Holden and Toyota. There was even money spent on Ford to make it LHD, that ended up being redirected to the so called startup of Focus production, which then went god-knows where - probably to the EcoLPI, EcoBoost and Diesel programs.


Lukeyson

[Joe5619]

Originally Posted by johnydep

For a car manufacturer to be viable they need to produce 300,000 vehicles per year.

Seeing as you seem to be an expert.. How & why did you come up with this number??

[johnydep]

Originally Posted by Joe5619

Seeing as you seem to be an expert.. How & why did you come up with this number??

Article I read last year. I'll see if I can dig it up and post it.

[tweeked]

Stupid economists saying that we must have a level playing field.

Other countries such as Thailand (they pretty much only produce sub 3lt vehicles, so they "Tax" by engine size, everything they do not make. It is not a "tariff" on imports is it? It is still a free market isnt it?)

We are just too stupid and not brave enough to do something similar.

Cant wait till wee get some cheap Economists available from India, it will be gold when our professional academics that have never worked outside of the education system and that pride themselves on telling us how it all works that they have been retrenched as they are no longer financially competitive.