Last week Ford in Australia announced its intention to halt car manufacturing in October 2016. After 88 years of making cars in Australia Ford’s decision to pull out reflects some poor decisions (persisting with bigger vehicles and a domestic centric right hand drive platform), high costs and a high Australian dollar. Ford as a manufacturer will in a few years simply be something for the history books. However, with potentially 10,000 jobs being impacted the pain felt will have an enduring dimension to it.
On Friday May 24th the Age newspaper devoted its first 10 pages of news to the announcement, along with its Editorial. What is most disconcerting is the dialogue lacks any insight into what the lessons are, or importantly what the future holds. There are lots of facts, but no real learning expressed. Manufacturing output has fallen from 14% of Australia’s GDP in the late 1970’s to 7.3% today, but no commentary on what is replacing it.
Facts aplenty about the level of subsidies that have been afforded to the automotive industry but no exploration of what is the value of $ in subsidies if they are dwarfed by the subsidies provided by other Governments in other countries. Surely any conversation about subsidies has to be had around the relativity of them to other players in the same industry. If the US subsidies its automotive industry to the tune of $260US per capita, France $100US and Australia only $18 per capita – perhaps its indicative we are picking the wrong industry to support from a global market perspective. Not to mention the huge tariff barriers (as high as 80%) Australian car manufacturers face when exporting, relative to the low 0-5% tariffs Australia imposes on vehicle imports.
Government subsidised or not, what are the industries that are going to underpin our prosperity into the future? Where is the thinking being done to identify where our focus should be from a nation brand perspective. The Age Editorial (24/5) suggests that we must make good our aspiration to be the clever country. They suggest that means nurturing and investing in first-class education and encouraging innovation so that we can develop the services industries that generate high incomes, opportunities and wealth for the nation. Sadly their comments reflect the same meaningless high level dialogue that purveys about our future. We need to move beyond such vague generalities and develop a more definitive sense of where our future resides.