tag:theconversation.com,2011:/africa/topics/toyota-1567/articlesToyota – The Conversation2024-03-27T23:28:32Ztag:theconversation.com,2011:article/2267242024-03-27T23:28:32Z2024-03-27T23:28:32ZAustralia must wean itself from monster utes – and the federal government’s weakening of vehicle emissions rules won’t help one bit<figure><img src="https://images.theconversation.com/files/584679/original/file-20240327-24-tmdd5x.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5810%2C3867&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The federal government has bowed to pressure from the car industry, announcing it will relax proposed emissions rules for utes and vans and delay enforcement of the new standards by six months.</p>
<p>The legislation was introduced to parliament on Wednesday. The government <a href="https://minister.infrastructure.gov.au/c-king/media-release/new-vehicle-efficiency-standard-tailored-australia">says</a> the new rules give Australian motorists a greater choice of electric vehicle models and insists the policy is “good for the environment”. </p>
<p>But on the latter point, the government is mistaken. The amended rules will slow the reduction in emissions from Australia’s polluting road transport sector. And they reflect domestic and international trends that, taken together, increase the risk Australia, and the world, will fail to achieve net-zero emissions by 2050. </p>
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Read more:
<a href="https://theconversation.com/australian-passenger-vehicle-emission-rates-are-50-higher-than-the-rest-of-the-world-and-its-getting-worse-222398">Australian passenger vehicle emission rates are 50% higher than the rest of the world – and it's getting worse</a>
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<h2>What are the changes?</h2>
<p>Vehicle emissions standards set a limit on grams of CO₂ that can be emitted for each kilometre driven, averaged across all new cars sold. Carmakers failing to meet the standards will incur financial penalties.</p>
<p>The federal government released its <a href="https://www.infrastructure.gov.au/department/media/publications/cleaner-cheaper-run-cars-australian-new-vehicle-efficiency-standard-consultation-impact-analysis">initial version</a> of proposed vehicle emissions standards in February.</p>
<p>Under the changes announced this week, some 4WD wagons – such as the Toyota LandCruiser and Nissan Patrol – will be reclassified from “passenger car” to “light commercial vehicle”. The change means less stringent emissions standards will apply to those models.</p>
<p>In a <a href="https://minister.infrastructure.gov.au/c-king/media-release/new-vehicle-efficiency-standard-tailored-australia">statement</a>, the government justified the change by saying some off-road wagons have a similar chassis and towing capacity to vehicles in the light-commercial category, and so should be subject to the same standards.</p>
<p>The government will also give more favourable treatment to heavier vehicles. And manufacturers will not be penalised under the scheme until July 2025 – six months later than the government originally proposed. </p>
<h2>The global picture</h2>
<p>The government’s decision to weaken the standards is a response to pressure from the domestic vehicle industry, and a concession to the Opposition which falsely claims the new standards are a “<a href="https://www.abc.net.au/news/2024-03-15/fact-check-vehicle-missions-standard-ute-family-car-tax/103587622">ute tax</a>”.</p>
<p>But the watering-down also reflects a broader international trend in which the legacy vehicle industry is backing away from its <a href="https://media.ford.com/content/fordmedia/fna/us/en/news/2021/09/27/ford-to-lead-americas-shift-to-electric-vehicles.html">earlier</a> <a href="https://www.gm.com/commitments/electrification">commitments</a> to a rapid transition to electric vehicles. </p>
<p>For example, in the United States Ford and GM have both cut back production of some models, <a href="https://www.axios.com/2024/01/19/ev-cars-ford-lightning-gm-chevy-blazer-cuts">reportedly due to</a> lower-than-expected consumer demand.</p>
<p>Also in the US, carmakers this month <a href="https://www.politico.com/news/2024/03/20/bidens-regulators-poised-to-issue-rule-meant-to-drive-electric-car-sales-00148019">secured a relaxation</a> of the Biden administration’s fuel efficiency targets for new vehicle sales.</p>
<p>US politicians are also pushing for <a href="https://www.hawley.senate.gov/hawley-introduces-new-bill-raise-tariffs-chinese-evs-protect-american-autoworkers">increased tariff protection</a> from imports, already taxed at 27.5%. This would make US producers even more competitive against big Chinese electric vehicle brands such as BYD.</p>
<p>Toyota, the world’s largest car maker, has gone all-in on hybrid electric vehicles, beginning with the highly successful Prius. But as the global market has shifted to fully electric cars, Toyota has <a href="https://electrek.co/2023/10/30/why-is-toyota-anti-ev-it-lost-the-race-to-compete-ev-council/">fought against</a> further tightening of standards. </p>
<figure class="align-center ">
<img alt="three large utes under US flag and Ford sign" src="https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/584688/original/file-20240327-26-ws6hhg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">US carmakers secured a relaxation on fuel efficiency targets.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Pressures in Australia</h2>
<p>Australia no longer has a domestic car manufacturing industry. But global carmakers continue to exert powerful influence through the Federated Chamber of Automotive Industries, Australia’s peak industry body for manufacturers and importers of passenger and light-commercial vehicles. The chamber has consistently <a href="https://www.smh.com.au/national/inside-the-car-industry-s-climate-lobbying-push-20230522-p5da61.html">lobbied against</a> effective climate action. </p>
<p>The government’s agreement to weaken standards also reflects the prevailing assumption, apparently shared by both major parties, that tradespeople comprise the majority of the “working class” voters for whom they are vying.</p>
<p>But it’s an out-of-date assumption. In the 1980s, the occupations fitting a broad interpretation this term (trades and technical workers, machinery operators and labourers) <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">accounted for 40%</a> of all employed workers, and a majority of full-time non-managerial workers. </p>
<p>But today, <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">only 28%</a> of workers fit this description. Workers with professional qualifications, such as teachers and nurses, <a href="https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release">outnumber</a> trades and technical workers two to one. But their concerns are frequently dismissed by some politicians as those of a woke, inner-city minority. </p>
<h2>Utes are changing</h2>
<p>The shift from substance to symbol in regards to the working class is mirrored in the transformation of utes themselves. </p>
<p>Until relatively recently – and as the name implies – utes were utilitarian vehicles designed for the practical tasks of carrying a farming couple “<a href="https://hidrive.com.au/a-brief-history-of-the-ute/#:%7E:text=In%20one%20version%20of%20the,pigs%20to%20market%20on%20Mondays.">to church on Sundays and the pigs to market on Mondays</a>”. But over time, this has been replaced by various forms of cosplay. </p>
<p>Utes have been tricked out with sports bars and fancy wheels, metallic paint and so on. More recently, the traditional ute has been replaced by US-style pickups, typically sold in dual-cab configurations. </p>
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Read more:
<a href="https://theconversation.com/labors-fuel-efficiency-standards-may-settle-the-ute-dispute-but-there-are-still-hazards-on-the-road-222875">Labor's fuel-efficiency standards may settle the ute dispute – but there are still hazards on the road</a>
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<p>Most models of the market-leading Ford Ranger <a href="https://www.ford.com.au/showroom/trucks-and-vans/ranger/specs/">don’t even offer</a> a single-cab version, though such versions are sold overseas.</p>
<p>These vehicles are massive, but many have far less carrying capacity than a traditional ute. For example, the Ram 1500 has a tub length of <a href="https://www.news.com.au/technology/motoring/motoring-news/2023-ram-1500-big-horn-has-arrived-in-australia/news-story/f84366c4e20c57d6a25201cc52440062">1.7 metres</a>, compared to about 2.4 metres for the tray of a standard single-cab ute. </p>
<p>Unless the growth in the size of passenger vehicles is stopped and reversed, Australia’s task of meeting our net-zero target will be even more difficult.</p>
<p>It’s unlikely the two big parties will act on this issue any time soon. But as climate change worsens, the need to wean ourselves from monster cars and internal-combustion engines will demand the attention of our political leaders.</p><img src="https://counter.theconversation.com/content/226724/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is a former Member of the Climate Change Authority, which recommended fuel efficiency standards in 2014</span></em></p>The amended rules will slow the reduction in emissions from Australia’s polluting road transport sector and reflect alarming trends, here and abroad.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2231622024-03-08T13:37:46Z2024-03-08T13:37:46ZUAW’s Southern strategy: Union revs up drive to get workers employed by foreign automakers to join its ranks<figure><img src="https://images.theconversation.com/files/580189/original/file-20240306-16-zhfgjh.jpg?ixlib=rb-1.1.0&rect=135%2C63%2C5068%2C2506&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A UAW supporter in 2017 outside a Nissan plant in Canton, Miss., ahead of a vote the union lost.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Nissan-Union/90212afb1edb40979e133f3d7931592a/photo?Query=mississippi%20uaw&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=91&currentItemNo=18">AP Photo/Rogelio V. Solis</a></span></figcaption></figure><p>Persuading Southern autoworkers to join a union remains one of the U.S. labor movement’s most enduring challenges, despite persistent efforts by the United Auto Workers union to organize this workforce.</p>
<p>To be sure, the UAW does have members employed by Ford and General Motors at facilities in <a href="https://apnews.com/article/general-motors-strike-united-auto-workers-uaw-f16005a7b20a6f1772947957854d1017">Kentucky, Texas, Missouri and Mississippi</a>.</p>
<p>However, the <a href="https://www.reuters.com/article/us-volkswagen-uaw-idUSKBN0TN2DE20151205/">UAW has tried and largely failed</a> to <a href="https://www.nytimes.com/2019/06/14/business/economy/volkswagen-chattanooga-uaw-union.html">organize workers</a> at foreign-owned companies, including Volkswagen and Nissan in Southern states, where about <a href="https://www.cnn.com/2023/09/20/business/uaw-jobs-south-auto/index.html">30% of all U.S. automotive jobs are located</a>.</p>
<p>But after the UAW pulled off its <a href="https://theconversation.com/united-auto-workers-union-hails-strike-ending-deals-with-automakers-that-would-raise-top-assembly-plant-hourly-pay-to-more-than-40-as-record-contracts-216432">most successful strike in a generation</a> against Detroit’s Big Three automakers, through which it won higher pay and better benefits for its members in 2023, the union is trying again to win over Southern autoworkers.</p>
<p>The UAW has <a href="https://uaw.org/uaw-announces-40-million-commitment-to-organizing-auto-and-battery-workers-over-next-two-years/">pledged to spend US$40 million through 2026</a> to expand its ranks to include more auto and electric battery workers, <a href="https://www.nytimes.com/2024/03/02/business/economy/uaw-auto-workers-union.html">including many employed in the South</a>, where the industry is <a href="https://uaw.org/we-are-the-majority-workers-at-mercedes-benzs-largest-us-plant-announce-majority-support-for-movement-to-join-uaw/">quickly gaining ground</a>.</p>
<p>Based on my five decades of experience as a <a href="https://scua.uoregon.edu/agents/people/33456">union organizer and labor historian</a>, I anticipate that, recent momentum aside, the UAW will face stiff resistance from Toyota, Volkswagen, Mercedes-Benz and the other big foreign automakers that operate in the South. The <a href="https://www.thenation.com/article/economy/uaw-chattanooga-union-drive/">pushback is also coming from Southern politicians</a>, many of whom have expressed concern that UAW success would undermine the region’s carefully crafted approach to economic development. </p>
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<a href="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="The back of a worker wearing a UAW t-shirt indicating employment in Brandon, Mississippi." src="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A sign of things to come?</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AutoWorkersStrikeMississippi/f5cb369d2cd245a99b3081ff2af50396/photo?Query=uaw%20alabama&mediaType=photo&sortBy=&dateRange=Anytime&totalCount=21&digitizationType=Digitized&currentItemNo=0&vs=true">AP Photo/Rogelio V. Solis</a></span>
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<h2>Lauding the ‘perfect three-legged stool’</h2>
<p>After the region’s formerly robust <a href="https://doi.org/10.5744/florida/9780813037950.003.0010">textile industry imploded</a> in the 1980s and 1990s because of an influx of cheap imports, Southern business and political leaders revived the region’s manufacturing base by successfully recruiting foreign automakers. </p>
<p>The strategy of those leaders reflects what the <a href="https://www.bcatoday.org/the-united-auto-workers-labor-union-must-not-do-to-alabama/">Business Council of Alabama</a> has described as the “perfect three-legged stool for economic development.” It consists of “an eager and trainable workforce with a work ethic unparalleled anywhere in the nation,” accompanied by a “low-cost and business-friendly economic climate, and the lack of labor union activity and participation.”</p>
<p>The prospect of a low-wage and reliable workforce has <a href="https://www.cnbc.com/2022/08/14/automakers-investing-in-the-south-as-evs-change-the-auto-industry.html">lured the likes of Nissan, BMW</a>, Mercedes-Benz, Kia, Honda, Volkswagen and Hyundai to the South in recent decades.</p>
<p>Although many of those companies <a href="https://www.reuters.com/business/autos-transportation/volkswagen-ig-metall-agree-wage-deal-2021-04-13/">negotiate constructively</a> with unions on their home turf, the lack of union membership and the protections that go with it have proved a draw for them in the United States.</p>
<p>As journalist <a href="https://www.latimes.com/opinion/la-xpm-2011-may-15-la-oe-meyerson-europeans-20110515-story.html">Harold Meyerson has noted</a>, these foreign automakers embraced the opportunity to “slum” in America and “do things they would never think of doing at home.”</p>
<p>The absence of union representation is a major reason why.</p>
<p>Less than 5% of workers in six Southern states are union members, and only Alabama and Mississippi approach union membership levels above 7%, <a href="https://www.bls.gov/news.release/pdf/union2.pdf">according to the Bureau of Labor Statistics</a>. </p>
<p>That’s below the national average, which <a href="https://theconversation.com/1-in-10-us-workers-belong-to-unions-a-share-thats-stabilized-after-a-steep-decline-221571">slid to 10% in 2023</a>.</p>
<h2>Blaming unions for bad job prospects</h2>
<p>One way automotive employers in the South have blocked unions is by <a href="https://muse.jhu.edu/book/59212/">portraying them as outdated institutions</a> whose bloated contracts and rigid work rules destroy jobs by making domestic auto companies uncompetitive.</p>
<p>Automotive leaders in the South argue the region has developed an alternative labor relations model that <a href="https://www.automotivedive.com/news/is-unionizing-foreign-automakers-next-uaw-strike/698260/">provides management with flexibility</a>, offers wages and benefits superior to what local workers have earned previously and frees employees from any subordination to union directives. </p>
<p>Southern automakers also draw on another powerful resource in resisting the UAW: public intervention by top elected officials.</p>
<p>In 2014, when the UAW attempted to organize a Volkswagen plant in Chattanooga. Bob Corker, Tennessee’s junior U.S. senator and a former mayor of Chattanooga, weighed in as voting commenced.</p>
<p>Corker claimed he had received a pledge from Volkswagen’s management to expand production in Chattanooga <a href="https://newrepublic.com/article/116653/bob-corkers-uaw-intervention-chattanooga-vw-vote-speaks-volume">if workers voted against the union</a>. </p>
<p>Three years later, Mississippi Gov. Phil Bryant similarly urged Nissan workers to reject the UAW. </p>
<p>“If you want to take away your job, if you want to end manufacturing as we know it in Mississippi, just start expanding unions,” <a href="https://www.mpbonline.org/blogs/news/state-leaders-unionizing-nissan-will-not-help-mississippi/">Bryant said in 2017</a>.</p>
<p>A majority of the autoworkers <a href="https://www.nytimes.com/2017/08/05/business/nissan-united-auto-workers-union.html">heeded their conservative leaders’ advice</a> in both cases and <a href="https://www.washingtonpost.com/news/wonk/wp/2014/02/14/united-auto-workers-lose-historic-election-at-chattanooga-volkswagen-plant/">voted against joining the UAW</a>.</p>
<h2>Making dire warnings</h2>
<p>With the UAW ramping up its organizing efforts again, Southern governors are sounding alarms once more.</p>
<p>“The Alabama model for economic success is under attack,” <a href="https://www.madeinalabama.com/2024/01/gov-ivey-unions-want-to-target-one-of-alabamas-crown-jewel-industries-but-im-standing-up-for-alabamians-and-protecting-our-jobs/">warned Alabama Gov. Kay Ivey</a>. </p>
<p>She then asked workers: “Do you want continued opportunity and success the Alabama way? Or do you want out-of-state special interests telling Alabama how to do business?”</p>
<p>Unions “have crippled and distorted the progress and prosperity of industries and cities in other states,” <a href="https://governor.sc.gov/news/2024-01/2024-state-state-address-governor-henry-mcmaster">South Carolina Gov. Henry McMaster</a> declared in his Jan. 24, 2024, State of the State address. He then issued an ominous call: “We will fight” the UAW’s labor organizers “all the way to the gates of hell. And we will win.” </p>
<p>The UAW counters that union membership means workers will get predictable raises, <a href="https://uaw.org/join/#toggle-id-14">better benefits and improved workplace policies</a>.</p>
<h2>Changing context</h2>
<p>Although these arguments from anti-union politicians haven’t changed much over the years, the context certainly has.</p>
<p>The <a href="https://www.npr.org/2023/11/12/1211602392/uaw-auto-strike-deals-ratified-big-three-shawn-fain">UAW’s big wins on pay and benefits</a> resulting from its 2023 strike against General Motors, Ford and Stellantis have increased its clout and credibility. </p>
<p>Many automakers with a U.S. workforce not covered by the UAW – including Volkswagen, Honda, Hyundai and other foreign transplants – responded by raising pay at their Southern plants. The union justifiably describes those raises as a “<a href="https://www.cnn.com/2023/11/14/cars/uaw-labor-toyota-honda-hyundai/index.html">UAW bump</a>.”</p>
<p>The UAW will presumably cite these pay hikes in its outreach to <a href="https://theconversation.com/next-on-the-united-auto-workers-to-do-list-adding-more-members-who-currently-work-at-nonunion-factories-to-its-ranks-217064">workers at Tesla</a> and other nonunion companies involved in electric vehicle and battery production in which the industry is investing heavily. </p>
<p>“Nonunion autoworkers are being left behind,” <a href="https://uaw.org/join/">the UAW’s recruiting website</a> warns. “Are you ready to stand up and win your fair share?”</p>
<p>The pitch continues: “It’s time for nonunion autoworkers to join the UAW and win economic justice at Toyota, Honda, Hyundai, Tesla, Nissan, BMW, Mercedes-Benz, Subaru, Volkswagen, Mazda, Rivian, Lucid, Volvo and beyond.”</p>
<p>Some Southern autoworkers, meanwhile, have been <a href="https://uaw.org/wp-content/uploads/2024/02/IMPROVING-WORK-LIFE-BALANCE-AT-VOLKSWAGEN.pdf">expressing concerns over scheduling</a>, safety, two-tier wage systems and workloads that they believe a union could help resolve.</p>
<p>It’s also clear they’ve been emboldened by the gains they have seen UAW members make. </p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/TXMNbGS2Hy0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Southern autoworkers applaud the union-organizing drive underway at a VW factory in Chattanooga, Tennessee.</span></figcaption>
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<h2>Revving up</h2>
<p>The UAW’s campaign is just starting to rev up.</p>
<p>In accordance with its “<a href="https://uaw.org/join/#toggle-id-6">30-50-70</a>” strategy, the union is announcing the share of workers who have signed union cards in stages. Once it hits 30% at a factory, the UAW will announce publicly that an organizing campaign is underway. At the 50% mark, it will hold a public rally for workers that includes their neighbors and families, as well as <a href="https://www.motortrend.com/news/2024-motortrend-person-of-year-shawn-fain-uaw-president/">UAW President Shawn Fain</a>.</p>
<p>Once it gains support from 70% of a plant’s workers, the UAW says it will seek voluntary recognition by management.</p>
<p>A recent National Labor Relations Board ruling provides unions with additional leverage in this process. If management refuses to recognize the union’s request, the employer would then be required to seek an NLRB representation election.</p>
<p>To win, unions need a majority of those voting. Under the new rule, if management is found to have interfered with workers’ rights during the election process, it could then be <a href="https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-announcing-new-framework-for-union-representation">required to bargain with the union</a>.</p>
<p>So far, the UAW has announced that it has obtained the support of more than half the workers at factories belonging to two of the 13 nonunion automakers it’s targeting: a <a href="https://uaw.org/were-taking-the-lead-over-half-of-volkswagen-workers-in-chattanooga-tennessee-sign-cards-to-join-the-uaw-in-less-than-60-days/">Volkswagen plant in Chattanooga</a>, Tennessee, and a
<a href="https://www.theguardian.com/us-news/2024/jan/10/uaw-union-mercedes-benz-alabama">Mercedes-Benz factory near Tuscaloosa</a>, Alabama. It has also obtained 30% support at a <a href="https://thehill.com/business/4440930-hyundai-workers-alabama-uaw/">Hyundai plant in Alabama</a> and a <a href="https://labornotes.org/2024/03/toyota-workers-critical-engine-plant-launch-uaw-union-drive">Toyota engine factory in Missouri</a>.</p>
<p>I believe that the stakes are high for all workers, not just those in the auto industry.</p>
<p>As <a href="https://www.politico.com/news/2023/09/05/unions-south-labor-organizing-ussw-seiu-00114085">D. Taylor, the president of Unite Here</a>, a union that represents workers in a wide range of occupations, recently observed: “If you change the South, you change America.”</p><img src="https://counter.theconversation.com/content/223162/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>I was briefly a UAW local union member in the 1970s.</span></em></p>Despite intermittent efforts over the past three decades, the UAW union has been unable to organize employees of foreign-based automakers in states such as Alabama and Tennessee.Bob Bussel, Professor Emeritus of History and Labor Education, University of OregonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2170642023-11-27T19:34:04Z2023-11-27T19:34:04ZNext on the United Auto Workers’ to-do list: Adding more members who currently work at nonunion factories to its ranks<figure><img src="https://images.theconversation.com/files/560571/original/file-20231121-24-oer4wu.jpg?ixlib=rb-1.1.0&rect=106%2C152%2C4872%2C3109&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will Tesla's workers be the next to approve a UAW contract?</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EarnsTesla/8d2415b3d23949aca5513ecd9c47f8ec/photo?Query=tesla&mediaType=photo,video,graphic,audio&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=3150&currentItemNo=65">AP Photo/Godofredo A. Vásquez</a></span></figcaption></figure><p>Having negotiated “<a href="https://theconversation.com/united-auto-workers-union-hails-strike-ending-deals-with-automakers-that-would-raise-top-assembly-plant-hourly-pay-to-more-than-40-as-record-contracts-216432">record contracts</a>” with the Big Three – and seen the bulk of its <a href="https://finance.yahoo.com/news/1-uaw-says-64-workers-150358604.html">rank-and-file members approve them</a> – the United Auto Workers says its work isn’t done.</p>
<p>The union intends to <a href="https://www.axios.com/2023/10/20/uaw-strike-organizing-automakers">try once more</a> to persuade the rest of the U.S. auto industry’s workers to <a href="https://labornotes.org/2019/06/why-uaw-lost-again-chattanooga">join the union</a>.</p>
<p>“We’re going to organize like we’ve never organized before,” <a href="https://www.cnbc.com/2023/11/03/tesla-toyota-in-uaws-sights-for-organizing-after-big-3-wins.html">said UAW President Shawn Fain</a>.</p>
<p>As <a href="https://scholar.google.com/citations?user=TcpezG4AAAAJ&hl=en&oi=ao">labor scholars</a> who have <a href="https://scholar.google.com/citations?user=EQEoODAAAAAJ&hl=en&oi=sra">studied union finances</a>, we believe this is a formidable objective. On top of the <a href="https://apnews.com/article/technology-buffalo-new-york-business-826b91456748c7167fe977d458aaba2d">intense corporate resistance</a> from the <a href="https://www.cnbc.com/2023/11/03/tesla-toyota-in-uaws-sights-for-organizing-after-big-3-wins.html">likes of Tesla CEO Elon Musk</a>, there’s the high cost of waging expensive campaigns in states like <a href="https://www.npr.org/2023/09/22/1200875078/south-non-union-uaw-strike-foreign-automakers">Tennessee and Alabama</a>, which have “<a href="https://doi.org/10.1080/12265934.2021.1919183">right-to-work</a>” laws designed <a href="https://www.ncsl.org/labor-and-employment/right-to-work-resources">to discourage labor organizing</a>. </p>
<p>But the United Auto Workers appears to have the money, know-how and institutional infrastructure to launch these organizing campaigns.</p>
<h2>The other 57%</h2>
<p>About 146,000 UAW members are employed by General Motors, Ford and Stellantis, the global company that makes Chrysler, Dodge and Ram vehicles in North America. That’s down from <a href="https://money.cnn.com/1999/06/14/companies/uaw/">407,000 in 1999</a>.</p>
<p>So far, none of the autoworkers employed by the Big Three’s <a href="https://www.nytimes.com/2023/10/29/business/uaw-ford-contract.html">foreign-based competitors</a> or the <a href="https://www.nytimes.com/2022/12/09/business/economy/ev-battery-union.html">U.S.-based electric vehicle manufacturers</a> belong to a union. Each of the Big Three has joint ventures with various foreign-based companies to produce batteries. The workers at <a href="https://www.cnbc.com/2022/12/09/gm-lg-ev-battery-plant-uaw-union-vote.html">only one of these joint venture plants</a> have voted to join the UAW.</p>
<p>Today, the UAW represents <a href="https://www.bls.gov/iag/tgs/iagauto.htm">43% of the U.S. automotive workforce</a> in vehicle manufacturing. The other 57%, roughly 190,000 workers, are employed by Toyota, Honda and other foreign companies, and Tesla or another <a href="https://evmagazine.com/top10/top-10-pure-play-ev-companies">domestic electric vehicle manufacturer</a>. Nonetheless, in comparison to other industries, the degree of unionization in the automotive industry remains about <a href="https://www.bls.gov/news.release/pdf/union2.pdf">four times as high as for the workforce as a whole</a>.</p>
<p>Intermittent campaigns to persuade autoworkers at nonunion factories in places like <a href="https://www.theguardian.com/technology/2018/sep/10/tesla-workers-union-elon-musk">Fremont, California</a>, and <a href="https://www.npr.org/2019/06/15/733074989/tennessee-workers-reject-union-at-volkswagen-plant-again">Chattanooga, Tennessee</a>, have <a href="https://www.wardsauto.com/industry-news/if-uaw-doesn-t-change-it-s-toast">failed over the past four decades</a>.</p>
<h2>Employer obstacles</h2>
<p>Many U.S. employers have a long <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315499093-11/human-resource-management-practices-worker-desires-union-representation-jack-fiorito">history of attempting to avoid unionization</a>.</p>
<p>One such tactic is providing nonunion employees with some of the benefits of belonging to a union, such as raises or better benefits, without the payment of union dues. <a href="https://apnews.com/article/hyundai-honda-toyota-wage-increase-united-auto-workers-1349059944c75d7372f53d1ee6cf5cb2">Toyota, Honda, Hyundai</a>, <a href="https://www.reuters.com/business/autos-transportation/subaru-raise-us-plant-worker-wages-light-uaw-deals-with-detroit-automakers-ceo-2023-11-16/">Subaru</a> and <a href="https://www.reuters.com/business/autos-transportation/nissan-motor-hiking-wages-us-auto-plants-after-uaw-deal-2023-11-20/">Nissan all announced plans to increase</a> pay for their U.S. employees soon after the 2023 UAW strike concluded.</p>
<p>Fain calls this wave of raises for nonunion automotive workers the “<a href="https://youtu.be/V3bengdSGjY'">UAW bump</a>,” joking that UAW stands for “you are welcome.” His joke has two meanings: It’s a response to the thanks owed for the increased pay and it’s an invitation for workers employed by those companies to join the union he leads.</p>
<p>The UAW leader also quips that when the union’s new contracts expire in April 2028, it will be negotiating with “<a href="https://www.axios.com/2023/10/30/uaw-ford-shawn-fain-contract-deal">the Big Five or Big Six</a>” instead of just GM, Ford and Stellantis. In other words, he is predicting that the UAW will have won organizing campaigns by then with two or three more of the <a href="https://www.storagecafe.com/blog/top-10-largest-car-manufacturers-in-the-us/">automakers producing the most vehicles in the U.S.</a> – such as Toyota, Honda and Nissan.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/V3bengdSGjY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">This UAW video features media coverage of union president Shawn Fain testifying in Congress and a string of raises for nonunion U.S. autoworkers.</span></figcaption>
</figure>
<h2>UAW’s financial status</h2>
<p>In our book, “<a href="https://www.taylorfrancis.com/books/mono/10.4324/9781003335474/trade-union-finance-marick-masters-raymond-gibney">Trade Union Finance: How Labor Organizations Raise and Spend Money</a>,” we explain that unions remained in relatively strong financial shape from 2006 through 2019 – a period that included the economic upheaval of the Great Recession.</p>
<p>For example, among the sample of 53 national unions whose finances we studied, 49 saw their member-based income from dues and other sources grow by more than 33% during this period.</p>
<p>The UAW’s shrinking ranks led it to raise its dues by 25% in 2014 to <a href="https://www.nbcnews.com/business/autos/united-auto-workers-union-raises-dues-first-time-47-years-n121586">offset declining member-based income</a>.</p>
<p>The UAW has yet to disclose what it spent on the 2023 strike against the Detroit Three. Based on reported striker numbers and dates, we estimate that it cost the union approximately US$86 million just in payments to workers eligible for <a href="https://theconversation.com/what-are-strike-funds-a-labor-management-relations-expert-explains-213212">$500 weekly payments from its strike fund</a>.</p>
<p>That most likely left the union with nearly $750 million in its strike fund, which held roughly <a href="https://www.fitchratings.com/research/us-public-finance/uaw-strike-will-have-no-near-term-credit-effect-on-us-states-locals-21-09-2023">$825 million before the strike began</a>.</p>
<h2>Financing union organizing</h2>
<p>Organizing workers employed by <a href="https://www.cnn.com/2023/10/12/business/tesla-union-uaw-strike/index.html">automakers that resist unions, such as Tesla</a>, can be expensive. </p>
<p>The union has to pay organizers and cover the organizers’ expenses, and it is responsible for the costs of complying with labor law requirements associated with holding union elections. We do not know the exact costs of organizing campaigns or how much unions spend on them. </p>
<p>We do know that the United Auto Workers spent $4.4 million in 2022 to pay its organizers, or 5.6% of the union’s <a href="https://olmsapps.dol.gov/query/orgReport.do?rptId=865078&rptForm=LM2Form">total payroll</a>. This level of expenditure pales in comparison to the more than $45 million the union <a href="https://uaw.org/tag/strike/">spent on strike benefits</a> for its members who went on strike that year – none of whom were employed in the automotive industry.</p>
<p>How can the UAW finance a massive organizing campaign to win over the workers at the likes of Tesla, Honda, Nissan, Subaru, Toyota and Hyundai? We have identified three means of supplementing traditional sources of revenue from dues.</p>
<p><strong>1: Get donations from other labor groups</strong></p>
<p>Unions are free to help out each other through donations made to one another.</p>
<p>One important precedent for this is from the UAW’s earliest days. In 1936, one year after the union got its start, John Lewis, at the time the head of the Committee for Industrial Organization, <a href="https://search.worldcat.org/title/417956">gave the nascent United Auto Workers $100,000</a> – over $2.23 million adjusted for inflation – for its organizing efforts.</p>
<p>Labor unions can easily accept donations because they are <a href="https://blog.candid.org/post/unions-and-their-role-in-the-social-sector/">501(c)(5) nonprofits</a>. This designation means they <a href="https://ballotpedia.org/501(c)(5)">don’t have to pay any federal income tax</a>, although that exemption does not apply to the money they spend on electioneering and lobbying. Unlike charities, which in the U.S. are designated as 501(c)(3) organizations, <a href="https://www.irs.gov/charities-non-profits/other-non-profits/tax-treatment-of-donations-to-section-501c5-organizations">donations to unions are not tax deductible</a> for donors.</p>
<p><strong>2: Team up with other unions</strong></p>
<p>A second approach is for unions to pool their money for organizing another industrial sector. </p>
<p>We’ve found that the United Auto Workers, the United Steelworkers and the International Association of Machinists had a combined $513 million in working capital – money available for them to use as they see fit – in 2022. Some of those funds could help foot the bill for a concerted effort to persuade employees of nonunion automakers to join the union.</p>
<p>And the UAW could tap into these funds to supplement their spending on organizing personnel. </p>
<p><strong>3: Experiment with crowdfunding</strong></p>
<p>Third, rank-and-file members of the United Auto Workers, along with other manufacturing unions, could chip in to cover organizing costs through a <a href="https://theconversation.com/4-new-findings-shed-light-on-crowdfunding-for-charity-161491">crowdfunding campaign</a> by raising money online from donors.</p>
<p>Such a crowdfunding campaign might also draw donations from nonunion autoworkers who favor unionization, or anyone else who wants to see more autoworkers belonging to a union.</p>
<h2>Innovative tactics</h2>
<p>Spending more money on labor organizing will not suffice. The UAW will also need to rely on creativity and innovative thinking.</p>
<p>The challenges involved with winning over nonunion autoworkers will be far more formidable than its task in <a href="https://www.reuters.com/business/autos-transportation/uaw-pull-out-all-stops-organizing-nonunion-automakers-2023-11-08/">negotiating the 2023 contracts with the Big Three</a>. </p>
<p>We believe that the UAW would be wise to again use the <a href="https://www.npr.org/2023/10/20/1207367334/the-uaw-strike-is-not-the-first-time-a-union-weaponized-the-element-of-surprise">element of surprise</a> as it did with its 2023 strike against GM, Ford and Stellantis. One key to its success was how it threw the companies off balance by unpredictably ratcheting up the number of facilities where workers had gone on strike.</p>
<p>Fain and his allies are bound to fare better if they again, as they did with the 2023 strike against the Big Three, <a href="https://www.wilx.com/2023/10/11/how-social-media-influences-uaw-strike/">shape the narrative</a> through the deft use of social media. That tactic helped the UAW garner grassroots support and <a href="https://apnews.com/article/labor-unions-auto-workers-poll-b6f0efba4892d1f5d2a829effd514f7d">keep public opinion on its side</a>.</p><img src="https://counter.theconversation.com/content/217064/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>While Marick Masters was serving as the director of the Douglas A. Fraser Center for Workplace Issues at Wayne State University from 2009 through 2019, the Center received grants from the Detroit Three's joint training centers with the United Auto Workers to pursue education and research on unions and labor-management relations. These grants were operating strictly within the purview of the university.</span></em></p><p class="fine-print"><em><span>Ray Gibney does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Wooing those workers will be expensive and require a lot of creativity, since many of them are employed in ‘right-to-work’ states.Marick Masters, Professor of Business and Adjunct Professor of Political Science, Wayne State UniversityRay Gibney, Associate Professor of Management, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1808842022-06-15T03:30:05Z2022-06-15T03:30:05Z‘I couldn’t see a future’: what ex-automotive workers told us about job loss, shutdowns, and communities on the edge<figure><img src="https://images.theconversation.com/files/457026/original/file-20220407-11-t6cnqf.jpg?ixlib=rb-1.1.0&rect=48%2C97%2C3546%2C2274&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Economies are forever changing and the loss of some industries or businesses is part of that transformation. But change often comes at great cost for workers, many of whom are already vulnerable.</p>
<p>The stories of retrenched workers give us important insights into the often complex effects of job loss. To find out more about these experiences, we interviewed 28 workers made redundant from the auto sector around South Australia and Victoria over the past five years, as part of a larger research project about disadvantaged communities.</p>
<p>Our <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">paper, published in the journal Regional Studies, Regional Science</a>, reveals how economic change interrupts careers and life plans, casting people into new worlds of precarious work and long, indefinite journeys in search of security.</p>
<p>The stories of these automotive workers are not unique; they reflect the experiences of many workers in Australia who have faced retrenchment and redundancy as industries and businesses have closed.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-the-departure-of-toyota-holden-and-ford-really-means-for-workers-23137">What the departure of Toyota, Holden and Ford really means for workers</a>
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<h2>Bad jobs are easy to find</h2>
<p>Since being retrenched, many of our interviewees have struggled to find a job that is secure, safe and pays a decent wage.</p>
<p>Bad jobs – with undesirable hours and low pay – are easy to find, and many are forced to take them. Many are also shocked by what they find at their new workplaces – poor safety standards, toxic cultures and boring or “disgusting” work. These included jobs as diverse as food processing, cleaning, warehousing, chicken killing and grout manufacturing. </p>
<p>As one worker who’d been made redundant three years before <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">told</a> us:</p>
<blockquote>
<p>I got a job as a prefabrication supervisor […] And that was absolutely horrible, horrible, horrible […] just the safety stuff, you know, like they talked a lot of safety, but there was never much action […] just a bullying culture.</p>
</blockquote>
<p>Another left a processing job with a food company after just two days, saying:</p>
<blockquote>
<p>I couldn’t do that job. It was absolutely disgusting. It was hot. They were arrogant towards you.</p>
</blockquote>
<p>Workers often left jobs quickly, or struggled through while looking for something else. The result was a high level of employment instability, as people cycled through multiple jobs searching for one they could tolerate long term.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two men working on automotive engineering." src="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/457029/original/file-20220407-19249-cwi93t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Ex-automotive workers shared their experiences candidly.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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</figure>
<h2>‘It really, really scarred me’</h2>
<p>Workers at the bottom of the labour market often experience demanding or demoralising recruitment processes for casual positions through labour hire agencies. These workers are made to feel feel they can’t afford to be choosy:</p>
<blockquote>
<p>So labour hire, I just pretty much I just said yes to everything. And that’s the way, that’s the work in labour hire. If you start saying no, then you go to the back of the list.</p>
</blockquote>
<p>Casual jobs often serve as a kind of probation, but there are no guarantees:</p>
<blockquote>
<p>I couldn’t see a future. Yeah. So I would just continue to look around […] because I couldn’t see them taking me any further than casual.</p>
</blockquote>
<p>One worker who had already experienced bad employers <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">described</a> the difficult choice she faced:</p>
<blockquote>
<p>I would like [to leave this job and look for something] permanent. But I really don’t want to go into another workplace like [company name], it really, really scarred me.</p>
</blockquote>
<p>Workers want their old lives back – even if that’s not the “real world” any more. As one <a href="https://rsa.tandfonline.com/doi/full/10.1080/21681376.2022.2078737#.YqVksHZBw2w">put it</a>:</p>
<blockquote>
<p>I just think there’s a lot of work out there that, there’s just bits and pieces, and it doesn’t really support someone to have a proper job or be able to afford a decent life […] I’ve probably had maybe six, seven, eight jobs since [the closures]. And none of them have been that good. And I mean, I’ve hated most of them.</p>
</blockquote>
<h2>A new world of precarious work</h2>
<p>In many established sectors, workers once enjoyed good working conditions – often over decades of employment in what they believed were “jobs for life”. Job loss thrust them into a new world of precarious work very different from what they’d known.</p>
<p>Many were downhearted about this new reality:</p>
<blockquote>
<p>It’s just very, very dodgy […] it’s sad, really sad to think that there’s, like, these places out there. And there’s so many of them and they’re operating the way they do and, and nobody’s really controlling any of it.</p>
</blockquote>
<p>Some never stopped longing for a job that made them feel the way their old job did:</p>
<blockquote>
<p>I just miss [my old firm], I miss their way of working. Building up you as a person, as a team.</p>
</blockquote>
<p>Even those who had adjusted to their new working lives admitted that you needed to be willing to do anything:</p>
<blockquote>
<p>[T]here is work out there […] Too many people are too choosy, that’s the problem […] I didn’t give a shit what sort of work I did […] There’s money in shit.</p>
</blockquote>
<h2>Better jobs – not just more jobs</h2>
<p>At the start of the pandemic, the nation’s leaders talked about “building back better”. </p>
<p>For those living on the margins of our workforce and those made redundant through processes beyond their control, “building back better” means finding ways to create better – not just more – jobs.</p>
<p>Australian workers want security, decent conditions and job satisfaction, not a choice between one “shit” workplace and another.</p>
<p>Most of all, they want work they can build their lives around. If we don’t listen to the voices of those living on the fringe, the problems we know all too well today will haunt our communities into the future.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/australias-choice-pay-for-a-car-industry-or-live-with-the-consequences-8305">Australia's choice: pay for a car industry, or live with the consequences</a>
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<img src="https://counter.theconversation.com/content/180884/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This story is part of The Conversation's Breaking the Cycle series, which is about escaping cycles of disadvantage. It is supported by a philanthropic grant from the Paul Ramsay Foundation.</span></em></p><p class="fine-print"><em><span>Andrew Beer receives funding from Australian Research Council. </span></em></p>Our interviews with ex-automotive workers reveal how economic change interrupts lives, casting people into new worlds of precarious work and long, indefinite journeys in search of security.Helen Dinmore, Research Fellow, University of South AustraliaAndrew Beer, Executive Dean, UniSA Business, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1734632021-12-10T16:32:25Z2021-12-10T16:32:25ZWhy Nissan is probably the most serious threat to Tesla out of the traditional automakers<figure><img src="https://images.theconversation.com/files/436943/original/file-20211210-68670-ve1moz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Getting into gear</span> <span class="attribution"><a class="source" href="https://www.alamy.com/ukraine-kyiv-20-april-2021-blue-nissan-leaf-car-moving-on-the-street-editorial-image425031447.html?pv=1&stamp=2&imageid=177179B2-A2DF-49A9-992E-E97F63E55AB1&p=184237&n=0&orientation=0&pn=1&searchtype=0&IsFromSearch=1&srch=foo%3dbar%26st%3d0%26pn%3d1%26ps%3d100%26sortby%3d2%26resultview%3dsortbyPopular%26npgs%3d0%26qt%3dnissan%2520leaf%25202021%26qt_raw%3dnissan%2520leaf%25202021%26lic%3d3%26mr%3d0%26pr%3d0%26ot%3d0%26creative%3d%26ag%3d0%26hc%3d0%26pc%3d%26blackwhite%3d%26cutout%3d%26tbar%3d1%26et%3d0x000000000000000000000%26vp%3d0%26loc%3d0%26imgt%3d0%26dtfr%3d%26dtto%3d%26size%3d0xFF%26archive%3d1%26groupid%3d%26pseudoid%3d196110%26a%3d%26cdid%3d%26cdsrt%3d%26name%3d%26qn%3d%26apalib%3d%26apalic%3d%26lightbox%3d%26gname%3d%26gtype%3d%26xstx%3d0%26simid%3d%26saveQry%3d%26editorial%3d%26nu%3d%26t%3d%26edoptin%3d%26customgeoip%3dGB%26cap%3d1%26cbstore%3d1%26vd%3d0%26lb%3d%26fi%3d2%26edrf%3d0%26ispremium%3d1%26flip%3d0%26pl%3d">iurii Vlasenko</a></span></figcaption></figure><p>Nissan <a href="https://www.thetimes.co.uk/article/nissan-to-invest-billions-in-sunderland-plant-to-drive-electric-car-revolution-j70j95fmn">recently announced</a> a new £13 billion investment to help transition its business to being focused around electric vehicles (EVs). The investment is centred around its Sunderland plant in the north east of England, which already makes the popular Nissan Leaf, and a plan to build 23 new electric models by 2030. </p>
<p>But Nissan, like most traditional automakers, has a long way to go if it wants to catch Tesla. Elon Musk’s company <a href="https://autobala.com/these-are-the-top-10-best-selling-evs-in-the-world/220082/">is easily</a> the biggest seller of EVs in the world, with the Model 3 and Model Y shifting around <a href="https://ir.tesla.com/press-release/tesla-q3-2021-vehicle-production-deliveries">230,000 vehicles</a> per quarter between them worldwide. China’s SAIC is in second place thanks to its Wuling Hingguang Mini, which is the best selling EV in China. After that come Volkswagen, BYD and Hyundai. </p>
<p>So why are many of the traditional players that have built their businesses on internal combustion engines so far behind Musk, and can Nissan buck the trend?</p>
<h2>Why some have struggled</h2>
<p>Tesla created the first serial production EV with lithium-ion batteries in 2008 with the launch of the Roadster sports car. It has gone on to evolve a suite of vehicles whose range, performance and efficiency are arguably the best in the business – as reflected by <a href="https://www.bbc.co.uk/news/business-58993848">the company’s impressive</a> growth and profitability.</p>
<p>It makes sense that if you have been making EVs for the last decade, you’re probably more successful at making them now. You will have vastly more data in terms of how drivers use your vehicles, what goes wrong with them, and how to best manage suppliers of motors and batteries. </p>
<p>Nissan has certainly served its time, having debuted the Leaf in 2011, which is one of the best selling EVs of all time, having sold <a href="https://insideevs.com/news/443096/500000th-nissan-leaf-produced-sunderland-uk/">half a million</a> units over a decade. But if there has been a lesson in this sector, it’s that being successful at making vehicles with internal combustion engines does not guarantee success at making EVs. </p>
<p>An example is General Motors (GM). GM was there all the way back in the late 1990s with its ground-breaking EV1. These little cars, loved by their owners, showed how an all-electric future could look. But GM went on to crush the EV1s en-masse, saying <a href="https://www.nextpit.com/tbt-general-motors-ev1-controversy-and-crushed-innovation">they were</a> insufficiently popular, though conspiracy theorists have questioned whether it was ever serious about taking them to mass market. In the process, EV1s became the star of their <a href="https://www.imdb.com/title/tt0489037/">own documentary</a>. </p>
<p>GM tried again to crack EVs with its Volt in 2010, which was also popular until being killed in 2018 (the demise was blamed on an ageing production facility). It also launched the Bolt in 2017, which was designed to be a relatively cheap, long range EV. But while it achieves this, it has been plagued with battery issues. The knowledge that Bolt packs can catch fire has become so pervasive that car parks in the US <a href="https://insideevs.com/news/543282/parking-lots-ban-chevy-bolts/">have reportedly</a> been banning them from entering. </p>
<p><a href="https://www.electrive.com/2021/09/21/gm-declares-bolt-battery-problems-solved/">GM says</a> it now has a solution, and has recalled tens of thousands of Bolts to have their battery packs replaced. But as a result, production of new Bolts <a href="https://techcrunch.com/2021/12/02/gm-delays-production-of-new-chevy-bolt-evs-until-end-of-january/">is currently suspended</a> until late January. GM also promises some 20 new EV models by 2023, but recently came in <a href="https://electrek.co/2021/11/18/gm-promised-20-new-evs-by-2023-they-brought-zero-to-the-la-auto-show/">for criticism</a> after displaying no EVs at the 2021 LA Auto Show (whose theme was electrification). Given that President Biden <a href="https://www.bloomberg.com/news/articles/2021-11-24/biden-s-praise-for-gm-overlooks-tesla-s-actual-ev-leadership-kwdh01el">recently credited GM</a> with leading the industry in EV manufacture, this surely raises eyebrows. </p>
<p>Toyota was also a key player in moving the industry to greener vehicles with its hybrid cars of the late 1990s, but is now also playing catch up. It has only just, in December 2021, released its first volume production EV, <a href="https://www.toyota.co.uk/electric/bZ">the bZ</a>, after going much further than others with developing hydrogen-powered vehicles. Toyota’s hydrogen-powered Mirai failed to gain market share in the way that EVs with batteries have, <a href="https://newsroom.toyota.eu/toyotas-first-half-year-sales-growth-maintains-record-market-66-share/">selling just 316</a> in Europe in the first half of 2021. Toyota is <a href="https://electrek.co/2021/12/02/toyota-partners-byd-affordable-electric-car/">reportedly also</a> teaming up with China’s BYD to launch a US$30,000 EV in 2022. </p>
<p>Meanwhile, Volkswagen is the legacy automaker seen as most likely to catch up with Tesla’s EV production rate – <a href="https://www.ft.com/content/7e32dfb1-2282-40fa-9b10-181c01272ba3">potentially by 2024</a>. The German giant <a href="https://www.ft.com/content/398513ce-fc3e-4901-9670-382151acbb9c">is spending</a> some €35 billion (£29 billion) on the sector. But Volkswagen acknowledges that it takes them three times as long as Tesla to make its flagship EVs, making the gap in capabilities painfully apparent. It aims to narrow the gap to double in 2022. </p>
<h2>Nissan’s advantage</h2>
<p>If we have learnt anything from Tesla and also <a href="https://theconversation.com/china-is-on-course-to-build-the-best-cars-in-the-world-167661">Chinese EV entrants</a> such as NIO, BYD and XPeng, it’s that bespoke electric chassis make better electric cars. For example, Tesla’s Model 3 rival, the Polestar 2, was originally meant to be a petrol <a href="https://www.motorauthority.com/news/1122902_6-things-you-need-to-know-about-polestar">Volvo S40</a>, but adapting an internal combustion engine vehicle to be electric just doesn’t work as well. You end up with cars with <a href="https://cleantechnica.com/2021/12/08/what-is-the-key-difference-between-the-polestar-2-and-the-tesla-model-3-efficiency/">less range on the battery</a> and often less space inside. </p>
<p>Fortunately for Nissan and its alliance partner Renault, they already have such a bespoke EV platform. Known as <a href="https://www.renaultgroup.com/en/news-on-air/news/the-cmf-ev-platform-advances-the-new-generation-of-electric-vehicles/">CMF-EV</a>, it allows the group to share a number of components across different EVs and maximise the efficiency of manufacturing them.</p>
<p>From observing Tesla, the second vital factor to producing EVs at scale (and profitably) is to make your battery packs as <a href="https://electrek.co/2017/05/08/tesla-battery-director-gigafactory-supply-chain/">close to</a> the final assembly factory as possible, reducing transport cost and time. Again, Nissan ticks this box. Its Sunderland plant, which not only produces the Leaf but will also produce its successor, is situated very close to the <a href="https://www.theguardian.com/business/2021/oct/25/uk-battery-gigafactory-electric-car-sunderland-envision-nissan">Envision battery “gigafactory”</a> that supplies it. Chinese-owned Envision plans to produce 38GWh of batteries a year – enough to power 500,000 new cars, which would put Nissan on par with Tesla’s factories in the US and China.</p>
<p>So with its years of EV knowledge, efficient battery supply chains and bespoke EV platform, Nissan could very well be the legacy automaker that ends up being able to compete with the new kids on the block. But if it fails to capitalise on its advantages to reinvent itself as an EV-first company, we have seen from numerous other companies that being an early runner is certainly not enough on its own.</p><img src="https://counter.theconversation.com/content/173463/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Stacey receives funding from ERDF. </span></em></p>Elon Musk’s dedicated EV maker is miles ahead, but Nissan has several advantages over its legacy rivals.Tom Stacey, Senior Lecturer in Operations and Supply Chain Management, Anglia Ruskin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1617312021-06-15T12:26:10Z2021-06-15T12:26:10ZWith Ford’s electric F-150 pickup, the EV transition shifts into high gear<figure><img src="https://images.theconversation.com/files/405774/original/file-20210610-15-1vxmnj3.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7380%2C4142&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ford calls its all-electric F-150 Lightning "the truck of the future."</span> <span class="attribution"><a class="source" href="https://media.ford.com/content/fordmedia/fna/us/en/news/2021/05/19/all-electric-ford-f-150-lightning.html">Ford</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>When President Joe Biden took Ford’s electric F-150 Lightning pickup for a <a href="https://www.freep.com/story/money/cars/ford/2021/05/19/biden-ford-f-150-lightning-track-dearborn/5152825001/">test drive</a> in Dearborn, Michigan, in May 2021, the event was more than a White House photo op. It marked a new phase in an accelerating shift from gas-powered cars and trucks to electric vehicles, or EVs. </p>
<p>In recent months, global auto manufacturers have released plans to <a href="https://www.bbc.com/news/business-40505671">electrify their vehicle fleets by 2030 or 2035</a>, setting up a race to see who can most quickly shift entirely away from producing vehicles <a href="https://www.caranddriver.com/news/g35562831/ev-plans-automakers-timeline/">powered by gasoline</a>. </p>
<p>Like Biden, former President Donald Trump <a href="https://www.nbcnews.com/business/autos/trump-biden-both-boast-about-creating-auto-industry-jobs-differ-n1240000">promised to create jobs in the auto industry</a>. But Trump sought to do it by perpetuating a fossil-fueled system that is the <a href="https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks">largest source of U.S. greenhouse gas emissions</a>. Automakers benefited from some Trump policies in the short term, including <a href="https://www.reuters.com/article/us-usa-autos-emissions/trump-finalizes-rollback-of-obama-era-vehicle-fuel-efficiency-standards-idUSKBN21I25S">the rollback of fuel economy standards</a>. Now, however, they seem to be embracing the challenge of competing globally in a climate-constrained future. </p>
<p>As an <a href="https://bcb47.wixsite.com/bcb4">environmental historian</a>, I see this moment as pivotal because unlike EVs from manufacturers like Toyota or Tesla, the electric F-150 does not entirely rely on green consumer choice. It places the electric vehicle transition squarely in the hands of mass-market consumers who don’t choose cars based on environmental considerations, and who are buying far more light trucks – pickups, sport utility vehicles and minivans – than cars today.</p>
<p><iframe id="GT7dC" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/GT7dC/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>The century of gasoline</h2>
<p>America’s 20th-century affair with gas-powered cars was not inevitable. From 1890 through about 1915, vehicles powered by <a href="https://theconversation.com/energy-transitions-are-nothing-new-but-the-one-underway-is-unprecedented-and-urgent-104821">horses, coal, electric batteries and gasoline</a> jockeyed for position on U.S. streets. And electric-powered vehicles had some clear advantages. Many consumers feared that gas-powered cars were prone to explode, and there was no nationwide fueling infrastructure. </p>
<p>But World War I combined with a moment of technological convergence that favored the internal combustion engine. Massive new petroleum discoveries in Texas, and later in the Middle East, produced a glut of oil, just as electric lighting replaced kerosene lamps. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Soldiers assess a plank bridge over a gully." src="https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=471&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=471&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=471&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=592&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=592&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405777/original/file-20210610-11008-dxhvtk.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=592&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In a photo captioned ‘Another fine example of modern engineering,’ members of the 1919 Transcontinental Motor Convoy decide whether a rickety bridge will support their vehicles.</span>
<span class="attribution"><a class="source" href="https://www.eisenhowerlibrary.gov/research/online-documents/1919-transcontinental-motor-convoy">Eisenhower Presidential Library</a></span>
</figcaption>
</figure>
<p>In 1919, Capt. Dwight D. Eisenhower <a href="https://www.eisenhowerlibrary.gov/research/online-documents/1919-transcontinental-motor-convoy">joined a small convoy</a> that crossed the U.S. in gas-powered military vehicles to test Army mobility. It took them 62 days – clear evidence that <a href="https://theconversation.com/how-world-war-i-ushered-in-the-century-of-oil-74585">modern vehicles required better roads</a>. </p>
<p>By World War II, gasoline-powered personal transportation and road-building to support it had become planks of American economic growth. In the 1950s, President Eisenhower furthered that commitment with the construction of the <a href="https://www.fhwa.dot.gov/interstate/history.cfm">most extensive system of highways</a> the world had ever seen.</p>
<h2>Car culture and the pickup truck</h2>
<p>Americans’ particular contribution to 20th-century transportation patterns was making automobiles part of a competitive consumer marketplace. Starting in the 1950s, a complex economy of easy financing and advertising drove consumers to buy new and buy often. Every aspect of a car was a potential marketing point, from <a href="https://www.motorcities.org/story-of-the-week/2020/the-1958-buicks-were-fins-and-chrome-models">chrome styling</a> to <a href="https://www.hotrod.com/articles/hemi-engines-ford-chevy-oldsmobile-ardun-big-small-block/">hemi-powered hot rod engines</a> and more modern options like <a href="https://www.consumerreports.org/car-maintenance/how-to-add-remote-start-to-your-car/">remote starting</a> and <a href="https://www.motorbiscuit.com/5-family-friendly-suvs-with-fab-rear-seat-entertainment-systems/">rear-seat theaters</a>.</p>
<p>Another uniquely American marketing achievement was framing trucks – utilitarian vehicles designed for work – as rides that could also serve consumers. Advertisers used themes of <a href="https://www.youtube.com/watch?v=LdP-xTIipXc">grit and power</a> to sell trucks, depicted in the muddy expanses of western landscapes, to suburban drivers. </p>
<p>Federal fuel efficiency standards enacted in 1978 unintentionally reinforced the idea of <a href="https://theconversation.com/how-the-federal-government-came-to-control-your-cars-fuel-economy-94467">trucks as a consumer product</a>. These <a href="https://www.transportation.gov/mission/sustainability/corporate-average-fuel-economy-cafe-standards">Corporate Average Fuel Economy standards</a> classified pickups as “light trucks,” along with sport utility vehicles and minivans, and set separate fuel efficiency standards for them. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Biden at the wheel of an electric F-150." src="https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/405779/original/file-20210610-28-nt9fmq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">President Joe Biden, a self-described ‘car guy,’ drives a test model F-150 Lightning truck at Ford’s Dearborn Development Center on May 18, 2021.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Biden/f6ff6bb8cf8e4da09cd19c60c109705a/photo">AP Photo/Evan Vucci</a></span>
</figcaption>
</figure>
<p>By the year 2000, pickup trucks were U.S. automakers’ <a href="https://www.manufacturing.net/automotive/news/21415625/gm-profit-surges-on-truck-sales">most profitable models</a>, and manufacturers were looking for ways to make these vehicles <a href="https://www.statista.com/statistics/199980/us-truck-sales-since-1951/">more powerful and luxurious</a>. Ford’s F-150 became the <a href="https://theconversation.com/how-the-ford-f-150-became-king-of-cars-96255">best-selling vehicle in the nation</a> in 1982 and held that spot for the next four decades.</p>
<h2>Lightning in a bottle?</h2>
<p>Modern hybrid and electric vehicles emerged in the 1990s, driven by Japanese manufacturers’ innovations. Early versions – the <a href="https://en.wikipedia.org/wiki/Honda_Insight">Honda Insight</a> and <a href="https://en.wikipedia.org/wiki/Toyota_Prius">Toyota Prius</a>, and later the <a href="https://en.wikipedia.org/wiki/Nissan_Leaf">Nissan Leaf</a> – allowed consumers to choose automobiles that burned much less gasoline, or none in the case of the Leaf. Options like these had been unavailable during the gas crises of the 1970s. </p>
<p>While the Prius, which was the first mass-produced hybrid electric vehicle, will likely be remembered as transformational in the electric transition, <a href="https://www.tesla.com/">Tesla</a> was the first manufacturer to take the possibility of an alternative vehicle and combine it with style and prestige. Tesla brought bling and sex appeal to early EVs, many of which had functioned more like their golf-cart cousins.</p>
<p>Today’s hybrids and EVs aren’t just little sedans. Manufacturers including Honda, Toyota and Ford offer popular hybrid SUVs, and all-electric versions are entering the market. And now the electric F-150 breaks new ground. It’s targeted at small businesses and corporate customers, particularly construction and mining companies, which purchase many trucks. These buyers are the auto industry’s bread and butter.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/3-YOvl8ygeg?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Car-buying guide Edmunds suggests thinking of the electric F-150 as “a battery you can drive.”</span></figcaption>
</figure>
<p>To satisfy their needs, the Lightning has a battery large enough to travel <a href="https://www.autoweek.com/news/green-cars/g36492134/ford-f-150-lightning-things-to-know/">more than 200 miles per charge</a> (320 kilometers), and paying a bit more gets customers over 300 miles (480 kilometers). An <a href="https://www.ford.com/trucks/f150/f150-lightning/2022/">electric motor on each axle</a> provides faster acceleration than gas-powered models and enough torque to tow 10,000 pounds (4,535 kilograms). </p>
<p>In a unique feature, the truck’s battery pack can be configured to produce 9.6 kilowatts of power – enough to <a href="https://www.autoweek.com/news/green-cars/g36492134/ford-f-150-lightning-things-to-know/">run an average home for three days</a> during an outage. The Lightning also has 11 outlets that enable it to double as a worksite power station for charging tools and gear. </p>
<p>The base model has a <a href="https://www.wired.com/story/most-radical-thing-about-ford-f-150-lightning-cost/">sticker price just under US$40,000</a>, and the Lightning qualifies for a <a href="https://www.cars.com/articles/which-electric-cars-are-still-eligible-for-the-7500-federal-tax-credit-429824/">$7,500 federal tax break</a> for electric vehicle purchases that the Trump administration <a href="https://www.reuters.com/article/us-usa-trump-budget-autonomous/trump-budget-proposes-ending-electric-vehicle-tax-credit-idUSKBN1QS27Q">tried unsuccessfully to end</a>. Combined, those factors can make it <a href="https://www.motor1.com/news/508418/ford-f150-lightning-price-cheapest/">cheaper to buy than its gas-powered sibling</a>.</p>
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<p>Ford’s 1908 Model T may look like ancient history by comparison, but experts chose it as the <a href="https://europe.autonews.com/article/20000103/ANE/1030709/model-t-beats-mini-to-the-car-of-the-century-award">car of the 20th century</a> because it put gas-powered cars within reach for mass consumers. Judging from early consumer buzz, the electric F-150 could play a similar role for EVs today. Ford received <a href="https://www.nytimes.com/2021/06/09/business/ford-jim-farley-electric-vehicles.html">100,000 preorders in three weeks</a> for the new model, which is scheduled to start rolling off the assembly line in spring 2022. </p>
<p>As one analyst put it, “If this truck is successful, it means <a href="https://www.nytimes.com/2021/05/18/todayspaper/quotation-of-the-day-top-selling-us-vehicle-could-be-make-or-break-in-bid-to-cut-emissions.html">you can sell an electric version of any vehicle</a>. It could be the domino that tumbles over the rest of the market for EVs.”</p><img src="https://counter.theconversation.com/content/161731/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brian C. Black does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ford’s electric F-150 pickup won’t roll off assembly lines until early 2022, but the company has received thousands of preorders already for a vehicle aimed at the mass market, not eco-buyers.Brian C. Black, Distinguished Professor of History and Environmental Studies, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1351702020-05-22T12:18:59Z2020-05-22T12:18:59ZWhy Ford, Chanel and other companies pitch in during a crisis – without the government ordering them to<figure><img src="https://images.theconversation.com/files/336859/original/file-20200521-102647-gbww8q.jpg?ixlib=rb-1.1.0&rect=50%2C179%2C3690%2C2311&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ford employees assemble ventilators. </span> <span class="attribution"><span class="source">AP Photo/Carlos Osorio</span></span></figcaption></figure><p><a href="https://www.who.int/news-room/detail/03-03-2020-shortage-of-personal-protective-equipment-endangering-health-workers-worldwide">Severe shortages of critical medical supplies</a> have prompted governments to compel private companies to fill the gap. In the U.S., President Donald Trump invoked rarely used powers to force <a href="https://www.nytimes.com/2020/03/30/business/gm-ventilators-coronavirus-trump.html">General Motors</a> to make ventilators, while the leaders of <a href="https://www.ft.com/content/42f636be-751d-4ebf-9b55-bf313014769f">France</a>, the <a href="https://www.autocar.co.uk/car-news/industry/government-ask-uk-manufacturers-build-ventilators">U.K.</a> and <a href="https://www.japantimes.co.jp/news/2020/02/28/national/mask-makers-distance-abes-coronavirus-guarantee/#.XsbHpBNKgnc">Japan</a> have put pressure on companies to make more medical supplies. </p>
<p>But, judging by how many non-medical companies have voluntarily stepped up to shift their manufacturing might to produce health care supplies – including GM rival <a href="https://www.businessinsider.com/ford-making-ventilators-to-fight-coronavirus-how-many-when-ge-2020-3">Ford</a> – it seems hardly necessary. </p>
<p>Fashion brands such as <a href="https://www.ft.com/content/e9c2bae4-6909-11ea-800d-da70cff6e4d3">LVMH</a>, <a href="https://www.reuters.com/article/us-health-coronavirus-france-chanel/chanel-turns-its-workshops-to-making-face-masks-as-coronavirus-spreads-idUSKBN21G0JP">Chanel</a> and <a href="https://wwd.com/beauty-industry-news/beauty-features/loreal-launches-sweeping-program-to-combat-covid-1203539626/">L’Oreal</a> <a href="https://www.businessinsider.com/dior-reopens-baby-dior-factory-to-start-making-face-masks-2020-4">are transforming their factories</a> to mass produce face masks. Spirit and beer makers <a href="https://www.nasdaq.com/articles/anheuser-busch-starts-making-hand-sanitizer-alongside-its-beer-2020-03-23">Anheuser-Busch</a>, <a href="https://www.adweek.com/creativity/diageo-and-anheuser-busch-join-alcohol-brands-pivoting-to-free-sanitizer/">Diageo</a>, <a href="https://www.businessinsider.com/coors-beer-company-makes-hand-sanitizer-amid-coronavirus-pandemic-2020-3">Molson Coors</a> and <a href="https://www.bevindustry.com/articles/92934-bacardi-launches-production-of-hand-sanitizer-at-puerto-rico-distillery">Bacardi</a> are shifting some of their production and distribution towards hand sanitizer. And automakers <a href="https://www.bloomberg.com/news/articles/2020-03-27/toyota-shifts-factories-to-face-shields-will-help-device-makers">Toyota</a>, <a href="https://www.reuters.com/article/us-health-coronavirus-volkswagen-ventila/volkswagen-tests-ventilator-output-as-carmakers-join-coronavirus-fight-idUSKBN2172VH">Volkswagen</a> and <a href="https://www.reuters.com/article/us-health-coranavirus-fiat-chrysler-vent/fiat-chrysler-starts-ventilator-component-output-in-italy-idUSKBN21L1FA">Fiat Chrysler</a> are leveraging their 3D printing capabilities to produce face shields and are <a href="https://www.msn.com/en-us/money/companies/ford-partners-with-3m-and-ge-healthcare-to-make-respirators-ventilators-to-fight-coronavirus/ar-BB11DicJ">partnering</a> with other companies to make ventilators.</p>
<p>And that’s just three industries. In all, hundreds of companies across the globe have committed money, supplies and know-how to help with the COVID-19 response, according to the U.S. Chamber of Commerce Foundation’s <a href="https://www.uschamberfoundation.org/aid-event/corporate-aid-tracker-covid-19-business-action">corporate aid tracker</a>. </p>
<p>Why are these companies being so generous? </p>
<p>As <a href="https://kelley.iu.edu/faculty-research/faculty-directory/profile.cshtml?id=EMAFIKRE">scholars</a> of <a href="https://scholar.google.com/citations?user=DFjwsYUAAAAJ&hl=en&oi=ao">corporate social responsibility</a>, we believe altruism certainly plays a role for many of them, but it’s not the only motivator. Research on company behavior points to two others: <a href="https://www.ingentaconnect.com/content/mcb/168/2015/00000020/00000002/art00003">bolstering reputation</a> and <a href="https://www.doi.org/10.1086/467466?mobileUi=0&">avoiding regulation</a>. </p>
<h2>Burnishing the brand</h2>
<p>In normal times, companies often undertake socially responsible initiatives to <a href="https://www.inc.com/maureen-kline/how-to-manage-your-companys-reputation.html">enhance their brand</a> and build a stronger relationship with consumers, investors and employees in order to drive profits. </p>
<p>What’s a socially responsible initiative? <a href="https://www.doi.org/10.1002/csr.132">There are many definitions</a>, but the way scholars like us think of it is it means taking voluntary action that is not prescribed by law or not necessary to comply with a regulation. </p>
<p>Reputation Institute, a management consultancy, found that people’s willingness to buy, recommend, work for or invest in a company <a href="https://www.forbes.com/sites/jacquelynsmith/2012/12/10/the-companies-with-the-best-csr-reputations/#49e60e384404">is significantly influenced</a> by their perceptions of its corporate social responsibility practices. So doing something that benefits people in their community can lead to <a href="http://dx.doi.org/10.2139/ssrn.2062429">higher sales</a>, <a href="https://philpapers.org/rec/SHIEDS">increase the company’s valuation</a> and <a href="https://doi.org/10.1108/14720701011085544">keep good employees around longer</a>. </p>
<p>But these are anything but normal times. Rather, it is a global crisis that has created a need for an <a href="https://unfoundation.org/blog/post/weekly-update-all-hands-on-deck-against-covid-19/">all hands on deck</a> response from everyone, including corporate America. In other words, <a href="https://www.forbes.com/sites/pamdanziger/2017/10/20/fire-floods-hurricanes-how-and-why-corporations-must-help/#10231fb67388">just like during natural disasters</a>, people expect companies to do their part – and not appearing to do so could damage a brand’s reputation. A <a href="https://www.conecomm.com/news-blog/2013-global-csr-study-release">2013 survey of citizens of 10 countries</a> that included the U.S., France, Brazil and China found that 9 in 10 people said they would boycott a company they believed behaved irresponsibly. </p>
<p>And this is especially true of industries that are more directly connected to the crisis. In the current situation, for example, there’s been a shortage of hand sanitizer, which fashion companies that make perfume <a href="https://tanksgoodnews.com/2020/03/17/lvmh-hand-sanitizer/">can easily produce</a>. And manufacturers are, as we’ve seen, <a href="https://www.wsj.com/articles/trump-lashes-out-at-general-motors-over-ventilators-11585327749">capable of repurposing</a> their assembly lines to build ventilators. </p>
<p>Not doing its part, in this environment, could result in a long-term hit to a company’s reputation. </p>
<h2>Eluding onerous regulations</h2>
<p>The other motivator is preempting government regulation, which becomes a greater risk during and after a crisis. </p>
<p>For instance, we saw <a href="https://corpgov.law.harvard.edu/2010/11/20/the-financial-panic-of-2008-and-financial-regulatory-reform/">more financial regulation</a> after Wall Street’s behavior sparked the Great Recession, and lawmakers from districts that suffer from hurricanes <a href="https://www.nber.org/papers/w25835">tend to support bills</a> promoting more environmental regulation. </p>
<p>So companies will often pursue voluntary self-regulation and take other proactive measures during a crisis in hopes of forestalling a more onerous government reaction. A recent <a href="https://web.stanford.edu/%7Etomz/pubs/MMT-APSR-2019.pdf">Stanford study</a> found that even a modest effort can work to effectively preempt regulation. </p>
<p>Furthermore, this allows companies to set the terms and control the agenda, <a href="https://store.hbr.org/product/profiting-from-environmental-regulatory-uncertainty-integrated-strategies-for-competitive-advantage/CMR498">allowing them to choose actions</a> that are in the interest of society, profitable, and avoid the costs and pains of complying with new regulations. </p>
<p>At the moment, companies may be stepping up to avoid a more draconian response from the government, such as when Trump invoked the <a href="https://www.washingtonpost.com/politics/2020/03/19/defense-production-act-trump-coronavirus/">Defense Production Act</a> against GM, which allows him to control and direct corporate resources towards production of critical equipment. This also gives the federal government priority in contracting, limiting a company’s ability to find the most efficient or profitable contracts.</p>
<p>So next time you read about a company doing something for the greater good, applaud the effort. But you could consider its other strategic motivations as well. </p>
<p>[<em>Insight, in your inbox each day.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=insight">You can get it with The Conversation’s email newsletter</a>.]</p><img src="https://counter.theconversation.com/content/135170/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ford is assembling ventilators, LVMH is making hand sanitizer, and Chanel is making masks. Here’s why these and dozens of other companies are doing it.Elham Mafi-Kreft, Clinical Associate Professor of Business Economics, Indiana UniversitySteven Kreft, Clinical Professor of Business Economics and Public Policy, Indiana UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1008612018-08-02T12:03:34Z2018-08-02T12:03:34ZHow Durex can recover from its product recall<figure><img src="https://images.theconversation.com/files/230425/original/file-20180802-136664-bw3i4u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/madrid-spain-may-24-view-boxes-425808787?src=RuJkjgHR-uYcAY-XQQCtpg-1-47">Shutterstock/enriscapes</a></span></figcaption></figure><p>The condom maker Durex is in brand crisis mode after it was forced to issue a recall of some of its products over <a href="https://www.bbc.co.uk/news/uk-45014118">fears they could split</a>. Durex is not the first company to suffer from high profile product recalls. There is no doubt that such episodes can cause lasting damage to a brand’s reputation but the fact is recalls happen. Other global brands which have gone though much bigger issues have shown that if they are dealt with quickly and appropriately, a company can survive and prosper.</p>
<p>The Reckitt Benckiser Group plc (RBG) (the manufacturer of Durex condoms) is the latest business to fall foul of product deficiencies. It has <a href="https://www.durex.co.uk/pages/product-recall">recalled ten batches of Durex Real Feel condoms</a> and Durex Latex Free condoms due to a “risk that the condom might tear or leak, reducing its protection from sexually transmitted diseases and pregnancy”. Durex confirmed that “a limited number” had not passed its “stringent shelf life durability tests” and <a href="https://www.durex.co.uk/pages/product-recall">apologised</a>.</p>
<p>A product recall can mean life or death to a business. Over the next few days, RBG will have to strategically coordinate how it manages the product recall to reduce any lasting damage to its reputation, brand and product value. </p>
<h2>High profile brand issues</h2>
<p>Product recalls are not new and occur in every sector where there is a threat to safety or life due to defective parts, unreliability of materials or quality assurance issues. </p>
<p><a href="https://www.investopedia.com/articles/investing/010815/how-do-recalls-affect-company.asp">Research has shown</a> that small companies can flounder, curl up and die with the onslaught of dealing with product recalls, customers, claims, returns and repairs. Their cash flow and infrastructure cannot cope. It becomes all too much and bankruptcy looms. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=628&fit=crop&dpr=1 600w, https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=628&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=628&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=789&fit=crop&dpr=1 754w, https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=789&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/230384/original/file-20180802-136667-1o5lbme.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=789&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The world’s largest toy manufacturer has had to recall batches of toys over the years.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/circa-march-2014-berlin-logo-brand-187664108?src=Q2Lm0gUYN6hRDe9Ls0_oJw-1-28">Shutterstock/360b</a></span>
</figcaption>
</figure>
<p>For example, the recall of 1,000 toys cost small business owner Cynthia Thomas US$15,000 and nearly her business <a href="https://money.cnn.com/2010/03/19/smallbusiness/product_recalls/index.htm">due to a drop in customers and sales</a>. Larger companies cope much better as they have deeper pockets, additional, non-affected assets and an army of resources at their disposal. This is perhaps why the world’s biggest toymaker, Mattel, has coped better with a number of major recalls of Chinese-made products after <a href="http://news.bbc.co.uk/1/hi/business/6979151.stm">lead was found in the paint of some toys</a>.</p>
<p>And Durex as a brand can take comfort in the fact that the impact of product recalls is felt to be more short term than long. Companies such as Toyota and Volkswagen have demonstrated that you can face <a href="https://money.cnn.com/2012/10/10/investing/toyota-recall/index.html">huge catastrophes</a>, the wrath of your customers and the sector, but still regain a strong place within the market. </p>
<p>In 2012, Toyota had 7.43m cars recalled globally while Volkswagen had to recall <a href="https://www.reuters.com/article/us-volkswagen-emissions-plan/volkswagen-to-refit-cars-affected-by-emissions-scandal-idUSKCN0RT0OL20150929">11m vehicles</a> after it admitted cheating on US emissions tests. Both companies have managed to stay stable in the market despite the fact that their reputation has been dented on more than one occasion. </p>
<p>The public will always acknowledge that defective products exist, regardless of stringent operational systems, checks and balances. So what should RBG do to reduce the level of condemnation that it now faces? </p>
<h2>Apologise quickly and take action</h2>
<p>A company in this situation needs to act fast, taking immediate responsibility for its actions and deliver action, not rhetoric. An apology goes a long way to fixing the problem. Durex has made this important first step and <a href="https://www.durex.co.uk/pages/product-recall">said sorry to its customers</a> and offered refunds. </p>
<p>The refund of product costs to customers is an expected response but the business may need to do more in order to avoid more damning repercussions – such as loss of sales, sponsorship and affiliations. </p>
<p>So an apology alone may not be enough. RBG will need to build up confidence in the brand through decisive action. One way to do this is to settle claims quickly. The business needs to ensure that it proactively seeks out failed products – as opposed to waiting for them to come out of the woodwork. Companies which voluntarily address this issue, as opposed to being forced to by their customers, are much <a href="https://www.emeraldinsight.com/doi/abs/10.1108/10610420910949004">more likely to retain them</a>. </p>
<p>An opposing view is that the need to act quickly may be seen as an admission of guilt and inflate <a href="http://journals.ama.org/doi/abs/10.1509/jmkg.73.6.214?code=amma-site">anxiety in the marketplace</a>. So RBG needs to tactfully handle all communications to present a positive image to the public. </p>
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<p>The Medicines and Healthcare products Regulatory Agency <a href="https://www.gov.uk/government/news/batches-of-durex-condoms-recalled-people-urged-to-check-their-batch-numbers">has stated</a> that pharmaceutical wholesalers will collect damaged stock immediately from pharmacies. But customers are being asked to act responsibly and return products from their point of purchase. This can lead to a reduced number of returns as there is no collection mechanism and the customer has to make all the effort to return the product. The lure of refunded money may not be enough to make a return happen.</p>
<p>To address this, RBG could arrange for drop off points for the customers (convenient to them) or arrange for local collections, piggybacking on other delivery networks, like couriers, pharmaceutical wholesalers and the Royal Mail.</p>
<h2>Looking ahead</h2>
<p>In the future, RBG has to make its customers believe in the quality and safety of its product. For example, Rolls Royce was very transparent in its need to recall products in 2015 – even when it affected <a href="https://www.ft.com/content/347f7b7e-87d9-11e5-9f8c-a8d619fa707c">just one car</a>, a Rolls Royce Ghost which was recalled because of a problem with the side-impact airbags. In doing so, customers were reassured that quality and safety were at the forefront of the business. RBG needs to adopt the same stance with Durex and its other products. </p>
<p>Condoms are a very popular product. In the Rio Olympics 2016, it was reported that the event lasted 17 days, had 10,500 athletes, 33 venues, and <a href="https://www.theguardian.com/sport/shortcuts/2016/jul/18/rio-2016-42-condoms-per-athlete-olympic-village-sex">450,000 condoms</a>. The amount allocated was three times more than in the <a href="https://www.mirror.co.uk/lifestyle/sex-relationships/sex/london-2012-sex-mad-athletes-given-1148988">London Olympics in 2012</a>. As a product they provide a vital public health function and provide psychological and emotional support to people using them.</p>
<p>A good solid corporate reputation can withstand most business traumas. Companies in crisis have to work harder to be seen as a “good” business to buy from and trade with. RBG needs to think strategically, act responsibly and react quickly to stay in business and provide its products to the masses.</p><img src="https://counter.theconversation.com/content/100861/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Liz Breen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Major brands which suffer from high profile product recalls need to follow some basic rules to make sure they weather the storm.Liz Breen, Reader in Health Service Operations, University of BradfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/992672018-07-05T10:38:44Z2018-07-05T10:38:44ZWhy it doesn’t matter if a Harley is ‘made in America’<p>Harley-Davidson was one of the president’s favorite companies less than six months ago. Now it’s the latest business to feel his wrath. </p>
<p>That’s because on June 25, Harley-Davidson <a href="http://investor.harley-davidson.com/node/17401/html">announced</a> it will move some of its production overseas. The iconic American motorcycle brand said it was doing this to avoid retaliatory tariffs imposed by the European Union in response to U.S. import taxes. </p>
<p>“A Harley-Davidson should never be built in another country – never!” President Donald Trump <a href="https://twitter.com/realdonaldtrump/status/1011584315040419840">tweeted</a> “Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end.”</p>
<p>Back in February, things were very different. At a meeting with executives at the White House, Trump <a href="https://www.whitehouse.gov/briefings-statements/remarks-president-trump-meeting-harley-davidson-executives-union-representatives">praised</a> Harley-Davidson for being “a true American icon, one of the greats,” and thanked them “for building things in America.” </p>
<p>As an international relations expert who focuses on <a href="https://scholar.google.com/citations?user=vf1UpqAAAAAJ&hl=en&oi=ao">trade disputes</a>, Trump’s anger at Harley’s announcement is understandable. He wants to promote Harley-Davidson for his <a href="https://www.upi.com/Trump-puts-America-first-in-manufacturing-trade-speech/2081500317847/">“America First” agenda</a>. The goal of this approach is to protect and create American manufacturing jobs. With Harley taking the production of its EU-bound bikes abroad, this does not look like a success for Trump. </p>
<p>But this got me to thinking, in a world that depends on global supply chains, what makes a product truly “made in America”? Is a Harley really an all-American bike? Who even cares?</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=415&fit=crop&dpr=1 600w, https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=415&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=415&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=522&fit=crop&dpr=1 754w, https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=522&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/226054/original/file-20180703-116129-1keb60x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=522&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump and Vice President Mike Pence met with Harley-Davidson CEO Matthew Levatich in February.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump-100-100-Photos/6e55f7cf96a8455a9567e56961fd8497/10/0">AP Photo/Pablo Martinez Monsivais, file</a></span>
</figcaption>
</figure>
<h2>What ‘made in America’ means</h2>
<p>For consumers hoping to figure out if a product is made in the U.S., it’s trickier than you’d think.</p>
<p>Products like American soybeans or corn are pretty clear-cut: They are grown and harvested in the U.S. by American farmers, in states like North Dakota and Iowa. The only inputs are seeds, land, fertilizer and water – all of which are easily found in the U.S. </p>
<p>“American-made” clothing, on the other hand, becomes more ambiguous. Even when a garment is sewn in a factory in New York or Los Angeles, earning it its “Made in USA” tag, the fabric or thread may have been spun in Bangladesh or India with American-grown cotton. </p>
<p>The Federal Trade Commission has a <a href="https://www.ftc.gov/system/files/documents/plain-language/bus03-complying-made-usa-standard.pdf">40-page document</a> that thoroughly explains what makes an item “Made in USA.” Basically, to earn that designation, a product has to be “all or virtually all” made in a U.S. state or territory. Only automobiles, textiles, fur and wool must disclose their U.S. content at the point of sale. Other products may use the tag as long as they follow the guidelines. </p>
<h2>Foreign or domestic</h2>
<p>Let’s take a closer look at vehicles.</p>
<p>The parts that comprise “American-made” motorcycles and cars have been shuttled back and forth over North American borders ever since the <a href="https://www.history.com/this-day-in-history/nafta-signed-into-law">North American Free Trade Agreement</a> was signed in 1993. American auto manufacturers like Ford and Chevrolet <a href="https://www.autoblog.com/2010/10/06/is-your-car-really-american">depend</a> on parts from Mexico and the EU and often assemble their cars in Canada. </p>
<p>In 1994, Congress passed the <a href="https://www.nhtsa.gov/part-583-american-automobile-labeling-act-reports">American Automotive Labeling Act</a>, requiring automakers to reveal the share of the parts that came from the U.S. or Canada, the country of assembly, and the engine and transmission’s country of origin. The aim was to encourage more patriotic consumerism on the premise that Americans would buy more of a product if they knew it was produced domestically. </p>
<p>American University business professor Frank DuBois describes some of this data as misleading because it doesn’t break down what share of the parts came from the U.S. versus Canada. He created the <a href="http://kogodbusiness.com/auto-index/">2016 Kogod Made in America Auto Index</a> to track this and other information to come up with a more accurate indicator of how much of a car benefits the U.S. economy. His results reveal the fine line between foreign and domestic. </p>
<p>For instance, Japanese carmaker Toyota assembled its 2017 Camry in the U.S. with an American-made engine and transmission. Three-quarters of the parts came from either the U.S. or Canada, giving it a “total domestic content” score of 78.5 percent. Similarly, Tokyo-based Honda built its Accord in the U.S. with an American engine, Japanese transmission and 80 percent U.S. or Canadian parts, giving it a score of 81 percent. </p>
<p>General Motors’ Chevy Volt, on other hand, contains only 63 percent domestic content and half its parts are from outside the U.S. or Canada, even though its engine is American. The Ford Fusion is even lower: It has a U.K.-built engine, and only a quarter of its parts were made in the U.S. or Canada. </p>
<h2>A global bike</h2>
<p>As for Harley-Davidson motorcycles, they may be considered classic Americana, but the components of the bikes themselves come from many places outside the U.S., just like in the auto industry. </p>
<p>Harleys sold in the U.S. <a href="https://www.jsonline.com/story/money/2018/06/28/harley-davidsons-classic-americana-foreign-sourced-parts/741163002">are indeed assembled</a> in one of four plants located in Wisconsin, Missouri and Pennsylvania. But the brakes and clutch are imported from Italy, the engine pistons are made in Austria, the bike suspension comes from Japan, and other electronic components originate in Mexico and China.</p>
<p>While Harley-Davidson claims it attempts to use as many American parts as it can, the company is <a href="https://www.cycleworld.com/2013/11/12/where-is-it-made-2014-harley-davidson-street-750-and-street-500/">sometimes forced</a> to go abroad to find the right parts in terms of cost and comparable quality. </p>
<p>As for its <a href="https://www.nytimes.com/2018/06/25/business/harley-davidson-us-eu-tariffs.html">plan</a> to avoid the EU counter-sanctions, Harley plans to shift some production of bikes intended for European markets to facilities in other countries <a href="https://www.vox.com/policy-and-politics/2018/6/26/17506424/trump-tariffs-harley-davidson-thailand">such as Thailand</a>, where it’s building a new factory. </p>
<p>But that won’t actually change anything for American consumers, no matter what Trump says. In other words, Harleys that Americans buy after its plans go into effect will still be as American as they were a year ago. And all the profits Harley makes will continue to flow to the U.S. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=339&fit=crop&dpr=1 600w, https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=339&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=339&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=426&fit=crop&dpr=1 754w, https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=426&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/226056/original/file-20180703-116120-1vbwya3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=426&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Furniture-Revival/9e2874e6e1d34c2180c01282a8285c03/2/0">AP Photo/Rogelio V. Solis</a></span>
</figcaption>
</figure>
<h2>Don’t go bananas</h2>
<p>So back to our original question, what does it really mean to be “made in America”? </p>
<p>Since the 1980s, U.S. companies have been using this label in their advertising to push back against foreign competition as global production expanded into Asia and elsewhere. In this era of “America First,” the Trump administration <a href="http://thehill.com/homenews/administration/342235-white-house-announces-new-campaign-promoting-trumps-agenda">has doubled down</a> on this branding. </p>
<p>But the truth is it makes little sense. Nor does attacking a U.S. company for moving some of its production – production intended for overseas markets and customers – to another country. </p>
<p>In 2013 political scientist Mike Allison and I <a href="https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1557-203X.2013.01195.x">wrote an article</a> that showed how the meaning of “domestic” can be very expansive. In the 1990s, for example, the U.S. filed a complaint with the World Trade Organization against the EU for quotas it set on bananas from Latin America.</p>
<p>None of the products in the dispute were made in the U.S. or Europe, but two of the biggest growers of bananas – Chiquita and Fyffes – were headquartered in the U.S. and the U.K. respectively. Essentially, both the Clinton and first Bush administrations – as well as officials in the EU – fought over bananas made elsewhere because they figured corporate profits supported by a product mattered more than where it was made. </p>
<p>Furthermore, consumers also look at other things besides where the product is made. In a <a href="https://www.reuters.com/article/us-usa-buyamerican-poll-idUSKBN1A3210">2017 poll</a>, 69 percent of Americans surveyed said price is “very important” in considering the purchase of a product. Only 32 percent said not bearing a made in the U.S. label was a dealbreaker. </p>
<p>So the problem with Trump’s tariff push is that other things matter more than where something is made. And companies will do what they have to do to stay competitive, even if it means moving overseas. </p>
<p>Following Harley’s announcement, fellow bike maker Polaris <a href="https://www.desmoinesregister.com/story/money/business/2018/06/29/polaris-tariffs-prompt-study-moving-production-out-iowa-europe/747386002/">said</a> it was also considering moving some production from Iowa to Poland. </p>
<p>Other companies in different industries will likely follow. While Trump may be following a hard line with tariffs against U.S. competitors, Americans will likely see negative effects from that move, either in the form of jobs being shipped overseas or prices rising due to reciprocal tariffs.</p><img src="https://counter.theconversation.com/content/99267/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christina Fattore does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The motorcycle maker angered Trump after it said it plans to move some production overseas to avoid EU tariffs – just a few months after the president praised the company for being a ‘true American icon.’Christina Fattore, Associate Professor of Political Science, West Virginia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/824742017-08-30T20:46:32Z2017-08-30T20:46:32ZRobots won’t steal our jobs if we put workers at center of AI revolution<figure><img src="https://images.theconversation.com/files/184069/original/file-20170830-24267-1w1z0fj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Future robots will work side by side with humans, just as they do today.</span> <span class="attribution"><span class="source">AP Photo/John Minchillo</span></span></figcaption></figure><p>The technologies driving artificial intelligence are expanding exponentially, leading <a href="http://www.express.co.uk/news/uk/716715/Robots-earth-world-destroy-human-race-AI">many technology experts and futurists</a> to predict machines will soon be doing many of the jobs that humans do today. <a href="http://www.theclever.com/15-legitimate-fears-about-artificial-intelligence/">Some even predict</a> humans could lose control over their future.</p>
<p>While we agree about the seismic changes afoot, we don’t believe this is the right way to think about it. Approaching the challenge this way assumes society has to be passive about how tomorrow’s technologies are designed and implemented. The truth is there is no absolute law that determines the shape and consequences of innovation. We can all influence where it takes us. </p>
<p>Thus, the question society should be asking is: “How can we direct the development of future technologies so that robots complement rather than replace us?” </p>
<p>The Japanese <a href="https://dspace.mit.edu/bitstream/handle/1721.1/48159/industrialrelati00shim.pdf?sequence=1">have an apt phrase for this</a>: “giving wisdom to the machines.” And the wisdom comes from workers and an integrated approach to technology design, as our research shows.</p>
<h2>Lessons from history</h2>
<p>There is no question coming technologies like AI will eliminate some jobs, as did those of the past. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=835&fit=crop&dpr=1 600w, https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=835&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=835&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1050&fit=crop&dpr=1 754w, https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1050&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/184061/original/file-20170830-24262-xxd20e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1050&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The invention of the steam engine was supposed to reduce the number of manufacturing workers. Instead, their ranks soared.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Lewis_Hine_Power_house_mechanic_working_on_steam_pump.jpg">Lewis Hine</a></span>
</figcaption>
</figure>
<p><a href="http://www.nber.org/chapters/c1567.pdf">More than half of the American workforce</a> was involved in farming in the 1890s, back when it was a physically demanding, labor-intensive industry. Today, thanks to mechanization and the use of sophisticated data analytics to handle the operation of crops and cattle, <a href="https://fred.stlouisfed.org/series/USAPEMANA">fewer than 2 percent</a> are in agriculture, yet their output is <a href="https://www.ers.usda.gov/data-products/agricultural-productivity-in-the-us/agricultural-productivity-in-the-us/#National%20Tables,%201948-2013">significantly higher</a>. </p>
<p>But new technologies will also create new jobs. After steam engines replaced water wheels as the source of power in manufacturing in the 1800s, the <a href="http://www.nber.org/chapters/c1567.pdf">sector expanded sevenfold</a>, from 1.2 million jobs in 1830 to 8.3 million by 1910. Similarly, many feared that the ATM’s emergence in the early 1970s <a href="http://www.aei.org/publication/what-atms-bank-tellers-rise-robots-and-jobs/">would replace bank tellers</a>. Yet even though the machines are now ubiquitous, <a href="https://economics.mit.edu/files/11563">there are actually more tellers today</a> doing a wider variety of customer service tasks. </p>
<p>So trying to predict whether a new wave of technologies will create more jobs than it will destroy is not worth the effort, and <a href="http://www.pewinternet.org/2014/08/06/future-of-jobs">even the experts are split 50-50</a>.</p>
<p>It’s particularly pointless given that perhaps fewer than 5 percent of current occupations are likely to disappear entirely in the next decade, according to a <a href="http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet">detailed study</a> by McKinsey. </p>
<p>Instead, let’s focus on the changes they’ll make to how people work.</p>
<h2>It’s about tasks, not jobs</h2>
<p>To understand why, it’s helpful to think of a job as made up of a collection of tasks that can be carried out in different ways when supported by new technologies. </p>
<p>And in turn, the tasks performed by different workers – colleagues, managers and many others – can also be rearranged in ways that make the best use of technologies to get the work accomplished. <a href="http://www.jwalkonline.org/upload/pdf/Hackman%20%26%20Oldham%20(1975)%20-%20Development%20of%20the%20JDS.pdf">Job design specialists</a> call these “work systems.” </p>
<p>One of the McKinsey study’s key findings was that about a third of the tasks performed in 60 percent of today’s jobs are likely to be eliminated or altered significantly by coming technologies. In other words, the vast majority of our jobs will still be there, but what we do on a daily basis will change drastically.</p>
<p>To date, robotics and other digital technologies have had <a href="https://economics.mit.edu/files/11600">their biggest effects</a> on mostly routine tasks like spell-checking and those that are dangerous, dirty or hard, such as lifting heavy tires onto a wheel on an assembly line. Advances in AI and machine learning will significantly expand the array of tasks and occupations affected. </p>
<h2>Creating an integrated strategy</h2>
<p>We have been exploring these issues for years as part of our ongoing discussions on <a href="https://theconversation.com/its-time-we-reinvented-labor-for-the-21st-century-64775">how to remake labor for the 21st century</a>. In our recently published book, “<a href="http://mitsloan.mit.edu/newsroom/press-releases/mit-sloan-professors-new-book-lays-out-a-comprehensive-strategy-to-change-the-course-of-the-countrys-economy-and-employment-system/">Shaping the Future of Work: A Handbook for Change and a New Social Contract</a>,” we describe why society needs an integrated strategy to gain control over how future technologies will affect work.</p>
<p>And that strategy starts with helping define the problems humans want new technologies to solve. We shouldn’t be leaving this solely to their inventors.</p>
<p>Fortunately, <a href="http://www.techrepublic.com/article/why-robots-still-need-us-david-a-mindell-debunks-theory-of-complete-autonomy/">some engineers</a> and <a href="https://www.youtube.com/watch?v=vjFXpR3Rzjk">AI experts</a> are recognizing that the end users of a new technology must have a central role in guiding its design to specify which problems they’re trying to solve.</p>
<p>The second step is ensuring that these technologies are designed alongside the work systems with which they will be paired. A so-called simultaneous design process produces better results for both the companies and their workers compared with a sequential strategy – typical today – which involves designing a technology and only later considering the impact on a workforce. </p>
<p>An excellent illustration of simultaneous design is how <a href="https://books.google.com/books?id=KBm8F9cI8OYC&pg=PA226&lpg=PA226&dq=toyota+robots+assembly+lines+1980s&source=bl&ots=SiT7qDlz9O&sig=L4xMjrxVFZh9SWpSHTSxpwDYRFo&hl=en&sa=X&ved=0ahUKEwiZ0_2Uk__VAhXCRCYKHYGEDyYQ6AEIUjAJ#v=onepage&q=toyota%20robots%20assembly%20lines%201980s&f=false">Toyota handled the introduction of robotics</a> onto its assembly lines in the 1980s. Unlike rivals such as General Motors that followed a sequential strategy, the Japanese automaker redesigned its work systems at the same time, which allowed it to get the most out of the new technologies and its employees. Importantly, Toyota solicited ideas for improving operations directly from workers. </p>
<p>In doing so, Toyota <a href="https://global.oup.com/academic/product/transforming-organizations-9780195065046?cc=us&lang=en&">achieved higher productivity</a> and quality in its plants than competitors like GM that invested heavily in stand-alone automation before they began to alter work systems.</p>
<p>Similarly, businesses that tweaked their work systems in concert with investing in IT in the 1990s <a href="http://digital.mit.edu/research/papers/154_erikbworkplace.pdf">outperformed</a> those that didn’t. And <a href="http://journals.sagepub.com/doi/abs/10.1177/0019793916640493">health care companies</a> like <a href="http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2044&context=articles">Kaiser Permanente</a> and others learned the same lesson as they introduced electronic medical records over the past decade. </p>
<p>Each example demonstrates that the introduction of a new technology does more than just eliminate jobs. If managed well, it can change how work is done in ways that can both increase productivity and the level of service by augmenting the tasks humans do.</p>
<h2>Worker wisdom</h2>
<p>But the process doesn’t end there. Companies need to invest in continuous training so their workers are ready to help influence, use and adapt to technological changes. That’s the third step in getting the most out of new technologies. </p>
<p>And it needs to begin before they are introduced. The important part of this is that workers need to learn what <a href="http://fortune.com/2016/03/11/hybrid-job-skills/">some are calling “hybrid” skills</a>: a combination of technical knowledge of the new technology with aptitudes for communications and problem-solving. </p>
<p>Companies whose workers have these skills will have the best chance of getting the biggest return on their technology investments. It is not surprising that these hybrid skills are now in high and growing demand and command good salaries. </p>
<p>None of this is to deny that some jobs will be eliminated and some workers will be displaced. So the final element of an integrated strategy must be to help those displaced find new jobs and compensate those unable to do so for the losses endured. Ford and the United Auto Workers, for example, <a href="http://www.nytimes.com/2006/09/15/business/15ford.html?mcubz=3">offered generous early retirement benefits</a> and cash severance payments in addition to retraining assistance when the company downsized from 2007 to 2010. </p>
<p>Examples like this will need to become the norm in the years ahead. Failure to treat displaced workers equitably will only widen the gaps between winners and losers in the future economy that <a href="http://money.cnn.com/2016/12/22/news/economy/us-inequality-worse/index.html">are now already all too apparent</a>.</p>
<p>In sum, companies that engage their workforce when they design and implement new technologies will be best-positioned to manage the coming AI revolution. By respecting the fact that today’s workers, like those before them, understand their jobs better than anyone and the many tasks they entail, they will be better able to “give wisdom to the machines.”</p><img src="https://counter.theconversation.com/content/82474/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Kochan receives funding from The Hitachi Foundation in support of the MIT Good Companies-Good Jobs Initiative and from the MIT Mary Rowe Fund for Conflict Management Research..</span></em></p><p class="fine-print"><em><span>Lee Dyer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Rather than fret about how many jobs future technologies will destroy, we should focus on how to shape them so that they complement the workforce of tomorrow.Thomas Kochan, George Maverick Bunker Professor of Management Professor, Work and Organization Studies Co-Director, MIT Sloan Institute for Work and Employment Research, MIT Sloan School of ManagementLee Dyer, Professor Emeritus of Human Resource Studies and Research Fellow at the Center for Advanced Human Resource Studies, Cornell UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806922017-07-10T12:44:32Z2017-07-10T12:44:32ZWhy Volvo going ‘all-electric’ is not as revolutionary as it seems<figure><img src="https://images.theconversation.com/files/177516/original/file-20170710-29726-1tjsikc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>The announcement from Volvo that all of its new models from 2019 will include an element of electric vehicle technology was a PR coup for the Swedish car maker. It received a disproportionate amount of attention as the <a href="https://www.dezeen.com/2017/07/05/volvo-first-major-car-company-scrap-combustion-engine-design-transport-news/">“first major car company”</a> to switch to all-electric. But the <a href="https://www.media.volvocars.com/global/en-gb/media/pressreleases/210058/volvo-cars-to-go-all-electric">statement</a> by their CEO Hakan Samuelson that this “marks the end of the solely combustion engine powered car”, is more a reflection of Volvo’s position in the market than any justification of a global change. </p>
<p>Volvo, known for decades <a href="https://www.thebrandbite.com/2014/01/15/volvo-brand-positioning-safety-end-of-volvo/">for its safety</a>, has fallen behind other manufacturers when it comes to environmental credentials. It recently introduced hybrid versions of the XC90, XC60, S90 and V90. But let’s not forget that Toyota introduced the mass-produced hybrid, its Prius, worldwide in the year 2000. Toyota now have <a href="http://www.hybridcars.com/hybrid-sales-rising-globally-says-toyota/">around 80% of the global market</a> for hybrid vehicles. </p>
<p>The question we should be asking is why Toyota or any of the other mainstream manufacturers have not come out with the same proposition to end the role of solely combustion engine powered cars? The answer lies in the fact that the major part of Volvo’s sales take place in Europe, the US and China. These markets have the potential to have the basic infrastructure in place that’s needed to support the electrification of vehicles. </p>
<p>Other manufacturers have a more global perspective and appreciate that in parts of the world such as Africa and parts of South America the idea of a regular supply of electricity for basic needs is of more pressing concern than the facility to plug in an electric vehicle. To some extent this position is really an admission that Volvo has limited expansion plans in developing markets and is happy to concentrate in its more established countries. A cynic might also suggest that the move helps the company meet the new <a href="http://www.acea.be/industry-topics/tag/category/euro-standards">more stringent EU emissions targets</a> that are due to be introduced over the next few years. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177518/original/file-20170710-29730-n4r4rj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hybrids use two power sources.</span>
<span class="attribution"><a class="source" href="https://www.media.volvocars.com/global/en-gb/media/photos/41628">Volvo</a></span>
</figcaption>
</figure>
<p>Hybrid vehicles, by their very nature, require two power sources. One is a small, usually petrol-fuelled engine that charges the battery that drives the car. There are also more sophisticated developments that involve charging the battery while the car brakes but these are usually supplementary to the main form of electricity generation. Volvo’s claim gives the impression that petrol engines are a thing of the past when, with the current technology, they are still a critical part in the hybrid system. </p>
<h2>New infrastructure</h2>
<p>For car companies there is at least one major issue with a truly and entirely electric future. This prospect would mean that for the first time it would be those providing the infrastructure that would dictate what was happening in the motor industry. </p>
<p>Electric vehicles work well when the driver can charge the vehicle on a regular and convenient basis, usually overnight. This is fine if you have a driveway and a power source available. If, however, you live in a block of flats or in a terraced property there is a major issue. Battery life and access to a charging point add barriers in potential customers’ minds over the purchase of an electric vehicle. This makes the hybrid alternative a much more attractive proposition for all the major manufacturers who have or are in the process of developing hybrid models.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177523/original/file-20170710-22784-4nd4ly.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">More charge points are needed.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>Volvo’s announcement also steals the show from perhaps the most interesting discussion about the future of cars. That’s whether or not hydrogen-powered vehicles will dominate the market – either as part of a hybrid system or as a fully hydrogen-powered fuel cell engine. There is only the Toyota Mirai available in a <a href="http://www.mytoyotamirai.com/toyota-mirai-availability/">few developed markets</a> and <a href="http://www.businesscar.co.uk/tests/2017/toyota-mirai-review">only 3,000 have been sold globally</a>. The reason: a serious shortage of refuelling stations.</p>
<p>The emissions from these vehicles is water and they are claimed to be environmentally neutral. Toyota and Hyundai have made major advances in this area but face the bigger problem of building the infrastructure to refuel hydrogen-powered cars. The installation of refuelling stations would require significant investment.</p>
<p>So, despite Volvo’s claims, the future of motoring will undoubtedly still include a petrol engine in some format in the immediate future. The only way that this is likely to change is if governments divert their infrastructure spending away from rail into opening up greener alternatives for drivers. This would improve the environment while still allowing the mobility that a car gives to people in everyday use. Even with car ownership declining in some cities, something will have to power the buses and taxis – and the cleaner that can be, the better for all.</p><img src="https://counter.theconversation.com/content/80692/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jim Saker has received research funding in the past from the EPSRC and BMW (UK). He does not currently hold external funding. He is vice president of the Institute of the Motor Industry.</span></em></p>Volvo might be the first car company to go all-electric, but it’s far from the market leader and petrol will continue to be relied upon.Jim Saker, Director of the Centre for Automotive Management , School of Business and Economics, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/787502017-06-02T03:55:53Z2017-06-02T03:55:53ZCartels caught ripping off consumers should be hit with bigger fines<p>The Australian Competition and Consumer Competition (ACCC) is going after larger fines from companies for cartel conduct that costs the Australian consumer. The difficulty is bringing Australian penalties into line with international standards, to be great enough to deter this kind of activity, often perpetrated by companies overseas.</p>
<p>The significance of this latest push by the regulator has been highlighted by a recent case where the Federal Court fined a Japanese manufacturer, Yazaki, A$9.5 million for a cartel involving car parts. Australians who bought a Toyota Camry could have paid more for the parts for these cars because of the way the manufacturer acted. </p>
<p>The court described the conduct as “deliberate, sophisticated and devious”. It rejected the Japanese company’s argument that it made only a “modest” profit, said to have been in the region of A$3.6 million - that is, about A$340 per vehicle. </p>
<p>The <a href="https://www.accc.gov.au/media-release/accc-appeals-yazaki-corporation-penalty-decision">ACCC</a> is now appealing that decision. It says the more appropriate fine is between $42 and $55 million. </p>
<p>ACCC chairman, Rod Sims, rightly points out that a far greater fine is warranted “to reflect both the size of Yazaki’s operations and the very serious nature of its collusive conduct”. He stressed the penalty should serve as a deterrent against breaking Australia’s competition laws.</p>
<p>This appeal is timely if not overdue. An OECD review of our fining policy and practice is currently under way. There’s been a need for some time for higher fines against companies that fix prices or engage in other types of collusion, undermining competition for consumers, while also damaging other businesses (often smaller ones) that play by the rules. </p>
<p>The level of corporate fines for anti-competitive conduct in Australia is woefully below international benchmarks. In the US and Europe these fines are typically in the hundreds of millions.</p>
<p>They are higher in large part because the authorities in those jurisdictions take a substantial percentage of the offending company’s turnover (up to 30%) as the starting point in calculating the penalty. This figure acts as a proxy for the economic harm caused by the conduct or the illegal gains that it yielded for the corporate law breaker.</p>
<p>That base fine is then increased, sometimes even doubled, by reference to aggravating factors such as the seniority of the management involved and ultimately by the need to deter others from playing fast and loose with the law. The approach is a highly structured and certain one, and room for negotiating out of the penalty is limited. </p>
<p>In Australia, the approach could not be more different. The same factors are taken into account but the room for bargaining with the regulator in the context of settlement negotiations is considerable. What’s more there is not a clear mechanism for producing a penalty that will deter prospective colluders tempted to pursue cartel-derived profits at the expense of consumers. </p>
<p>The high watermark for fines against companies that engage in cartel conduct in this country remains the fine of <a href="https://www.accc.gov.au/media-release/accc-welcomes-record-penalties-against-visy-calls-for-stronger-cartel-law">A$36 million against packaging company Visy in 2007</a>, for its price fixing arrangement with Amcor - a cartel sanctioned by the company’s Chairman, Richard Pratt. A$36 million was the total fine imposed for no less than 37 breaches of the law, representing under A$1 million per contravention – about 10% of the then statutory maximum. The judge described it as “by far the most serious cartel case” in Australian competition law history. </p>
<p>Overseas comparisons are stark. At the time of the Visy decision, the highest cartel fine in the EU stood at €896 million in relation to a car glass cartel. Today, the highest is more than €1 billion, <a href="http://ec.europa.eu/competition/cartels/statistics/statistics.pdf">imposed on Daimler for a trucking cartel</a>. Had the method used in the EU and US for calculating these fines been used in the Visy case, the starting point for the fine imposed on the packaging giant would have been in the order of A$212 million.</p>
<p>US cartel fines are not quite as hefty as their European counterparts but are still in an entirely different league to Australian fines. In the US, deterrence is driven largely by the fact that executives found liable for breaking cartel laws are routinely put behind bars. </p>
<p>Australia has had criminal sanctions for individual cartelists on our statute books since 2009. The first prosecution was brought only last year. But to date, no individuals have been charged.</p>
<p>Our approach to fining corporate colluders also lacks transparency and predictability. The ACCC and then the Court apply a list of factors in a holistic way without any clear ranking or weighting of them. Past cases with similar facts are sometimes considered as a guide, but it’s almost impossible to know in advance what the likely penalty will be. </p>
<p>This too weakens deterrence but it also exposes the system to criticisms of arbitrariness and inconsistency, damaging to its legitimacy. A perception that large businesses are able to negotiate an acceptable cost of doing cartel business only erodes confidence in the system further.</p>
<p>A root and branch review of our competition policy, law and enforcement system, chaired by Ian Harper, <a href="http://competitionpolicyreview.gov.au/">was completed in 2015</a> and the government is in the process of implementing most of its recommendations. Many of these, including the controversial introduction of an effects test for misuse of market power, are inspired by the view that Australian competition law <a href="https://theconversation.com/au/topics/effects-test-15788">should match international best practice</a>. Regrettably, the approach taken to calculating fines was one of the “roots” that received least attention in the review. That was a missed opportunity. </p>
<p>But in the recent budget the government committed to bring maximum fines for breaches of the consumer protection laws into alignment with those applicable to competition law breaches. So now is the time to revisit how such penalties are calculated.</p><img src="https://counter.theconversation.com/content/78750/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caron Beaton-Wells receives funding from the Australian Research Council.</span></em></p>The level of corporate fines for anti-competitive conduct in Australia is woefully below international benchmarks.Caron Beaton-Wells, Professor, Melbourne Law School, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/719092017-01-29T16:41:10Z2017-01-29T16:41:10ZFord South Africa reacted badly in a crisis: it doesn’t have to be that way<figure><img src="https://images.theconversation.com/files/154389/original/image-20170126-30413-8a7r9l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In December 2015, <a href="http://www.timeslive.co.za/local/2017/01/24/Ford-broke-law-by-not-informing-consumer-commission-of-Kuga-death-police">Reshall Jimmy</a> burnt to death in his 1.6-litre EcoBoost Ford Kuga in South Africa. Since then a recorded <a href="http://www.timeslive.co.za/local/2017/01/19/Another-Kuga-burns1">51 Kugas</a> have caught alight across the country, and two more in Swaziland and Botswana. The Jimmy family recently announced they intend to bring a class <a href="http://ewn.co.za/2017/01/17/family-of-kuga-fire-victim-to-bring-class-action-suit-against-ford%20despite%20Ford%20denying%20his%20death%20was%20linked%20to%20the%20fault%20http://www.huffingtonpost.co.za/2017/01/18/ford-insists-that-reshall-jimmys-fiery-death-was-not-linked-to/">action suit</a> against Ford.</p>
<p>Yet it was more than a year after Jimmy’s death that Ford <a href="http://www.iol.co.za/motoring/industry-news/ford-sa-to-finally-recall-fiery-kugas-7418489">recalled</a> 4,556 1.6-litre EcoBoost Kugas in South Africa and more in other southern African countries. Ford took the decision only after the <a href="http://www.timeslive.co.za/local/2017/01/24/Ford-broke-law-by-not-informing-consumer-commission-of-Kuga-death-police">intervention</a> of the <a href="http://www.thencc.gov.za/">National Consumer Commission</a>, a statutory body designed to protect consumers in South Africa. At a joint media briefing, Commissioner Ebrahim Mohamed stated that Section 60 of the Consumer Protection Act had been invoked to compel Ford into corrective action.</p>
<p>When confronted with the possibility of having to decide on a recall, manufacturers can respond in one of four ways: </p>
<ul>
<li><p>denial, </p></li>
<li><p>involuntary recall, </p></li>
<li><p>voluntary recall and </p></li>
<li><p>super effort. </p></li>
</ul>
<p>That Ford only acted after the consumer commission got involved suggests that it was in denial. It required a push to at least get to the involuntary recall phase and only after overwhelming <a href="http://www.702.co.za/articles/239364/ford-kuga-owner-says-dealership-don-t-provide-courtesy-cars">negative publicity</a> and memes that spread around social media.</p>
<p>The Ford Kuga case adds to a growing list of similar experiences in the auto industry which seems incapable of learning from its own history. Ford and Toyota have both been involved in messy voluntary recalls where both companies took a long time to act. Evidence of safety issues with the <a href="https://philosophia.uncg.edu/phi361-metivier/module-2-why-does-business-need-ethics/case-the-ford-pinto/">Ford Pinto’s</a> fuel tank first emerged in 1973. It took another five years – and a number of explosions, deaths and court cases – for Ford to recall 1.5 million Pintos built between 1970 and 1976.</p>
<p>Toyota faced complaints about the <a href="https://www.washingtonpost.com/business/economy/toyota-reaches-12-billion-settlement-to-end-criminal-probe/2014/03/19/5738a3c4-af69-11e3-9627-c65021d6d572_story.html?utm_term=.3af43d08c2cc">sticky accelerators</a> in 2002. It took the company eight years to <a href="http://www.nytimes.com/2009/11/26/business/26toyota.html">recall</a> 7.7 million vehicles after a number of crashes and <a href="http://www.nytimes.com/2010/09/19/business/19autos.html">deaths</a>.</p>
<p>Empirical research into the effect of recalls confirms what rational people know to be true: they’re a good idea. Laval University scholars, Nizar Souiden and Frank Ponsen, <a href="http://www.emeraldinsight.com/doi/full/10.1108/JOCM-04-2015-0063">note</a> that</p>
<blockquote>
<p>Voluntary recalls and improvement campaigns can have a positive and significant impact on the manufacturer’s image.</p>
</blockquote>
<p>On top of this, it’s also <a href="https://faculty.fuqua.duke.edu/%7Emoorman/Marketing-Strategy-Seminar-2015/Session%206/Kalaignanam,%20Kurshwaha,%20and%20Eilert.pdf">self-evidently true</a> that product recalls can reduce the number of injuries and recalls in the future.</p>
<p>It’s therefore clear that the sooner a company reacts to a problem, the less of a negative impact there will be on customers, the brand and the bottom line. And, in addition, that if it makes a super effort to address the problem it can even build brand and customer loyalty like never before.</p>
<p>This is vital in the business of business because, as <a href="https://studentvillage.sv.co.za/careers-news/careers-vega-to-launch-new-degree">Gordon Cook</a>, co-founder of preeminent marketing school Vega, bluntly puts it: “Brands cause business”.</p>
<p>So if the evidence supports the contention that the survival of a business depends on acting quickly in a time of crisis, including instituting swift recalls, why should there be any reason to delay? </p>
<h2>Why firms freeze</h2>
<p>The answer lies partially in the realm of <a href="http://dx.doi.org/10.1108/JOCM-04-2015-0063">complexity theory</a> – that in the midst of a crisis many factors are at play, all of which have the potential to muddy the analysis and to pull the organisation in different directions. This often results in ill-conceived, naive and ineffective responses. </p>
<p>In the case of Ford, some commentators have even gone so far to say that there was <a href="http://www.timeslive.co.za/consumerlive/2016/12/22/Ford-confirms-Kuga-fires-confined-to-single-model%E2%80%9A-concedes-engine-overheating-a-possible-cause">no response</a> at all. </p>
<p>But it doesn’t have to be this way. There’s another side to <a href="http://dx.doi.org/10.1108/JOCM-04-2015-0063">complexity theory</a> that holds that organisations with two critical attributes can weather most storms. These are:</p>
<ul>
<li><p>a strong commitment to doing the right thing for stakeholders, and </p></li>
<li><p>a high readiness are most likely to effectively respond to crises. </p></li>
</ul>
<p>But organisations need both. If they’re lacking in one they are likely to have ineffective responses which in turn will lead to post-crisis losses. This could be in both their competitive edge, including market share, as well as financially if they face penalties or their share price dives.</p>
<p>Singapore Airlines handling of <a href="http://thinkbusiness.nus.edu/article/sia-crisis-response/">Flight SQ006 crash</a> is often cited as a model example of doing the right thing.</p>
<h2>Rebuilding confidence takes time</h2>
<p>The Kuga case is a classic example of being in the news for all the wrong reasons. And only time will tell if it will be able to bounce back from this as Toyota appears to have done. </p>
<p>It will need to rebuild brand equity. This will take time and will involve a great deal more than settling claims. And customers aren’t their only constituency. They must also restore faith with other stakeholders such as the dealer network. The company faces a hard journey ahead. </p>
<p>In the meantime, the Kuga fire story will continue to dominate the headlines. These will only cease being negative and become positive if Ford South Africa truly embraces a stakeholder inclusive approach and views events from a moral perspective. Debates on brand value will come across as off-centre if legitimate and reasonable demands to right a wrong are not addressed.</p><img src="https://counter.theconversation.com/content/71909/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Owen Skae does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The behavior of Ford South Africa around the fires that have engulfed its 1.6-litre EcoBoost Kugas model is a classic case of how not to handle a corporate crisis.Owen Skae, Associate Professor and Director of Rhodes Business School, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/652332016-10-06T19:10:46Z2016-10-06T19:10:46ZThe US used foreign investment to develop a new car industry, a lesson Australia hasn’t learned<p>In Australia, car makers have come to be seen by many as more of a cost than a benefit, a failing industry that was too reliant on government handouts. But in the United States, many state governments have attracted foreign investment that has provided ongoing economic security.</p>
<p>Now the end of car manufacturing in Australia is fast approaching. Ford Australia will close its production line in Broadmeadows on October 7, where the iconic Falcon has been made for almost six decades. </p>
<p>On the same day, Holden will close Cruze production in Adelaide, and Ford will shutter its engine plant in Geelong. In the course of the next year, Australia’s three car makers – Ford, Holden, and Toyota – will shut down completely. </p>
<p>In all, more than 5,000 production jobs, plus many more white collar and supplier positions, <a href="http://www.heraldsun.com.au/news/car-jobs-at-risk-as-national-employment-crisis-looms-after-federal-election/news-story/4eec69a23b48ac8275aaaf4554498925">will be lost</a>. </p>
<p>The shutdowns come following the 1984 Button Plan, a Hawke government initiative that provided for phased tariff reductions (2.5% per annum) as well as fewer separate manufacturing facilities. After this, industry protections were gradually removed and successive governments also signed more free trade agreements that made it easier for imported brands to penetrate the Australian market.</p>
<p>Prior to the closures, Holden boss Mike Devereux fought for two years for an increase of more than A$200 million in government funding, <a href="http://www.news.com.au/technology/innovation/motoring/holden-shutdown-general-motors-international-boss-stefan-jacoby-says-australia-is-better-without-car-manufacturing/news-story/af4de2d0090baa6c2a0ce24aa0e28729">claiming this would save the assembly lines.</a></p>
<p>By contrast in the US over the past few decades, a series of states have paid large financial incentives to attract foreign-owned car makers.</p>
<p>In 1980, Tennessee officials offered Nissan a US$33 million package to build its first American plant in Smyrna, while in 1985 Kentucky committed US$149 million in subsidies to lure Toyota to Georgetown. Another generous package, including a US$1 a year lease on a US$36 million piece of land, brought BMW to Greer, South Carolina in the early 1990s. From there, the <a href="https://www.amazon.com/South-America-since-World-Wardp/0195166507">incentives continued to escalate.</a></p>
<p>In the mid-1990s, Alabama spent US$325 million to bring Mercedes-Benz to Vance, and also gave generously to secure Honda and Hyundai factories. By 2002, Alabama’s total subsidies to foreign automakers <a href="https://www.amazon.com/South-America-since-World-Wardp/0195166507">were an estimated US$874 million</a>. More recently, Mississippi has paid close to US$800 million to land plants by Toyota and Nissan.</p>
<p>Ironically, the subsidies have been dished out mainly by southern states. The South is the most conservative region in America. </p>
<p>Many of the incentives have been authorised not by Democrats but by conservative, patriotic Republicans. Governing over states that are among the poorest in America, they argued that the cost of landing high-paying automotive jobs was justified. </p>
<p>Twenty-five years ago, for example, the Deep South state of Alabama had never produced a vehicle. By 2015, more than 13,000 people were employed in four major assembly plants, <a href="ww.edpa.org/wp-content/uploads/Alabamas-Automotive-Industry.pdf">while a further 24,000 worked for suppliers</a>. “Whatever it cost,” economic recruiter Ellen McNair asserted, “it was worth it”. </p>
<p>The incentives have established a thriving economic sector. In 2009, foreign-owned automotive factories <a href="http://www.nytimes.com/2008/11/17/business/economy/17impact.html?_r=0">employed 78,000 people</a> and turned out more <a href="http://query.nytimes.com/gst/fullpage.html?res=9503E1D9113BF931A15755C0A9639C8B63&pagewanted=all">than 25% of all vehicles manufactured in the US.</a></p>
<p>Even during and after the global financial crisis, none of these plants closed – unlike their domestically-owned counterparts. Instead, the sector has continued to expand. </p>
<p>Australians now drive many cars, including the high-end BMW X-5 and Mercedes M-Class, made in these US factories. Contrary to popular impressions, there is a thriving car industry in America; it is <a href="http://www.weeklystandard.com/the-other-american-auto-industry/article/17000">foreign-owned and based largely in the southern states.</a> </p>
<p>There are important differences between the Australian and American stories. In the US, a more decentralised political system means that states compete with one another <a href="https://www.amazon.com/SELLING-SOUTH-Southern-Industrial-Development/dp/0252061624">to land industrial investment</a>. Unions are much weaker in the US than in Australia, and southern states used weak labour laws, together with promises to fight organised labour, to lure automotive investment.</p>
<p>Transplant car workers are paid well by the standards of their area, yet not as much as their counterparts in Michigan and other traditional car-making states. The poverty of southern US states also drove their search for car plants, whereas in Australia, economic boosters argue the economy is diversified and displaced car workers can find other employment more easily. The US also has a much bigger vehicle market than Australia.</p>
<p>The US story reminds us, however, that automotive <a href="http://www.cargroup.org/?module=Publications&event=Download&pubID=113">jobs have tremendous value.</a>. In Australia, as in the US, the industry has provided well-paid jobs to generations of new immigrants, giving them upward mobility. Research of automotive plant closings in the US – and of manufacturing shutdowns more generally - shows that they have <a href="http://www.tandfonline.com/doi/pdf/10.1080/00236560903020906">devastating economic and social consequences</a>, as few workers <a href="https://www.amazon.com/Town-Abandoned-Confronts-Deindustrialization-Political/dp/0791428788/">are able to gain jobs that pay as well.</a> </p>
<p>As sociologists and others have demonstrated, displaced car workers - especially women and racial minorities - <a href="https://www.amazon.com/End-Line-AUTOWORKERS-AMERICAN-DREAM/dp/0252061489/ref=sr_1_1?s=books&ie=UTF8&qid=1474349920&sr=1-1&keywords=end+of+the+line+feldman">usually suffer “downward mobility,”</a> a drop in socio-economic status as a result of losing their job. Former automotive communities have <a href="https://www.amazon.com/End-Line-Postindustrial-America-Morality/dp/0226169103">suffered high rates of unemployment and depopulation</a> for years after plant closings. </p>
<p>In 1950, when the industry was booming, Detroit had 1.86 million inhabitants. Today, it <a href="http://www.census.gov/library/publications/2011/compendia/statab/131ed.html">has fewer than 700,000.</a></p>
<p>Unlike Australia, the US has used incentives to maintain a viable automobile industry. While Australia’s car industry was contracting, total domestic vehicle production in the US actually grew, and investments by foreign companies have also kept industry employment levels steady. </p>
<p>Many Americans believe that a viable automotive manufacturing sector is essential for their economy. It remains to be seen whether the Australian car industry can cope easily with the shutdowns.</p>
<p>The US experience, however, suggests that those displaced will not be able to move on so easily, and that Australia might be losing more than many of us realise.</p><img src="https://counter.theconversation.com/content/65233/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Timothy Minchin receives funding from the Australian Research Council to study the foreign-owned automotive sector in the U.S. </span></em></p>Australia can learn from the US where state governments have attracted foreign investment in manufacturing that contributes to local economies.Timothy Minchin, Professor of North American History, La Trobe University, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/665622016-10-06T05:16:15Z2016-10-06T05:16:15ZFord workers willing but unlikely to find decent jobs: study<p>When Ford closes the doors on its vehicle manufacturing operations today <a href="http://www.news.com.au/technology/innovation/motoring/half-of-ford-employees-will-be-jobless-after-factory-shutdowns-in-broadmeadows-and-geelong/news-story/c7e639b451eae34b2e7d046e8677e424">about 600 workers</a> will walk out of the factory gate for the last time at the Broadmeadows assembly plant in Melbourne’s northern suburbs and at the company’s engine and stamping plants in Geelong. Preliminary results from <a href="http://www.abc.net.au/news/2016-10-05/most-victorian-auto-workers-yet-to-start-looking-for-new-jobs/7904164">a survey of more than 400 auto workers</a> show that most of them still want to work but are unlikely to find secure, long-term jobs.</p>
<p>Most will become jobseekers in regions which are <a href="http://dote.org.au/wp-content/themes/dote2015/resources/melbourne.pdf">already socio-economically disadvantaged</a> with higher than average unemployment levels and lower than average household income. While 46% expect to be made redundant at some point in the next 12 months and 24% expect to remain with their current employer (either in the same role or redeployed within the company), 27% still don’t know whether or not they will have a job. This partly reflects the large number of workers employed in the supply chain and uncertainty about the survival chances of many of these businesses. </p>
<p>Most workers (62%) will want a new job if and when they are retrenched. Only a small minority plan to retire (8%), take a break from work (6%) or go into business or self-employment (1%). </p>
<p>Importantly, 50% say it is important that they stay in the same or a similar occupation. This finding highlights the ongoing need for governments to support manufacturing occupations, skills and careers. These could come from key manufacturing corridors of Victoria such as Melbourne’s southeast and northern suburbs. </p>
<p>Unfortunately, many workers will struggle to find jobs that fit their preferences and skillsets. In areas like Melbourne’s northern suburbs, near Ford’s Broadmeadows assembly plant, hundreds of newly-retrenched workers will join a local labour market in which more than one in every five jobseekers are currently out of paid work. </p>
<p>Many workers have received comprehensive assistance from the carmakers or state governments. For example, 53% say their current employer has provided help and 64% found this help useful. But there remains a critical role for government in carefully monitoring the transition for workers over the coming months and years. </p>
<p>The survey is a representative sample of all trade union members in the Victorian auto industry and part of a long-term study which will monitor the future work, job quality and health and wellbeing of these workers over the next three years. It includes employees of Ford (17%), Toyota (28%), GM Holden (7%) and many manufacturers which produce components in the auto supply chain (43%), where most of the job losses will be experienced. </p>
<p>The Australian car manufacturing industry will be gradually wound down over the next 12 months as GM Holden and Toyota follow suit and close their local car-making operations. Projected job losses resulting from these decisions are somewhere between <a href="http://www.pc.gov.au/inquiries/completed/automotive/report">40,000</a> and <a href="http://apo.org.au/files/Resource/wiser_closing_the_motor_vehicle_industry_2014.pdf">200,000</a> jobs nationally.</p>
<p>Australia has never before experienced such a rapid closure of an entire, strategically-important industry, with the process taking approximately three years from the closure announcements in 2013/14 to the final shutdown in 2016/17. </p>
<p>The major concern of this study is the quality of work and quality of life outcomes for workers and communities in regions affected by closures. </p>
<p>Preliminary results from our study show that the average age of workers is 50, the average length of time with their current employer is 19 years (with some having been employed for up to 45 years). And approximately one in five primarily speak a language other than English at home. </p>
<p>Workers with limited formal education and accredited skills may also struggle. Almost half (45%) of workers left school before Year 12 and 48% do not have a trade qualification. </p>
<p>Numerous studies of past large-scale closures and redundancies suggest that particular groups are disadvantaged as jobseekers, including older workers, workers who have been with a single employer for a long period of time and workers from a non-English speaking background. </p>
<p>Workers in these categories find it more difficult to negotiate local job markets. They tend to take longer to find alternative employment and often move into poorer-quality employment with lower wages and inferior employment conditions.</p>
<p>The first round of results from this survey of auto workers will be launched at the Victorian Parliament on October 26.</p><img src="https://counter.theconversation.com/content/66562/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Barnes does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Auto manufacturing workers will face significant problems in finding new jobs after the closure of the Ford and Holden plants, a new survey has found.Tom Barnes, Postdoctoral Research Fellow, Institute for Religion, Politics and Society, Australian Catholic UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/471402015-09-16T04:24:26Z2015-09-16T04:24:26ZUpheaval at South Africa’s universities is an opportunity to remake academia<figure><img src="https://images.theconversation.com/files/94886/original/image-20150915-29616-1y39qy8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">University students are protesting various issues related to transformation on campuses across South Africa.</span> <span class="attribution"><span class="source">Reuters/Mike Hutchings</span></span></figcaption></figure><p>The current <a href="http://www.dailymaverick.co.za/article/2015-04-28-op-ed-open-stellenbosch-tackling-language-and-exclusion-at-stellenbosch-university/#.VffJNRGqqko">wave of protest</a> in South African <a href="http://www.thedailyvox.co.za/rhodes-must-fall-the-movement-after-the-statue/">universities</a> shows up just how unprepared academia is to reflect on itself. </p>
<p>Yet, academia is uniquely qualified to do just that – solving the <a href="https://www.wickedproblems.com/1_wicked_problems.php">wicked problem</a> is what we are here for.</p>
<p>Too often, demands for change have stalled when they run up against rigid structure – think of post-apartheid change in South Africa or decolonisation across Africa. A strictly top-down bureaucratic organisation is very hard to change. Democratisation of South Africa, 21 years on, has not empowered the ordinary person to take on corrupt officialdom or poor service delivery.</p>
<p>Could an agile university offer a lesson to other parts of society? Consider the <a href="https://theconversation.com/the-arab-world-a-new-model-for-civilised-revolution-962">Arab Spring</a>, where anger in the streets ran up against a police state mindset. Once president Hosni Mubarak was overthrown, the attitude on the street was “job done”. Well, no. What ultimately <a href="http://www.spiegel.de/international/world/after-2011-uprisings-generals-regain-power-across-arab-world-a-984355.html">happened</a> was that one military dictator was replaced by another. </p>
<p>This illustrates that protest is not enough. Restructuring decision-making is what is really needed.</p>
<p>A university encapsulates the problem neatly. It is full of young people with energy and the cognitive tools to demand rapid change who are running up against a rigid, seemingly immovable structure.</p>
<p>There is enormous potential for long term and genuine change if universities change their approach to dissent.</p>
<h2>When rigidity relaxes</h2>
<p>Here are examples of what is possible when rigid institutional structures are relaxed and employees – in a university’s case, this would apply to both academics and students – are taken seriously.</p>
<ul>
<li><p>Toyota introduced <a href="http://www.fastcompany.com/1763849/how-lessons-toyotas-production-line-will-help-efficiently-rebuild-new-orleans">Stop the Line</a> manufacturing, which allowed any worker to hit a button and stop the production line to fix a problem. </p></li>
<li><p>Google employees have the option to spend <a href="http://www.businessinsider.com/google-20-percent-time-policy-2015-4">20% of their time</a> to pursue their own projects. </p></li>
<li><p>Software development used to follow a rigid step-by-step process. More recently, approaches like <a href="http://www.agile-process.org/">agile</a> software development have broken down this rigid approach in favour of more responsive methods that adapt to change rather than preventing it.</p></li>
</ul>
<p>What all these things have in common is they create a self-learning organisation that is able to improve itself by rapid feedback. They also all have aspects of breaking the hierarchy.</p>
<p>A related concept is <em>action learning</em>: a student conceptualises a problem, reflects on it, works on a solution and repeats the cycle. There are variations on this basic methodology but the core idea is a feedback cycle. This approach becomes really powerful allied to modern thinking about how knowledge is <a href="http://homes.cs.ru.ac.za/philip/Publications/_CSE/social-construction-CSE.pdf">socially constructed</a>.</p>
<h2>Tensions simmering</h2>
<p>How could all this apply to running a university?</p>
<p>The key thing is to incorporate feedback into decision making and to allow ideas to originate anywhere in the organisation. Rather than a top-down committee-based approach, an agile approach deals constructively with hard issues. Those that cannot be dealt with in the traditional way provide leverage for rapid institutional reform.</p>
<p>On my own campus, Rhodes University, there are deep tensions between the <a href="http://www.thedailyvox.co.za/black-student-movement-occupies-rhodes-university-offices/">Black Students’ Movement</a> (BSM) and conservative elements on campus. The BSM may well represent a minority position – albeit a vocal one. But the issues they articulate are real, even if many students and academics would rather have a quiet life and leave things be.</p>
<p>A group of about 50 Rhodes academics – I am among them – has organised themselves into the Alternative Transformation Forum. It tries to cut across institutional boundaries and includes membership across the spectrum from junior academics to heads of department. It has an open channel to both the vice-chancellor and the BSM. Yet this is not seen as an asset.</p>
<p>Our messages are not transmitted on campus-wide email lists because they are not an “official” structure, a feeble excuse for censorship. Meanwhile tensions grow and issues are sidestepped. The main committee room, the Council Chamber, has been occupied by the BSM. Meetings are held elsewhere and tensions continue to simmer.</p>
<h2>Agility in the academy</h2>
<p>How differently would an agile university handle this?</p>
<p>The BSM would be recognised as a group of students who really care about the future of the institution. Their issues could become a focal point for reflection on what a university really is and what it could become. South Africa is a highly <a href="http://mg.co.za/article/2014-10-30-inequality-mocks-sas-freedom">unequal society</a>, where the government has stalled at equalising privilege. This could be the start of an important conversation that could lead to a major breakthrough in stalled progress.</p>
<p>Young academics, with a fresh perspective, can see the roadblocks in a way those who grew up with the system cannot. Like Toyota workers, they are in a better position to see when to hit the big red button than the people at the top.</p>
<p>Instead of focusing on sticking points, standing on pettifogging interpretations of bureaucracy and <a href="http://oppidanpress.com/rhodes-admits-to-calling-for-police-assistance/">criminalising protest</a>, the university could look deep into itself for solutions to a wicked-hard educational crisis. </p>
<p>Eight in nine fee-free schools in South Africa are <a href="http://www.ru.ac.za/media/rhodesuniversity/content/uhuru/documents/Functionality%20of%20SAs%20dysfunctional%20schools.pdf">failing</a>. Universities did not cause this crisis, but agile thinking could <a href="http://opinion-nation.blogspot.co.za/2015/08/education-crisis-alternative.html">lead to a solution</a> where traditional top-down thinking has failed.</p>
<p>My appeal to universities in general is to learn how to be agile organisations. They should be able to self-adapt, self-learn and do away with excessively hierarchical and bureaucracy-bound structures.</p>
<p>Universities, despite their many flaws, have one massive advantage over other rigidly structured organisations. Teaching, learning and knowlege creation is their mission. It is time they internalised those concepts.</p><img src="https://counter.theconversation.com/content/47140/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Machanick does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There is enormous potential for long term and genuine change if universities change their approach to dissent – and reinvent themselves as more agile institutions.Philip Machanick, Associate Professor of Computer Science, Rhodes UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/422882015-05-26T10:06:24Z2015-05-26T10:06:24ZWhy automakers so frequently botch product recalls<figure><img src="https://images.theconversation.com/files/82749/original/image-20150522-32555-2q05ms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Faulty airbags led to the biggest auto recall in US history. </span> <span class="attribution"><span class="source">Airbag explosion via www.shutterstock.com</span></span></figcaption></figure><p>There has been a spate of highly visible recalls in recent years that have given a collective black eye to the automotive industry. </p>
<p>From Toyota’s <a href="http://blogs.wsj.com/drivers-seat/2012/07/01/toyota-recalls-lexus-vehicles-for-sticking-throttles/">fumbling</a> of the recall concerning its sticky throttles a few years ago, to GM’s more recent mishandling of its <a href="http://www.consumerreports.org/cro/2014/03/gm-recall-raises-concerns-about-warning-systems-for-auto-safety/index.htm">ignition-switch problem</a>, major car manufacturers look like they only know how to consistently mismanage the critical activity of recalling dangerous vehicles. </p>
<p>Now it’s Takata’s turn in the unwanted media spotlight, and this time the recall is not just big, it’s huge. The <a href="http://www.insurancejournal.com/news/national/2015/05/20/368706.htm">most recent count</a> puts the number of vehicles affected by its defective air bags at more than 30 million, marking a new world record for apparent incompetence in managing what many people believe to be any industry’s most important task: protecting public safety. Furthermore, it is going to be a logistical mess that will take years to fix all the affected vehicles</p>
<p>The dismay is widespread. Many members of the car-driving public are now asking one of journalists’ favorite questions: given the level of presumed ineptitude involved, how could these blatantly bad decisions have happened? Beyond that concern, we have an even bigger question: are these decisions criminal? And if they are criminal, who’s to blame? </p>
<p>(On that note, the Justice Department just last week <a href="http://www.nytimes.com/2015/05/23/business/gm-inquiry-said-to-find-criminal-wrongdoing.html?_r=0">raised allegations</a> of criminal wrongdoing against GM and some of its executives for failing to disclose its ignition-switch deficiencies in a timely manner.)</p>
<h2>Why recalls are slow</h2>
<p>All these cases come in the wake of Ford’s <a href="http://link.springer.com/article/10.1007%2FBF00870550">miserable experience</a> failing to recall the Pinto because of exploding gas tanks during rear-end collisions at low speeds almost 40 years ago, and this question is a latent concern of all current executives. Remember, Ford as a corporate entity – not the individual decision makers within the company – <a href="http://www.history.com/this-day-in-history/fatal-ford-pinto-crash-in-indiana">was charged</a> with a crime. And the crime was not negligence, it was murder (in an accident involving three teenagers who burned to death in a 1978 accident in Indiana). </p>
<p>As a former insider who worked as corporate recall coordinator for Ford during the time of the Pinto problem – and now a management professor at Penn State University who uses the case in his MBA teaching – I might have some insight into the factors that lead companies to make decisions that the engineers and executives see as <a href="http://www.newyorker.com/magazine/2015/05/04/the-engineers-lament">complex and rational</a>, but the public sees as simple and criminal.</p>
<p>Question #1 is: in each of these cases, why did the companies wait so long to acknowledge that there was a problem and initiate a recall? </p>
<p>Frankly, I sympathize with the corporate decision makers on this one. To me, the key issue is one of deciding when to pull the trigger and recommend recall. In my case, I was tracking a myriad of possible problems that might qualify for recall. </p>
<p>To initiate a recall I had to have two things: 1) traceable cause (I had to know that some specific component was breaking), and 2) a demonstrable pattern of failures. In most cases I had one or the other, but not both. In some cases I had neither. </p>
<p>What’s a person to do? Recommend recall when you don’t know what’s failing? Not very likely. Recommend recall when you don’t have convincing evidence of a pattern? I don’t think so. </p>
<p>The academic decision-making literature gives us some help on questions about decisions under risk (uncertainty), but not a lot of help on decisions under complexity and ambiguity (where information is either vague or subject to multiple opinions about the most effective course of action). Yet everybody knows executives are paid to make decisions under both these conditions. </p>
<p>It’s not easy, and everyone and every corporation can be accused of having had prior knowledge of a problem. The real question is how much knowledge is enough knowledge to act?</p>
<h2>Who knows there’s a problem and when</h2>
<p>Which gives rise to Question #2: who knew? </p>
<p>In each of the four cases I’ve cited, some engineers allegedly <a href="http://philosophia.uncg.edu/phi361-metivier/module-2-why-does-business-need-ethics/case-the-ford-pinto/">knew</a> there was a problem. In 1970, a subset of Ford engineers knew the Pinto would not meet a proposed fuel leakage standard because protruding studs would puncture the gas tank (the recall didn’t happen until after the Indiana incident in 1978). </p>
<p>As early as 2004, a <a href="http://www.autonews.com/article/20140627/OEM11/140629876/gm-was-urged-in-2004-report-to-study-cobalts-ignition-airbag-link">small group</a> of GM engineers suspected that there was a problem with Cobalt ignition switches (the recall was in 2014). In 2006, Toyota engineers <a href="http://www.cnn.com/2012/03/01/us/toyota-memo-acceleration-concerns/">became aware</a> of customer complaints about “unintended acceleration” (the recall was initiated in late 2009). Now it has come to light that Takata had reports of shrapnel from its air-bag inflators years before a recall that is only now getting under way.</p>
<p>Who’s at fault here for not pulling the trigger? The corporations? The individuals within the corporation? Well, who is the corporation anyway? </p>
<p>If a subset of people know of a problem, can the corporation be held culpable? Of course it can. But that consequence raises very interesting theoretical questions about organizations as agents in modern society. (It also raises questions about whether Mitt Romney was indeed correct in asserting that “Corporations are people, my friend,” but that is a different essay.)</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/KlPQkd_AA6c?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">On the campaign trail…</span></figcaption>
</figure>
<h2>Organizational learning</h2>
<p>More importantly, perhaps, it raises questions about organizational knowledge and learning. </p>
<p>Question #3, therefore, is: if some people in an organization know something important, but there are not adequate structures and processes in place to inform the key decision makers, how can we even talk about “organizational” learning? </p>
<p>Yet, we must. This is one of the most important academic questions of our time. How do we teach organizations how to learn, such that the entire entity acts like a distributed intelligence system? (I should note that Ford took steps in the ‘90s to make the company display the hallmarks of a learning organization)</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=349&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=349&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=349&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=439&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=439&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82744/original/image-20150522-32558-1olmjze.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=439&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">GM was in the spotlight earlier last year after fatalities resulting from faulty ignition switches.</span>
<span class="attribution"><span class="source">Reuters</span></span>
</figcaption>
</figure>
<h2>Dysfunctional cultures</h2>
<p>Lastly, all of these putatively bad actors (automotive corporations) have had questions raised about their dysfunctional cultures. So, Question #4 is another area of longstanding academic interest, and leads to several other related questions. </p>
<ul>
<li><p>did something about Ford’s way of doing business many moons ago lead to an intentional cover-up of information? (No, an internal investigation showed it was just engineers being engineers, testing out some solutions in case they needed to meet a new standard) </p></li>
<li><p>why were Toyota’s engineers acting so much like rational engineers and ignoring the palpable fears of customers (and should we be concerned about professional cultures that lead them to think so very differently from laypeople)? </p></li>
<li><p>what is it about GM’s supposed “cover your ass” culture that would tacitly have people wink at a potentially lethal ignition problem (and should they undergo a wrenching culture change as penance and practice, which they seem to be doing now under Mary Barra)? </p></li>
<li><p>why was Takata so deep in denial that it appeared to stonewall a patently obvious problem concerning flying shrapnel from a system that was intended to save your life? (How morbidly ironic.)</p></li>
</ul>
<p>Overall, academic theory and research can teach us quite a lot about decisions under uncertainty and risk, about who or what should be considered the locus of focus for responsibility, about how cultures influence decisions, etc. </p>
<p>But, in a modern world defined by immediate availability of information, litigiousness and image consciousness, what many corporations’ experiences with recalls really tell us is that we need more research and better theories to explain how and why those corporations and their representatives act as they do. And how we might reasonably teach them to act differently.</p><img src="https://counter.theconversation.com/content/42288/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dennis Gioia owns shares in Ford Motor Co., where he previously worked as a recall coordinator.
</span></em></p>From Ford’s Pinto problem to Takata’s defective airbags, sometimes it seems auto companies know how to do little more than mismanage product recalls.Dennis A. Gioia, Robert and Judith Auritt Klein Professor of Management, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/220052014-02-16T19:14:34Z2014-02-16T19:14:34ZWorkplace ‘flexibility’ on insecure ground<figure><img src="https://images.theconversation.com/files/41456/original/bb633rqv-1392271180.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Flexible work practices: for employees or employers?</span> <span class="attribution"><span class="source">Tracey Nearmy/AAPImage</span></span></figcaption></figure><p>If you were to choose one buzzword that, despite its vagueness, has dominated industrial relations debate over three decades, it would be “flexibility”. It has emerged again in rhetoric surrounding Toyota’s closure.</p>
<p>We love the sound. It’s undeniably good, seen beside its evil twin “rigidity”. If only we knew what it meant. Or at least, knew what others using it mean.</p>
<p>Words convey emotions that legitimise the user’s perspective.</p>
<p>One person’s flexibility is another person’s uncertainty. Just as one person’s stability is another person’s rigidity.</p>
<p>So flexibility might be “good” or “bad”. First, we need to distinguish between flexibility <em>for</em> workers and flexibility <em>by</em> workers.</p>
<h2>It depends on your interest</h2>
<p>Flexibility <em>for</em> workers occurs when companies change work practices or working time to better suit worker needs. Allowing workers to take time off to attend school concerts, enabling job sharing, permanent part-time work, ‘<a href="https://www.usq.edu.au/hr/empcond/catemploy/4852">48/52</a>’ arrangements – these are all examples of employers being flexible for workers. Research shows these things are <a href="http://journal.anzsog.edu.au/publications/10/EvidenceBase2013Issue4.pdf">mostly effective</a> in enabling better work-life balance, and are often aimed at increasing job satisfaction, <a href="http://realbusiness.co.uk/article/25418-ignore-flexible-working-at-your-peril">attraction, or retention</a> of valuable employees.</p>
<p>The Fair Work Act contains a “right to request” enabling some employees to request changed working arrangements to help them care for certain dependants. It might include different start or finish times, shorter hours, or a changed location of work. But it is merely a “right to request”, not a “right to have”. There is no appeal from the employer’s decision. It echoes, but is <a href="http://www.mngt.waikato.ac.nz/departments/Strategy%20and%20Human%20Resource%20Management/airaanz/proceedings/melbourne2008/nonref/papers/S.%20Charlesworth,%20I.%20Campbell.pdf">“generally weaker”</a> than, legislation in various European countries.</p>
<p>But when employers or politicians complain about a lack of flexibility, they usually mean flexibility <em>by</em> workers.</p>
<p>Here researchers distinguish between two types of flexibility <em>by</em> workers.</p>
<p>One is <em>functional flexibility</em> – the employer’s ability to move workers between activities and tasks, in line with changing workloads or production methods. It often requires multi-skilling of workers. It may lead to employees doing more work because they do more varied work.</p>
<p>The other is <em>numerical flexibility</em> – the employer’s ability to adjust labour inputs to changes in output. That means cutting or increasing the number of workers or their hours worked, classifying them as casuals or contractors, or varying the wages they are paid.</p>
<p>Numerical flexibility is sometimes linked to loss of quality in output, and often to loss of <a href="http://jir.sagepub.com/content/53/1/49.full.pdf+html">job quality</a>– because workers typically don’t like uncertainty in wages, hours or job security.</p>
<p>This is the sort of flexibility that critics of the Toyota unions claimed was needed, and frustrated by the “no extra claims” provision in the enterprise agreement. The whole point of two decades of enterprise bargaining has been to give employers and workers the flexibility to negotiate agreements suiting their particular circumstances.</p>
<p>A key element of that, and indeed of wage negotiations since the <a href="http://news.google.com/newspapers?nid=1301&dat=19830812&id=voZWAAAAIBAJ&sjid=ruYDAAAAIBAJ&pg=4958,3123872">early 1980s</a>, has been <a href="http://www.airc.gov.au/safetynet_review/decisions/G0700.htm">“no extra claims”</a>. This was an important source of stability for employers, who <a href="http://www.airc.gov.au/safetynet_review/decisions/G6800.htm">advocated it</a> and did not want unions reopening wage claims after agreements were made. Even the <a href="http://www.pc.gov.au/__data/assets/pdf_file/0018/63045/ca2007.pdf">Productivity Commission’s enterprise agreement</a> had a “no further claims” clause.</p>
<p>Now suddenly <a href="http://www.pc.gov.au/__data/assets/pdf_file/0006/132981/automotive-position.pdf">“no extra claims” is a rigidity</a>, because it inhibits an employer demanding more while an agreement is in place. And, according to some politicians, it is the <a href="http://www.abc.net.au/7.30/content/2013/s3942670.htm">fault of the Fair Work Act and of unions</a>, even though this was <a href="http://www.abc.net.au/worldtoday/content/2013/s3942975.htm">denied by Toyota</a> and indeed the same provisions existed under Coalition legislation. A virtuous stability has become an evil inflexibility because interests have changed.</p>
<h2>You can’t take that away…</h2>
<p>Unions actively oppose cuts in pay and conditions, because that’s what workers want them to do. There is nothing unusual about resistance to having things taken away from you. Losses are felt far more strongly than gains. It’s an innate part of human and indeed animal nature. </p>
<p>It’s a phenomenon <a href="http://books.google.com.au/books?id=oV1tXT3HigoC&pg=PT315&lpg=PT315&dq=%22the+concept+of+loss+aversion+is+certainly+the+most%22&source=bl&ots=bXQxID6rm_&sig=wt3H_XM0mi7mtcoHJfvunIyqLx8&hl=en&sa=X&ei=1237UqK7OMmBkQXyjYGgAw&redir_esc=y#v=onepage&q=%22the%20concept%20of%20loss%20aversion%20is%20certainly%20the%20most%22&f=false">repeatedly found</a> in psychological experiments. It’s why, when an animal attempts to invade another’s territory, the animal on “home” territory “<a href="http://www.bloomberg.com/news/2011-10-26/bias-blindness-and-how-we-truly-think-part-3-daniel-kahneman.html">almost always wins the contest</a>”. It’s why, despite <a href="http://www.crikey.com.au/2013/10/29/crikey-says-news-corp-is-threatened-by-aunty/?wpmp_switcher=mobile">reported deficits of over A$10 million per year</a>, Rupert Murdoch continues to publish <em>The Australian</em>. Resistance to losses is not restricted to workers; but workers have the least they can afford to lose.</p>
<p>So is “flexibility” in labour markets (which, for those who write about it, means flexibility by workers) necessarily a good thing? In the lead up to WorkChoices, and since its repeal, there were claims our industrial relations system lacked flexibility.</p>
<p>Yet by objective measures, the level of flexibility <em>by</em> employees in Australia is amongst the highest.</p>
<p>The Organisation for Economic Co-operation and Development (OECD) analysed a number of aspects of “inflexibility”, referring to them as “employment protection legislation”. <a href="http://www.oecd.org/els/emp/34846856.pdf">It found</a> (even before ‘WorkChoices’) that Australia had one of the lowest levels of job protection in the OECD (see chart). Several countries had high job protection and low unemployment, including Norway and the Netherlands.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41371/original/7h2c4zrr-1392210969.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Source: OECD, Employment Outlook 2004, Chapter 2: Employment Protection Legislation and Labour Market Performance, Paris, p72.</span>
</figcaption>
</figure>
<p>Overall, compared to other OECD countries, Australia also has high rates of part-time employment, temporary employment and people working very long hours. </p>
<p>Most countries do not allow long-serving employees to be denied sick or recreation leave. We call it casual employment, and it affects a quarter of employees.</p>
<h2>Lessons from elsewhere</h2>
<p>The OECD was one of the strongest advocates of labour market “flexibility”. Yet during the global financial crisis, something happened to force a rethink of its position.</p>
<p>Across the North Atlantic, gross domestic product (GDP) fell as the crisis deepened. Theory said the US labour market, with its far greater flexibility than that in Europe (for example, workers could be fired “at will” in the US), should adapt better than its European counterpart.</p>
<p>Reality was the reverse. The US experienced a smaller fall in GDP between 2008 and 2009 than did Europe yet it suffered a <a href="http://books.google.com.au/books?id=gbLQAQAAQBAJ&pg=PA194&lpg=PA194&dq=%22Yet+GDP+fell+by+considerably+more+in+the+EU%22&source=bl&ots=r8cd8VPn3o&sig=KgV6oYBUsJbLI_DOz2Rh8Wg5et8&hl=en&sa=X&ei=YWr7UuX9HcXPlAWd2YCwCQ&redir_esc=y#v=onepage&q=%22Yet%20GDP%20fell%20by%20considerably%20more%20in%20the%20EU%22&f=false">greater drop in employment</a>. </p>
<p>The OECD saw through the flexibility fairytale. So <a href="http://www.oecd.org/els/emp/45219634.pdf">in 2009 it found</a> no evidence that “reforms” to promote flexibility had made labour markets “less sensitive to severe economic downturns than was the case in the past”. It recommended improvements in income security it had previously dismissed as inhibiting flexibility.</p>
<p>We can no longer say that flexibility by employees is necessarily a good thing.</p>
<p>But we can say that the rhetoric of flexibility is often a device for transferring risk onto workers – who can least afford it.</p>
<hr>
<p><em>This is the first piece in our Insecure work series. Click on the links below to read the other pieces.</em></p>
<p><a href="https://theconversation.com/is-job-insecurity-becoming-the-norm-for-young-people-22311">Is job insecurity becoming the norm for young people?</a></p>
<p><a href="https://theconversation.com/viewpoints-should-penalty-rates-be-abolished-22819">Viewpoints: should penalty rates be abolished?</a></p>
<p><a href="https://theconversation.com/online-labour-marketplaces-job-insecurity-gone-viral-20020">Online labour marketplaces: job insecurity gone viral?</a></p><img src="https://counter.theconversation.com/content/22005/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions.</span></em></p>If you were to choose one buzzword that, despite its vagueness, has dominated industrial relations debate over three decades, it would be “flexibility”. It has emerged again in rhetoric surrounding Toyota’s…David Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231952014-02-14T05:38:12Z2014-02-14T05:38:12ZBuilding a housing industry from the relics of a car industry<figure><img src="https://images.theconversation.com/files/41498/original/sq86z93j-1392332279.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prefab housing is an industry that shares many assembly methods with car manufacturing.</span> <span class="attribution"><span class="source">Code_martial/Flickr</span></span></figcaption></figure><p>Unless you have been living under a rock, you couldn’t help but hear the dying wail of manufacturing here in Australia. Car manufacturing and food manufacturing being the most recent victims. There’s no shortage of potential contributors: the high Australian dollar, the natural resources sector, the unions, cheap foreign imports, etc.</p>
<p>Although it would seem that these types of manufacturing are bowing out from the Australian economy, there could be a good news story for manufacturing in the wings: the prefabricated building sector. </p>
<p>And it could provide a much needed employment bridge for workers within industries such as automotive. </p>
<h2>Growth trends in building manufacturing</h2>
<p>In 2012, output from the prefabricated building industry globally is <a href="http://www.businesswire.com/news/home/20140123005885/en/Research-Markets-Global-Prefabricated-Buildings-Market--#.UvyjnkKSx40">estimated</a> to be more than US$90 billion, up from $60 billion in 2011.</p>
<p>Australia’s share of this is still comparatively small, representing just 3% of the global number. Prefabricated buildings in Australia also represent 3% of the domestic residential housing market. In Scandinavian countries they use substantially more, with 50% of residential housing in Finland and 74% in Sweden being prefabricated. </p>
<p>But the Australian industry is growing, with an ambition to achieve 10% of the residential market by 2020.</p>
<p>While many of the Australian modular builders are focused on single and two storey dwellings, one company has setup a factory in Melbourne which is making multi-storey dwellings: <a href="http://www.hickory.com.au/unitised-building">Hickory Group</a>. Although the company has been building using conventional methods for generations, five years ago it established a modular factory which now employs more than 150 people and is producing more than 500 apartments every year. Many of the employees are drawn from the depleted Victorian automotive manufacturing sector. Since inception, the factory has produced multi-storey modular residential and hotel projects across the country, and engineered a system that can achieve architecturally diverse high-rise buildings.</p>
<p>Although Hickory is building apartments and hotels, its factory more resembles an auto manufacturing plant. The plant uses <a href="http://www.leanconstruction.org.au/">lean construction</a> techniques, building multiple parts of a building in parallel; as well as using <a href="http://www.innovation.gov.au/industry/buildingandconstruction/BEIIC/Pages/BuiltEnvironmentDigitalModelling.aspx">Building Information Modelling</a> (BIM), and Enterprise Resource Planning (ERP). In doing so, they <a href="http://www.hickory.com.au/unitised-building/benefits/#faster-construction">halve construction times</a> compared against conventional building methods in Australia. The product is also much more sustainable in terms of energy, carbon and building waste.</p>
<p>It’s not just the numbers that look good for manufactured buildings, the aesthetics are looking good too. <a href="http://www.completehome.com.au/be-inspired/tips-and-trends/15-fabulous-prefabricated-homes">Beautiful modular buildings</a> are popping up all over the country. Melbourne has the world’s tallest wood building: with Lendleases’s <a href="http://www.forteliving.com.au/">Forte</a> apartments. Even the <a href="http://www.afr.com/p/lifestyle/life_leisure/prefab_homes_moving_into_millionaires_8WOcz1UTTT0jNUYoH6KpvK">rich</a> are embracing modular construction.</p>
<p>In 2013, a modular peak industry body was established in Australia. <a href="http://www.prefabaus.org.au/">Prefabaus</a> already has 36 industry members.</p>
<h2>Labour opportunity</h2>
<p>The workforce for modular building requires skills that are usually associated with auto manufacturing, rather than traditional building skills. This includes factors such as design upfront, proactive rather than reactive thinking, procuring materials upfront and warehousing components. There is a clear opportunity to up-skill the auto manufacturing industry to building manufacturing.</p>
<p>Similar factories are operating and popping up in other parts of the world including China, Thailand, Malaysia. </p>
<p>Does this mean the end for manufactured buildings here in Australia? Not necessarily.</p>
<p>Although some might argue the Chinese quality isn’t on par with Australia, if that is the case, without a doubt, in time it will be. </p>
<p>Does that spell trouble for Australian industry? Maybe not.</p>
<p>Although labour costs in China are much lower than those in Australia, there are other factors which impact the savings perceived in buying modular products offshore.</p>
<p>One advantage that Australian factories have over their foreign competitors is that the modules can get to site quicker and transportation costs are less. Post project defect rectification and complying with builders warranty regulations becomes much more complicated when purchasing imported products from offshore suppliers. Having an Australian manufacturer and installer allows for greater certainty of any potential issues being resolved promptly and properly.</p>
<p>So while the construction costs, due to labour, may make overall costs more expensive, when compared against lesser transport costs, and potentially escalated costs to rectify defects and quality, these labour gains may be less relevant.</p>
<h2>A trend we can benefit, or lose from</h2>
<p>Modular will never completely replace conventional building approaches, but it will take a much greater share in the market, particularly for multi-storey buildings. This 21st century innovation offers a much more sustainable option for the construction sector.</p>
<p>Australian manufacturing has a window of opportunity here - to turn around the manufacturing industry from ailing to growing. If we don’t seize the day in building manufacturing, foreign companies will certainly fill the gap in the market, which could lead to job losses in traditional building.</p>
<p>So as the trend towards modular construction continues, Australia should embrace this opportunity and give domestic building manufacturing a fighting chance. The opportunity is there for transition assistance to help move auto jobs to modular building jobs that will ensure a much longer and more sustainable outcome than the millions used in supporting the auto manufacturers. We could use more of this kind of thinking in Australia.</p><img src="https://counter.theconversation.com/content/23195/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Unless you have been living under a rock, you couldn’t help but hear the dying wail of manufacturing here in Australia. Car manufacturing and food manufacturing being the most recent victims. There’s no…Jemma Green, Senior Research Fellow, Curtin UniversityPeter Newman, Professor of Sustainability, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231382014-02-14T03:08:53Z2014-02-14T03:08:53ZThe story of steel maps the job future for car workers<figure><img src="https://images.theconversation.com/files/41405/original/qxksdhr7-1392243946.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Workers who lost jobs at the Port Kembla Steelworks have faced mixed fortunes.</span> <span class="attribution"><span class="source">AAP/Dean Lewins</span></span></figcaption></figure><p>Prime Minister Tony Abbott is right when he describes Australia’s car industry workers as <a href="http://www.abc.net.au/am/content/2013/s3942002.htm">“highly skilled people, adaptable people”</a>. He has also been saying this week that the departure of Toyota and Holden creates an opportunity for automotive workers to transition from <a href="http://www.abc.net.au/am/content/2013/s3942002.htm">“good jobs to better jobs”</a>. </p>
<p>How realistic is this? What jobs can ex-car industry workers expect and will they make the best use of their skills? And where will these jobs be located? </p>
<p>The answer will depend on what resources are made available to support workers through the transition, and to encourage other employers to recruit them. We must not replicate the extremes of <a href="http://citiesmcr.wordpress.com/2014/01/26/bailing-on-detroit/">Detroit</a>, where a city left without government support went into meltdown. </p>
<p>We also need to take a personalised approach: be smart about the skills and capacities of individual automotive workers who have lost jobs. While the car industry may no longer remain viable in Australia, the workers’ skills are far from redundant. </p>
<p>We are currently interviewing ex-steelworkers who lost their jobs in 2011 <a href="http://www.illawarramercury.com.au/story/636346/800-jobs-to-go-at-port-kembla-steelworks/">after workforce downsizing in Wollongong</a>. </p>
<p>Their stories suggest finding new jobs, or even better jobs, will be a matter of macroeconomics, but also individual circumstances. A policy approach for car workers founded on genuine care will be key.</p>
<h2>Learning from other recent cases</h2>
<p><a href="http://www.theguardian.com/world/2014/feb/11/victoria-looks-newcastle-clues-post-toyota-future">Newcastle has been much discussed this week</a>. There, overall unemployment levels were kept low despite the closure of the city’s steelworks. Some found work in well-paid jobs in mining and construction; other replacement jobs were more precarious. </p>
<p>Overall jobs growth has been fuelled by general prosperity, in sectors like aged care, hospitality and creative industries. The community and civic leaders also cared deeply about the individuals and their fate.</p>
<p>Experiences in Wollongong provide another comparison. Fortunes have been mixed, but local social bonds and an ethic of care are immense resources. </p>
<p>One of our participants, Bob, aged 52, has worked at the steelworks for 35 years. He left high school and went straight into a job making steel in Port Kembla. All his family live in the region. His job involved making steel for railway lines, and later, slab steel. He now drives a crane. </p>
<p>He has no trade qualification and so is pessimistic about finding another well-paid job in the Illawarra. He believes he will have to get a courier job or “get by” from a redundancy package. After the 2011 redundancies he witnessed many close friends leave the plant. They found other jobs in Sydney. </p>
<p>Those of an older generation have taken early retirement, living off their redundancy packages. </p>
<h2>Need work, must travel</h2>
<p>Many ex-steelworkers in Wollongong are able to find work, but at a distance from family and communities. We are documenting how this impacts their social networks and personal bonds as people migrate elsewhere or commute long hours in order to work. The same thing happened with <a href="http://theconversation.com/mitsubishis-silver-lining-for-holden-workers-21425">Mitsubishi workers in Adelaide</a> who lost their jobs after that plant’s closure. </p>
<p>Younger Wollongong workers in particular are prepared to commute or move, taking up jobs in Sydney in a range of industries including mining, construction and transport. The workforce is now more mobile, doing the daily commute to where jobs can be found. </p>
<p>Some have become part of the increasingly significant fly-in, fly-out workforce based in Wollongong. Others have found work elsewhere in the region, <a href="http://www.soacconference.com.au/wp-content/uploads/2013/12/Gibson-Economy.pdf">in specific places and sectors where manufacturing jobs have grown</a>.</p>
<p>Another ex-steelworker, Jeff, is a 43-year old with an engineering management background, who has worked at the steelworks for over two decades. He has been able to get job interviews and offers, and feels much more optimistic about the future because he knows he can find alternative employment. </p>
<p>But the work isn’t in the Illawarra. He is now deciding what to do. Contemplating having to commute for work, Jeff is worried about being away from his family and impacts that will have on his kids and partner.</p>
<h2>Other manufacturing job options</h2>
<p>There are still options for car workers elsewhere in manufacturing, especially for those willing to move or travel. </p>
<p>Boeing has a large manufacturing plant in Melbourne, the largest outside of North America. Here in Wollongong too, small aeronautical engineering companies are making use of high quality, highly skilled labour to make custom parts for the Royal Flying Doctor Service and other specialist users. </p>
<p>Some will get jobs in smaller firms making high-tech and specialised manufactured goods, such as trucks (which are still made in Australia), mining equipment and military hardware. </p>
<p>As many <a href="http://theconversation.com/losing-the-car-industry-means-we-risk-our-technology-23082">commentators have suggested</a> in the past few days, Australia’s automotive sector (through R&D) has been innovative with materials and technologies, in areas like carbon fibre, automatic detection and ceramics for braking systems that have applications for other industries. <a href="https://theconversation.com/graphene-can-pave-the-way-for-australian-manufacturing-21993">Manufacturing innovations will generate new job opportunities</a>. </p>
<p>Another lesson from Wollongong is for governments to be bold, making significant <a href="http://www.iaccelerate.com.au">investments</a> in regional development and research initiatives that leverage upon, rather than reject, manufacturing innovations, skills and capacities.</p>
<p>Nevertheless, in the immediate case of car industry workers there is going to be pain. <a href="https://theconversation.com/what-the-departure-of-toyota-holden-and-ford-really-means-for-workers-23137">Staggering the timing of closures</a> with the interests of workers in mind will make a difference. Many jobs will have to be in other parts of the economy, and a <a href="http://theconversation.com/mitsubishis-silver-lining-for-holden-workers-21425">“job for a life”</a> is now much harder to find.</p>
<h2>Quality work matters</h2>
<p>There is one more lesson too: what is the quality and actual nature of the work being undertaken? </p>
<p>Greg is 29 and has worked in steel for 11 years. His daily duties include organising contract workers to perform certain jobs. Greg says that experience and skill can be applied to other industries outside of steel or manufacturing. He’s an electrician by trade and is confident he can use his knowledge and skills to find an alternative job. </p>
<p>But he may have to find a job doing something he’s just not passionate about. He says it gives him a thrill to see steel made and being put into cars and buildings. </p>
<p>No doubt car workers feel the same sense of pride and pleasure in seeing the physical fruits of their labour. Such emotions are not a mere externality to this debate. As well as finding alternative sources of work for ex-car workers, that work needs to be rewarding and enable individual people to best use their considerable skills and creativity.</p><img src="https://counter.theconversation.com/content/23138/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Gibson receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Andrew Warren does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Prime Minister Tony Abbott is right when he describes Australia’s car industry workers as “highly skilled people, adaptable people”. He has also been saying this week that the departure of Toyota and Holden…Chris Gibson, Professor of Human Geography, University of WollongongAndrew Warren, Lecturer in Geography and Planning, University of New EnglandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/230932014-02-13T03:28:03Z2014-02-13T03:28:03ZCar manufacturing numbers just don’t stack up<figure><img src="https://images.theconversation.com/files/41417/original/8vwxy47x-1392250932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Efficient manufacturing depends largely on scale, and Australia's car production numbers have fallen.</span> <span class="attribution"><span class="source">AAP/Adi Weda</span></span></figcaption></figure><p>Now that the final nail has been hammered in to the car industry’s coffin, what does it mean for the Australian economy? </p>
<p>As always, the data is a good place to start. </p>
<p>Efficient manufacturing depends largely on scale - production of cars in Australia has <a href="http://www.fcai.com.au/sales/monthly-production-volumes">fallen</a> from 324,118 in 2008 to 210,538 in 2013. That 2013 number represents less than 20% of the <a href="http://www.fcai.com.au/sales/-2013-new-vehicle-market">1,136,227 cars purchased</a> by Australians in that year. None of the top four selling cars in 2013 - in order: Toyota Corolla, Mazda, Toyota HiLux and Hyundai i30 - are made in Australia. </p>
<p>What about employment? In 2012, 51,931 workers were <a href="http://www.innovation.gov.au/industry/automotive/Statistics/Pages/default.aspx">employed</a> in the entire automotive industry, a decline from 77,776 in 2003. Only 11,053 of those in 2012 were directly employed in car manufacturing. The latter is about 1.2% of the <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Nov%202013?OpenDocument">total manufacturing workforce</a> of about 960,000. </p>
<p>In 2013, the monthly fluctuations, up or down, in full time persons employed in Australia averaged 5,600. That’s half the entire car manufacturing workforce. So a loss of car manufacturing employment would be a blip in terms of the national employment numbers.</p>
<p>At the same time profitability has been tanking. The <a href="http://www.innovation.gov.au/industry/automotive/Statistics/Pages/default.aspx">local manufacturing sector</a> made a trading loss of A$670 million in 2012, compared with a profit of $313 million in 2003. Despite declining employment, declining profitability and virtually zero productivity growth over 10 years, total wages and salaries paid by the industry have increased every year – by 2.8% in 2012 for example total government (read taxpayer) assistance to the car manufacturing industry was valued by the Productivity Commission at over A$1 billion in 2012, more than half of which was subsidies in the form of cash and special tax concessions, the remainder being the value of tariff assistance. The annual cash subsidies have been fairly steady over the past 10 years although the tariff assistance has declined. This rate of assistance is <a href="http://www.pc.gov.au/annual-reports/trade-assistance/2011-12/media-release">more than twice as high</a> as the average received by other manufacturing industries. </p>
<p>In short, this has for many years been a manufacturing industry in steady decline, losing sales and shedding jobs, making losses, yet receiving taxpayer assistance way in excess of other industries.</p>
<h2>Why is car manufacturing special?</h2>
<p>The idea that car manufacturing is unique and deserves special taxpayer aid because it is a laboratory for core skill development, or because it is part of a <a href="https://theconversation.com/losing-the-car-industry-means-we-risk-our-technology-23082">long supply chain</a> linking thousands of jobs, is highly exaggerated at best. The same arguments could be applied to just about any industry such as tourism, higher education or health. They all invest in skill formation and are linked to a long supply chain. </p>
<p>Another overblown <a href="https://theconversation.com/what-the-departure-of-toyota-holden-and-ford-really-means-for-workers-23137">claim</a> is that the car manufacturing regions in South Australia and Victoria would be crippled by the loss of jobs as the multiplier effects of lost spending by workers ripple through the local communities. Research suggests that ultimately up to 13,000 workers could lose jobs, directly and indirectly, from the <a href="http://www.adelaide.edu.au/wiser/docs/GMHNov2013ReportFinal.pdf">closure of a single GM plant</a> in Elizabeth in South Australia. However this looks like an absolute worst case scenario.</p>
<p>The recent industry announcements are not like the closure of Mitsubishi’s plant in Tonsley Park South Australia, where the decision was announced in February 2008 and the factory closed its doors the next month. The workers of Holden and Toyota have nearly four years to plan their futures. These workers have skill and experience. Some will find other full time jobs in manufacturing, some will change careers perhaps going into small business, some will work part-time and some will probably retire. And they will receive good redundancy pay. We can’t just assume that all of their labour and all of their spending will be completely lost.</p>
<h2>Where tax dollars go</h2>
<p>Jobs across the country will also be supported by the saving to taxpayers of the hundreds of millions of dollars that have been pumped into car manufacturing every year. Governments can spend the money on health, education, or paying off debt – yesterday’s spending that was unfunded – which in turn means lower taxes in the future. Whatever the government chooses to do with the saving, the spending returns to the economy, directly or indirectly, which supports jobs.</p>
<p>It’s always worth remembering that for every dollar we take from a taxpayer and try to give to another taxpayer, business or welfare recipient, we lose about 20 cents. This is the disincentive effect of taxes on labour participation. The more we take from taxpayers, the bigger these so-called deadweight losses.</p>
<p>The fact that taxpayers in other countries pay for jobs in their car manufacturing industries is not a good reason for us to do it. Their industries may be inherently more profitable than ours through larger scale, lower labour costs and a more competitive exchange rate. In any case, the reasons above for not subsidising car manufacturing apply to other countries. </p>
<p>The core issue in this debate is the role of the government in managing the changes that continually arise from new technologies and global competition – how much support to provide for the losers and in what form. This is not a new issue. </p>
<p>Iconic brands like Heinz, Speedo and Aerogard are no longer manufactured in Australia because we can buy them more cheaply when they are made overseas. Do any of today’s modern secretaries and PAs want to return to the typing pool? Or as Paul Keating famously said back in 2000: “Did we ever hurt anybody liberating them from the car assembly line?”</p><img src="https://counter.theconversation.com/content/23093/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ross Guest does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Now that the final nail has been hammered in to the car industry’s coffin, what does it mean for the Australian economy? As always, the data is a good place to start. Efficient manufacturing depends largely…Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231242014-02-13T01:38:51Z2014-02-13T01:38:51ZManaged decline to rapid demise: Abbott’s car industry gamble<figure><img src="https://images.theconversation.com/files/41408/original/zzy8wv2p-1392245972.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Prime Minister Tony Abbott is betting the rapid demise of Australia's automotive sector can be contained politically.</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p>For the past 30 years, Australian automotive industry policies can be characterised as managed decline. Beginning in the 1980s with the Button Plan, the aim of policy was to consolidate the industry and avoid the economic and political fallout that would accompany its rapid demise.</p>
<p>Managed decline was never the stated aim of automotive assistance. The goal was to create a smaller industry that could compete against imports and develop an export focus. Managed decline has been, however, an implicit part of automotive policies because the removal of protection and the continual downsizing of the industry progressively reduced the future costs of its demise.</p>
<p>Like a married couple trying to maintain a failing relationship, neither government nor industry could admit that there was no long-term future. Both parties were unwilling to embrace the sort of radical restructuring and interventionism that might have enabled the Australian industry to achieve scale by hooking into growing regional production structures. Instead, governments encouraged consolidation of the long-standing industry structure as a trade-off for more assistance, which, in turn, made production viable over the short-to-medium term.</p>
<p>The number of true believers in an automotive future waned as the industry declined. Increasingly, many Australians believed that the industry could survive only if governments committed ever more budgetary resources. In recent years, almost immediately after various governments had arranged new plans, the industry was soon demanding more assistance that took into account the new “unforeseen difficulties” the sector faced.</p>
<p>Managed decline can only go on for so long. Eventually the process of decline makes demise palatable and less destructive. While the Abbott government argues it is not responsible for the industry’s destruction, by refusing to engage with the industry on new funding arrangements, it has deemed that managed decline is no longer necessary.</p>
<p>In the short-term, the Abbott government has wagered that the political costs of moving from managed decline to rapid demise can be contained. Over the longer-term, it has gambled that other industries can cover the economic costs and that the manufacturing of cars has no wider benefits in terms of strategic capabilities or productivity.</p>
<p>The demise of the automotive industry and continuing decline of the wider manufacturing sector signals another victory for economic liberals who have long argued that governments should facilitate rather than fight the reallocation of economic resources from manufacturing to industries such as mining and gas in which Australia has a comparative advantage. It also signals the defeat of those interventionists who argue that Australia needs a strong manufacturing sector as an integral component of a wealthy and diverse economy.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41410/original/br5kd6vk-1392246274.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The number of true believers in the automotive industry has waned with the industry’s decline.</span>
<span class="attribution"><span class="source">Joe Castro/AAP</span></span>
</figcaption>
</figure>
<h2>Managed decline in practice</h2>
<p>Since the sale of Chrysler’s plant to Mitsubishi in 1980, policymakers have slowly managed the decline of the automotive industry. The process began in earnest with the Button Plan of the Hawke Labor government, which aimed to reduce the number of models produced in Australia from thirteen to six and the number of car manufacturers from five to three. </p>
<p>During the Howard years, policy towards the automotive industry shifted towards political expediency and while the profit performance of the industry improved during the early 2000s, the industry went into a funk as the resources sector began to boom. The Howard government had no faith in industry policy but did not want to be the government that presided over the final demise of the industry.</p>
<p>The Rudd government re-badged its assistance to the industry as co-investment, but was unable to produce an automotive industry that could survive without continuing and significant monetary injections. In 2008, it announced “A New Car Plan for a Greener Future”. The initially positive mood generated by the prospective investment soon turned sour and it was not long before the industry was once again pleading for more assistance. Mitsubishi’s final closure in 2008 represented another stage in the process of managed decline. </p>
<p>While Rudd provided rhetorical support for the industry and his industry minister Kim Carr truly believed in its future, the global financial crisis limited the development of new forms of assistance that might have enabled the industry to restructure and survive over the longer term. For Labor the emphasis eventually became industry survival rather than development.</p>
<p>In February 2011, Labor cut the A$1.3 billion Green Car Fund, an integral part of the wider assistance package, to pay for flood reconstruction. With that cut, Labor revealed it had abandoned any real hope for an alternative green-focused future for the industry. In May 2013, Ford Australia confirmed it would end local vehicle production in October 2016.</p>
<p>The incoming Abbott government faced a choice between further assistance for Holden and Toyota and the components sector or maintaining the depleted assistance regime set up by the Rudd government. Failing to engage with Holden and Toyota to create a new plan was a gamble that significant sunk costs would mean a continuation of existing production schedules. The end result was Holden’s December announcement that it would cease production by 2017 and Toyota’s February announcement that it would too.</p>
<h2>The fallout?</h2>
<p>Losing a significant industry like the car industry at the same time as mining investment continues to decline will cause problems for the Australian economy and workers. The demise of the industry does not mean an end to budgetary outlays as the government will have to assist the large number of workers affected and provide funds to encourage alternative economic development.</p>
<p>Nevertheless, having the industry announce an end to production in the early stages of its term of office may restrict the electoral consequences for the Abbott government, as might holding an election before the end of manufacturing in 2017. However, if the economy goes into recession in 2015 because of declining Chinese demand and high household indebtedness, voters might see the “decision” to hasten the demise of the industry as an important component of economic policy indifference and incompetence. </p>
<p>Alternatively, it is possible that the long-running process of managed decline has instilled in the Australian population an acceptance that the demise of the industry was inevitable.</p><img src="https://counter.theconversation.com/content/23124/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Conley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For the past 30 years, Australian automotive industry policies can be characterised as managed decline. Beginning in the 1980s with the Button Plan, the aim of policy was to consolidate the industry and…Tom Conley, Senior Lecturer, School of Government and International Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231372014-02-12T19:33:51Z2014-02-12T19:33:51ZWhat the departure of Toyota, Holden and Ford really means for workers<figure><img src="https://images.theconversation.com/files/41355/original/xjyp9t69-1392201158.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The impact of job loss on car industry workers is multifaceted, and those arguing 'better jobs' will emerge could be fooling themselves.</span> <span class="attribution"><span class="source">Julian Smith/AAP</span></span></figcaption></figure><p>People change jobs constantly, and the jobs lost in car manufacturing closures are insignificant in the context of total job changes - no different to everyday job changes. So say some commentators opining on the end of car manufacturing in Australia. The problem is, they’re wrong.</p>
<p>In reality, car industry job losses will be concentrated in particular localities and particular occupations at particular times, creating concentrated pools of workers with similar skills and experiences vying against each other for the relatively narrow range of jobs that suit their skills and experiences. This creates a long job queue that will take a long time to disperse. </p>
<p>Only the most highly skilled and well-connected among the job losers will find work in jobs that use their existing skill complements. There’s often a loss of skill, a loss of income in the period between job loss and eventual reemployment, and lifetime income reduction as a consequence of starting again at the bottom rung in a new occupation. </p>
<p>A small number of workers will flourish and do better than in their previous job; this was the case with about 2% of clothing workers but perhaps 20% of Ansett workers, for example. The concentrated nature of these job losses demands intervention to minimise adverse social impacts.</p>
<p>Potentially, job losses include not only the workers who are directly affected in car and component manufacturing plants but also workers in all those firms that supply those plants, from accountants to engineering consultants to cleaners, not to mention the local stores, lunch bars and services that workers buy with their wages. </p>
<p>The numbers of businesses that rely on auto-related work is much larger now than it was in the 1980s after tariff cuts because in the 1980s restructuring for “lean” production outsourced non-core activities. Some submissions to the Productivity Commission last year put these employment “multipliers” at 4.4 in South Australia, suggesting that for every 1,000 car maker jobs lost, 4,400 other jobs will disappear. In Detroit, the automotive multiplier effect has been estimated at 3.6. Note that the Productivity Commission rejected the multiplier effects argument as a justification for industry assistance, but based that conclusion on the questionable authority of a staff research paper. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=550&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=550&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41358/original/y2n94vvv-1392202048.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=550&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">With the departure of any major industry player comes the demise of support businesses, like this one at a former Ansett terminal.</span>
<span class="attribution"><span class="source">Julian Smith/AAP</span></span>
</figcaption>
</figure>
<h2>Which workers will be hardest hit?</h2>
<p>Workers who lose their jobs at a time of economic expansion fare much better than those who lose their jobs in a recession, when vacancies are scarce. The Mitsubishi and Ansett airlines workers, for example, fared better in the longer term than automotive workers who lost their jobs in the tariff-reduction related restructuring during the 1990-92 recession. </p>
<p>It would be helpful if policymakers tried to manage closure dates to avoid automotive job losses occurring at the same time as anticipated job losses in mining construction. At a minimum, the government needs to negotiate to ensure that Holden, Ford and Toyota close at different times. If Ford closed in 2016, Holden in 2017 and Toyota in 2018, the labour market would have longer to sift out with fewer casualties.</p>
<p>The employment prospects of automotive workers who are over 45 year of age are bleak regardless of their skills. Those with poor English language skills will also face considerable challenges. Policy interventions need to be sensitive to established social structures, and not assume that workers will be in position to find jobs outside an expected stereotypical range.</p>
<p>Retrenched workers that live in neighbourhoods with large numbers of unemployed workers – that is, in automotive sector feeder suburbs – will have poorer outcomes in the longer term. Younger workers without dependents or financial commitments are likely to relocate, but those with teenage children or a working spouse will face insurmountable barriers to relocation. Some marriages will end as the need to work wins out over family. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=513&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=513&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41356/original/62m2nwps-1392201396.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=513&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Abandoned factories are a byproduct of the demise of Australian manufacturing.</span>
<span class="attribution"><span class="source">Author</span></span>
</figcaption>
</figure>
<p>In previous large-scale retrenchments, housing prices have fallen in the most severely affected neighbourhoods as housing demand stalls. Those who relocate will realise a financial loss. In addition to the costs of relocation, moving to a location where jobs are more plentiful is likely to involve higher housing costs. Costs aside, people with strong community links are disinclined to relocate and will accept diminished occupational status instead. This outcome is a loss to the nation.</p>
<p>Those workers who are financially secure or who have a spouse in full-time work can usually afford to wait for an opportunity that maximises their use of skills and accords with their interests. Those in financial stress will have no option but to take any job that provides income. But careers have trajectories and the “any job” option is not the best option for sustaining a career. </p>
<p>Social security rules – on assets and savings - are going to penalise those former autoworkers that have saved and invested; while former colleagues who lived from week to week will qualify for full if meagre benefits. Free financial counselling for autoworkers before they finish work would help them know their position and negotiate with financial institutions regarding mortgages and loans.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=487&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=487&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41359/original/z29csfdt-1392202356.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=487&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Some Ansett workers were able to find better jobs, but others did not fare as well.</span>
<span class="attribution"><span class="source">Dan Peled/AAP</span></span>
</figcaption>
</figure>
<h2>Facing up to harsh realities</h2>
<p>While policymakers like to imagine that workers in “transitional” labour markets are accustomed to and comfortable with job change, in fact there will be significant numbers of mostly loyal and long-serving workers for whom job loss is going to trigger a significant personal crisis, perhaps leading to suicide. </p>
<p>The circumstances of the retrenchment have a lasting impact on the outcomes of mass job losses. In a nutshell, those people who believe that they have been mistreated or singled out in some way have significantly poorer outcomes. Dramatic and unexpected shutdowns and lock-outs actively produce poorer outcomes, especially for people who took out a loan the week before the event. The longer the warning of impending closure, the more time people have to adjust to the idea and plan for new circumstances before they have to cope with the reality. </p>
<p>The people most at risk – as the case of Ansett airlines demonstrated – are those who view their workplace as a family and rely on workmates for social interaction. A second highly vulnerable group are employers in failing small firms who feel responsible for their workforce and carry the weight of failure. Sadly, loyalty and commitment puts workers at more risk. In the Ansett case, self-help groups of former workmates were useful. The establishment of automotive “men’s sheds” in affected suburbs would provide a venue for maintaining attachments and connecting to support services. </p>
<p>The adjustment has already started. The most able workers are going to be headhunted or will find better jobs quite quickly. If they are replaced, the replacement will be of a lower calibre. By the time of closure, remaining workers are likely to be less attractive to employers. </p>
<p>Some component manufacturers will be searching to reorient their businesses and develop export markets, but many others will be working out ways to transfer the wealth held in their business to their personal accounts and then exit for the least cost. As component suppliers exit, supply chains will be disrupted. But lots of small closures are better in labour market terms than three major events, so this process has its benefits. </p>
<p>People who lose their jobs unexpectedly are likely to take about six weeks to come to terms with their situation; during that time many will feel paralysed and unable to search for work effectively. Between six weeks and six months the more employable among the workforce will have found work, although often in less skilled jobs. Between six and twelve months the likelihood of finding work diminishes quickly, although percentages are boosted by the reemployment of affluent higher skilled workers who take longer to find and commence suitable work. After a year the chances of finding work are poor and people tend to leave the workforce, often permanently. In short, the employment impacts of unemployment get worse over time (this is called hysteresis), which is the reason why the metaphor of “recovery” from job loss, as though it was an illness, is usually misplaced. </p>
<h2>Is retraining a panacea?</h2>
<p>Retraining is a policy intervention with well documented benefits. But the options for retraining are not the same now as they were in the 1990s. The TAFE system is much diminished and those training for less skilled jobs would incur high costs unless there is ample assistance. People who have been out of the education system for a long time will need introductory preparatory courses before they can tackle skill retraining. </p>
<p>In the case of clothing workers, two years in retraining for low level vocational skills did not improve employment prospects but instead separated former workers from the labour market. The best retraining outcomes are achieved by workers who are able to turn a pre-existing hobby into a vocation (horse-training and scuba-diving, for example) and those who can upgrade existing skills at tertiary level. </p>
<p>Crucially, if retraining is to build on workers’ pre-existing skills, then it should not be targeted in “skills-in-demand” areas. Experience shows that taking groups of retrenched workers and training them all in the same occupation (security guard, forklift driver) puts them exactly where they started: competing with each other for a small number of jobs.</p>
<h2>Has anyone seen the ‘better jobs’?</h2>
<p>Some commentators have characterised the car industry closures as unleashing a round of creative destruction that will drive the growth of new industries and create new jobs. For that to be true, it is necessary to assume that existing investments in the car industry somehow inhibit the growth of other “better” opportunities. This is bunkum: if there were investment opportunities in these other sectors, the investments would have happened regardless of the automotive sector. In fact, spillover arguments would suggest such investments are now less likely without the critical mass of the automotive sector. </p>
<p>There is currently no obvious new job generator in the Australian economy except for domestic construction and infrastructure projects. This does not bode well for the future in Victoria and South Australia.</p><img src="https://counter.theconversation.com/content/23137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sally Weller's work on retrenchment outcomes in the clothing and airlines industries was funded by the Australian Research Council and the Victorian Government. In 2002 she contributed to the Howard government's redundancy policy and in 2004 she provided background material for the ACTU's test case on redundancy and termination. </span></em></p>People change jobs constantly, and the jobs lost in car manufacturing closures are insignificant in the context of total job changes - no different to everyday job changes. So say some commentators opining…Sally Weller, Australian Research Council Future Fellow, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/231172014-02-12T04:36:16Z2014-02-12T04:36:16ZToyota’s exit was inevitable: now for real test of government<figure><img src="https://images.theconversation.com/files/41321/original/n7dv8n2k-1392169999.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Global shift: one-in-three vehicles produced by Toyota are manufactured in Asia.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Toyota Australia President and CEO, Max Yasuda, has described the car maker’s decision to leave Australia as one of the saddest days in its history worldwide.</p>
<p>I do not doubt the emotion expressed by Mr Yasuda, but he has probably known for some considerable time that this decision was inevitable. It has less to do with <a href="http://www.afr.com/p/national/hockey_and_toyota_at_odds_over_union_BuD4fBWADPXjDm4glWhd6K">intransigent unions</a> and much more to do with a high Australian dollar and importantly, a global shift by the automotive industry into emerging markets.</p>
<h2>The problem with the dollar</h2>
<p>Yasuda emphasised Toyota’s decision was not made on any single factor alone. He pointed to the high Australian dollar, which has made exports unviable, the high costs of manufacturing (including energy) and low economies of scale which has also impacted its profitability and ability to compete in the Australian market in “one of the most open and fragmented automotive markets in the world”. (Interesting, he also highlighted “current and future free trade agreements” as contributing to the prospect of declining demand for Australian made cars.)</p>
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<img alt="" src="https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41323/original/8ch9bqv3-1392170918.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">With Holden and Ford gone, Toyota’s closure was inevitable</span>
<span class="attribution"><a class="source" href="http://www.flickr.com/photos/danloatmba/4057295943/sizes/o/">Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>These factors, coupled with the exit of Holden and Ford that supported the viability of the component manufacturing and supply for all three auto makers – provides the immediate rationale and explains the timing. These issues shape both the return on existing production facilities and the viability of existing operations without making major changes or new investments.</p>
<p>In all probability, however, this decision would have been made sooner or later – even if the Australian dollar had fallen substantially, or if its <a href="http://www.smh.com.au/business/comment-and-analysis/australian-workplace-culture-partly-to-blame-for-toyotas-exit-20140211-32djv.html">workforce agreed to alter terms and conditions in order to reduce production costs</a>. So this provides the reasons for the timing of Toyota’s withdrawal, not the key reasons for doing so.</p>
<h2>Global shifts in the auto sector</h2>
<p>In reality, the decision to quit reflects the investment strategy adopted by auto-makers worldwide to align investment in production facilities to growing markets.</p>
<p>Since 2000, the most significant growth in sales – and hence investment in new production facilities – have come from Asia, notably China.</p>
<p>In Toyota’s case, its production capacity in Japan accounts for around 40% of its productive capacity – although that share has been steadily declining. In North America and Europe investment in new production facilities has, like sales, slowed considerably as well.</p>
<p>In contrast, Toyota’s Asian-based factories (excluding Japan) have grown at a phenomenal rate. In 2003, Toyota’s Asian factories accounted for around one-in-ten vehicles it produced. Today, Asia accounts for around one-in-three vehicles produced by Toyota.</p>
<p>The Australian experience stands in stark contrast to Toyota’s Asian growth story. Sales growth has been at best sluggish – and this reflected in its output in Australia. In 2003, Australia accounted for just under 2% of Toyota’s total global production. Today, it stands at a meagre 1%.</p>
<p>In short, Australia has not warranted the attention of Toyota’s headquarters and could certainly not be capable of justifying future investment.</p>
<p>Put another way, Toyota Australia had reached a critical point beyond which there was no return – the business was not viable and could not be retrieved. In this scenario, no amount of subsidy from state or federal governments could have enabled Toyota to work around what had become a dire situation for its Australian business.</p>
<h2>Impacts of withdrawl</h2>
<p>The impacts will be substantial. Combined with the pull-outs announced by Holden and Ford, this decision confirms that in the lead-up to the 2016-17 closures of production facilities in Geelong, Altona, Broadmeadows and Fisherman’s Bend – all based in Victoria – there will be substantial job losses.</p>
<p>Estimates have varied between 30,000 and 50,000 jobs. I think this is difficult to estimate just now. The fact is the precise impact will likely depend on the capacity of manufacturers supplying the auto-makers to find new sources of businesses. For some, they have already diversified and produce inputs for other manufacturing processes; but for others this will prove impossible.</p>
<p>It will also depend on the approach of government to supporting the industry in transition. While previous governments have been willing to provide significant subsidies to protect jobs, the current government has made clear that it is not in the business of supporting failing businesses. And that is fair enough.</p>
<p>But in many respects this is different and presents a strong rationale for government intervention and support, even for a government that believes in the power and efficiency of market forces. The nature of these supports will be deep and broad-ranging, and may need to be in place for some years to come.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=392&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=392&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=392&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=493&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=493&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41320/original/c2zwxw2r-1392169923.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=493&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Experience shows that un-skilled and semi-skilled workers will be most vulnerable following Toyota’s closure.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<h2>What governments need to do now</h2>
<p>Businesses will require support in many ways to adapt and change, or simply to exit.</p>
<p>Displaced employees will need help in finding alternative jobs, perhaps in other parts of manufacturing, to retrain and move on, or simply to deal with extended periods of unemployment.</p>
<p>Prior experience indicates that the unskilled and semi-skilled, along with older workers, will be particularly vulnerable. They will face the prospect of diminishing opportunities to find jobs that match their current skills and fewer opportunities or resources to retrain and shift into growing sectors.</p>
<p>These processes of transition will require government support to ensure that the economic and social costs are minimised and fairly shared. The government will also need to support the development of new investments in more sustainable industries to replace what is now a significant hole in Victoria’s manufacturing industry. </p>
<p>This will require a concerted effort to promote innovation in existing manufacturing businesses, and to support growth in emerging areas such as biotechnology, advanced metal manufacturing and biomedical equipment, to name just a few.</p>
<p>It will also test government in terms of investments in regional economies, in investment in new infrastructure and areas such as urban planning.</p>
<p>In short, it is likely to be a mammoth task that will require collaboration on a large scale – across different tiers of government, and involving many different stakeholders.</p>
<p>As I have <a href="https://theconversation.com/fords-departure-is-bad-news-but-not-the-end-of-the-world-14622">highlighted previously</a>, there are some examples to follow – such as Newcastle following the departure of BHP. What appears dire in the short-term, opens new possibilities for areas such as Geelong, Broadmeadows and Altona to reshape the economic foundations for future economic prosperity.</p>
<p>But of all course of this takes time, effort and pain before such an outcome might be realised.</p><img src="https://counter.theconversation.com/content/23117/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Gahan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Toyota Australia President and CEO, Max Yasuda, has described the car maker’s decision to leave Australia as one of the saddest days in its history worldwide. I do not doubt the emotion expressed by Mr…Peter Gahan, Professor of Management + Director, Centre for Workplace Leadership, Faculty of Business and Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/230822014-02-11T19:37:15Z2014-02-11T19:37:15ZLosing the car industry means we risk our technology<figure><img src="https://images.theconversation.com/files/41239/original/bc5r74p2-1392096874.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The link between manufacturing cars and developing technology has been fundamental in Australia.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>As <a href="https://theconversation.com/a-view-on-australias-manufacturing-industry-13868">I’ve argued before</a> and it’s generally accepted, the car industry is a critical part of Australia’s science and technology base. The sector spends A$600 million a year on R&D and another $800 million on buying inputs from the computing, engineering and consulting industry. So it’s a major producer and user of knowledge. </p>
<p>It also supports an incredibly diverse array of technologies, such as light metals, computerised machining, electronics, chip manufacture, plastics, chemicals, metallurgy, and a diverse range of robotics - technologies involved in assembling cars or making the components in cars. </p>
<p>All that will be lost with complete shutdown of the industry. There will be some of the auto component makers who are trying to diversify out, but a lot of those will fail, due to the sheer difficulty of innovating out of the auto sector. It really is a very difficult exercise to identify a new market and diversify into that market. It requires a lot of innovation and clever management.</p>
<h2>Its affect on job creation</h2>
<p>One of the positive aspects (in managing the transition away from a reliance on the car industry) is the long lead time on the three year shutdown. However, it’s important to note that is a maximum and it could well be - and appears to be happening at Ford - that the actual cessation of production could happen before that. </p>
<p>The critical aspect of labour redeployment is it very much depends on the quality and effectiveness of the measures put in place. What we know from many academic and government studies of redundancies in the Australian and global car industries is that it’s not a pretty picture. </p>
<p>As a rough rule of thumb, one third of workers will cease work altogether - they will retire, or go on the dole or the disability pension - or get a job at a lower level of work at lower wages and conditions, in either part-time or casual work. Another third will gain work in an equivalent or possibly higher level.</p>
<p>There are 45,000 people employed in the auto sector in what are reasonable quality jobs - mostly full time, with average weekly earnings and reasonable job tenure and a career path as well. What we know from <a href="http://mckellinstitute.org.au/wp-content/uploads/2012/11/McKell_Productivity_Report_A4.pdf">our study for the Mckell Institute</a> is the flow of new jobs into the economy over the last four decades has had mostly undesirable characteristics, such as the development of part-time casual jobs, contract work. Many automotive workers end up in retail, hospitality or aged care, cleaning, or security guard work.</p>
<p>About 80-90% of net employment growth - that is, hours worked - over the last four decades has been in industries with below-average productivity. This is one of the ironies. The Productivity Commission argues that getting rid of assistance to the motor vehicle sector will raise productivity across the economy, but misses the whole point. The reality is that it will almost certainly lower it. </p>
<h2>Some sectors more deserving of assistance than others?</h2>
<p>A really important thing to remember is the scale of the assistance to the sector. The Productivity Commission estimates the net value of assistance to the automotive industry is A$1.1 billion, calculated by the dollar equivalent of the tariff plus the direct budgetary assistance, or the cash transfers. But the actual value of output of the sector is around $21 billion. That is not a bad return of funds invested - the assistance is about 5% of the total output.</p>
<p>To put this in perspective: each year the ATO puts out a report which shows the value of the tax foregone for various industries. The <a href="http://www.treasury.gov.au/%7E/media/Treasury/Publications%20and%20Media/Publications/2013/TES/downloads/PDF/TES_2013_Consolidated.ashx">2013 report</a> showed the superannuation industry received A$33 billion worth of tax concessions. This tax foregone was made up of the contributions on superannuation which taxed only taxed at 15%, and concessional tax on capital gains paid by super funds, which is also taxed at 15%. In addition there is the zero tax paid by those receiving a superannuation pension. </p>
<p>Then there is the $1.5 billion private health insurance rebate; or the $4 billion mining diesel fuel rebate. These are not classified by the Productivity Commission as industry assistance - while its definition would appear to include that, it seems to have made an arbitrary decision not to include a lot of these tax expenditures or define them as assistance. </p>
<p>What is going on here is almost certainly a quite conscious move to dismantle the whole post-war reconstruction view of the state and its active role in industry policy - it’s clearly a repudiation of that world view. In effect what we’re going to end up with in terms of our export base is regressing to a 19th century model of unprocessed agricultural and mineral resources.</p><img src="https://counter.theconversation.com/content/23082/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phillip Toner does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As I’ve argued before and it’s generally accepted, the car industry is a critical part of Australia’s science and technology base. The sector spends A$600 million a year on R&D and another $800 million…Phillip Toner, Honorary Senior Research Fellow Department of Political Economy, University of SydneyLicensed as Creative Commons – attribution, no derivatives.