tag:theconversation.com,2011:/ca/topics/holden-2220/articlesHolden – The Conversation2022-06-15T03:30:05Ztag: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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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>
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<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>
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<p>Another left a processing job with a food company after just two days, saying:</p>
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<p>I couldn’t do that job. It was absolutely disgusting. It was hot. They were arrogant towards you.</p>
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<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>
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<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>
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<span class="caption">Ex-automotive workers shared their experiences candidly.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<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>
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<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>
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<p>Casual jobs often serve as a kind of probation, but there are no guarantees:</p>
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<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>
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<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>
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<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>
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<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>
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<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>
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<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>
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<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>
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<p>Some never stopped longing for a job that made them feel the way their old job did:</p>
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<p>I just miss [my old firm], I miss their way of working. Building up you as a person, as a team.</p>
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<p>Even those who had adjusted to their new working lives admitted that you needed to be willing to do anything:</p>
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<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>
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<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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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/1319942020-02-20T01:56:46Z2020-02-20T01:56:46ZHolden was never really Australian<figure><img src="https://images.theconversation.com/files/316321/original/file-20200220-10985-o0wmow.jpg?ixlib=rb-1.1.0&rect=1058%2C296%2C989%2C614&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">General Motors Holden</span></span></figcaption></figure><p>In the wave of nostalgia about the <a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">death</a> of the Holden brand in Australia, something important has been overlooked.</p>
<p>Holdens were never especially Australian.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=816&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=816&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=816&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1025&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1025&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316121/original/file-20200219-10995-ir513m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1025&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">James Holden.</span>
<span class="attribution"><a class="source" href="https://en.wikisource.org/wiki/Notable_South_Australians/James_Alexander_Holden,_J.P.">Wikisource</a></span>
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<p>Their origins stretch back to 1856, when James Holden established a saddlery in Adelaide. </p>
<p>The firm expanded into the car industry in the first world war when the Commonwealth government placed a ban on the import of cars, and only permitted import of chassis. </p>
<p>Holden seized the opportunity to build the cars on the imported American chassis.</p>
<h2>Holden assembled cars</h2>
<p>The tariff on imported cars introduced after the war led the firm to negotiate a deal where it assembled (“manufactured”) General Motors cars, often Chevrolets. </p>
<p>Holden advertising said the “<a href="https://nla.gov.au/nla.obj-383039195/view?sectionId=nla.obj-387021766&searchTerm=general+motors+holden&partId=nla.obj-383128506#page/n1/mode/1up">new Chevrolets</a>” were “built in Australia for all conditions of service”. His son Edward sold out to the Americans in 1931 who renamed the firm General Motors Holden.</p>
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<a href="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316113/original/file-20200219-11040-pbc1mr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&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">Advertisement, July 1931.</span>
<span class="attribution"><a class="source" href="https://nla.gov.au/nla.obj-383039195/view?sectionId=nla.obj-387021766&searchTerm=general+motors+holden&partId=nla.obj-383128506#page/n1/mode/1up">NLA</a></span>
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<p>During the second world war, it deftly offered its services to the Commonwealth government.</p>
<p>With car sales stalling, government contracts to produce trucks and aeroplane parts kept the firm in business and enabled it to develop the infrastructure that would allow it to shift from assembling vehicles to making them.</p>
<p>In May 1944 the government gave it permission to divert scarce war-time resources to drawing up plans for an Australian-made car.</p>
<h2>General Motors was suspicious</h2>
<p>But General Motors’ US president Alfred Sloan wan’t keen. Australia was a small market and he might not see a return on his investment.</p>
<p>And he had grave reservations about doing business with what he thought was a <a href="https://books.google.com.au/books?id=9IdVCgAAQBAJ&pg=PT59&lpg=PT59&dq=socialist+holden+%22general+motors%22+chifley&source=bl&ots=Sieb7XFhhx&sig=ACfU3U2Rhq8TbM5RK_MZJXnu4ADmXhUN6g&hl=en&sa=X&ved=2ahUKEwilx4bC_9znAhX76XMBHf3RC68Q6AEwDnoECAsQAQ#v=onepage&q=socialist%20holden%20%22general%20motors%22%20chifley&f=false">socialist</a> Labor government. It owned railways and a telephone network, something uncommon in the US.</p>
<p>When Prime Minister Ben Chifley arranged a government loan of A£2.5 million, he agreed.</p>
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<a href="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=360&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=360&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=360&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=452&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=452&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316285/original/file-20200219-11005-14qy23y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=452&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">Prime Minister Ben Chifley at the launch of the Holden’s 48/215 in 1948.</span>
<span class="attribution"><span class="source">National Motor Museum/Heritage Images</span></span>
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<p>Then the campaign to present the Holden as an Australian car began in earnest.</p>
<p>Politicians and journalists were wooed with special tours and advance viewings of the prototypes. However, it was made clear at the time that this was not an entirely Australian endeavour. </p>
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<a href="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1153&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1153&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1153&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1449&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1449&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316286/original/file-20200219-11044-1ppre6w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1449&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">1948 Holden advertisement.</span>
<span class="attribution"><a class="source" href="https://nla.gov.au/nla.obj-550404706/view?partId=nla.obj-550440935#page/n24/mode/1up">The Bulletin, NLA</a></span>
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<p>Chifley launched it at a lectern festooned with the Australian, British, and American flags, describing it as a link “between this country and the American people”. </p>
<p>An <a href="https://nla.gov.au/nla.obj-550404706/view?sectionId=nla.obj-552716840&searchTerm=engineering+experience+and+know-how+behind+all+General+Motors+cars&partId=nla.obj-550440935#page/n24/mode/1up">early advertisement</a> described it as “made in Australia especially for Australian conditions” but with the “engineering experience and know-how behind all General Motors cars”. </p>
<p>“You get the dependability which stands behind such famous GM names as Cadillac, Buick, Oldsmobile, Pontiac, Chevrolet and Vauxhaull,” it reassured wives and husbands.</p>
<p>It entered the perfect market. After years of enforced austerity, Australians were ready to consume, and they finally had the money to do it. Broader post-war demographic shifts and social trends enhanced its appeal. As Australians moved to new suburbs on the outer fringes of cities, the Holden became an indispensable part of modern life.</p>
<h2>It mocked rather than competed with Japan</h2>
<p>Holden’s dominance began to erode in the 1960s in the face of competition from Ford and Japanese manufacturers. Rather than developing local solutions, GMH increasingly looked to its parent company GM for new Americian designs. </p>
<p>American commercials were imported and “translated”.</p>
<p><a href="https://www.youtube.com/watch?v=zqweygy9K9Y">America’s</a> “baseball, hotdogs, apple pie and Chevrolet became <a href="https://www.youtube.com/watch?v=VGW-WX77zjY">Australia’s</a> "football, meat pies, kangaroos and Holden cars”.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/zqweygy9K9Y?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">“Baseball, Hot dogs, Apple pie, Chevrolet” American General Motors commercial in the 1970s.</span></figcaption>
</figure>
<p>The removal of government tariffs on imported cars in the 1980s increased foreign competition. GMH responded by producing fewer models in Australia and “rebadging” imported GM cars as Holdens.</p>
<p>Reduced to a badge, Holden was losing its identity as well as its connection with Australians.</p>
<p>Although its financial fortunes improved in the 1990s, its Australianness was becoming more tenuous with each new model. By the new century, Holdens were indistinguishable from German Opels and South Korean Daewoos.</p>
<h2>And became more foreign, the more it denied it</h2>
<p>While advertising campaigns continued to extol Holden’s Australianness and, increasingly, its <a href="https://campaignbrief.com/holden-promotes-the-all-new-ho/">nostalgic connection</a> with growing up, buyers could increasingly see through them. Holdens were no more Australian than Fords, Toyotas or Mitsubishis.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/WwCXMWmAzhc?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Commodore ad, “Are you sure”, 2018.</span></figcaption>
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<p>Its decision to end <a href="https://www.abc.net.au/news/2017-10-08/holden-closure-australia-history-car-manufacturing/9015562">Australian manufacturing</a> severed the last strand of sentimental attachment.</p>
<p>Denied ongoing government support, and facing a market that no longer identified with its products, GM decided its relationship with Australia was no longer worth the effort. This week’s <a href="https://media.gm.com/media/au/en/holden/news.detail.html/content/Pages/news/au/en/2020/feb/0217_Holden.html">announcement</a> was the inevitable formality.</p>
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Read more:
<a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">Why Australians fell out of love with Holdens</a>
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<img src="https://counter.theconversation.com/content/131994/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Crawford 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>Australia’s icon was owned and controlled by an American firm long suspicious about Australia.Robert Crawford, Professor of Advertising, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319152020-02-18T19:01:51Z2020-02-18T19:01:51ZVale Holden: how America’s General Motors sold us the Australian dream<figure><img src="https://images.theconversation.com/files/315840/original/file-20200218-11005-116edca.jpg?ixlib=rb-1.1.0&rect=26%2C13%2C4384%2C3525&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">State Library Victoria </span></span></figcaption></figure><p>General Motors has <a href="https://www.abc.net.au/news/2020-02-17/holden-car-brand-axed-after-160-years-in-australia/11972092">announced</a> the Holden brand will be “retired” in 2021. </p>
<p>This week’s announcement has been a long time coming. The Holden brand has been in a state of terminal decline since General Motors ceased local manufacturing in October 2017. A once-dominant presence in the everyday life of Australians, Holden became simply one of many imported cars on offer for the Australian consumer.</p>
<p>In 1926, when General Motors set up an Australian subsidiary, management immediately attempted to integrate the firm into the Australian community, importing General Motors <a href="https://www-tandfonline-com.ez.library.latrobe.edu.au/doi/full/10.1080/1031461X.2019.1651354">public relations practices</a> to Australia. </p>
<p>Using this then novel form of corporate communication, General Motors management placed the firm at the forefront of the nation-building project. It produced pamphlets and took out newspaper advertisements heralding General Motors’ contribution to the local economy. </p>
<p>A 1929 pamphlet asked: “What does General Motors mean?” </p>
<p>It answered: “More wealth for Australia, more jobs for Australians”. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=747&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=747&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=747&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=939&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=939&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315866/original/file-20200218-10995-gbbu2y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=939&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Holden ad published in the Daily Mercury on June 22 1932, with General Motors’ slogan, ‘More wealth for Australia, more jobs for Australians’.</span>
<span class="attribution"><a class="source" href="https://trove.nla.gov.au/newspaper/article/172806804?searchTerm=%22more%20wealth%20for%20Australia%2C%20more%20jobs%20for%20Australians%22&searchLimits=#">National Library of Australia</a></span>
</figcaption>
</figure>
<h2>An inherited identity</h2>
<p>In 1931, General Motors acquired South Australian car body manufacturer Holden’s Motor Body Builders. The formation of General Motors-Holden allowed General Motors to inherit an Australian identity. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-australians-fell-out-of-love-with-holdens-131907">Why Australians fell out of love with Holdens</a>
</strong>
</em>
</p>
<hr>
<p>In the wake of the Great Depression, General Motors’ public relations focused on the firm’s contribution to full employment. The Holden brand was increasingly tied to its industrial workforce. This was a deliberate marketing development, directed towards the paradoxical goal of making General Motors a local institution. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=447&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=447&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=447&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=562&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=562&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315841/original/file-20200218-11023-1ixr56i.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=562&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Workers at Holden’s Motor Body Builders, King William Street, Adelaide, putting wooden frames together, c 1919-1928.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>In 1948, General Motors-Holden, in close collaboration with the Australian government, produced the first fully Australian-made car: the Holden 48-215, popularly known as the Holden FX. </p>
<p>Marketed as “Australia’s own”, the Holden was a resounding success for General Motors. The car entrenched local automotive manufacturing and solidified a powerful symbolic connection with the Holden brand and the stability of post-war Australian capitalism.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=477&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=477&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=477&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=600&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=600&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315844/original/file-20200218-11040-z7d9kd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=600&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A Holden FX in an Australian paddock.</span>
<span class="attribution"><span class="source">State Library Victoria</span></span>
</figcaption>
</figure>
<p>It was in this context the Elizabeth manufacturing facilities opened in South Australia in 1954, forming the backbone of the community and providing a stable source of employment for years to come. </p>
<p>Production and sales of Holdens boomed in the 1950s, helped along by full employment for white men, high tariff protection, state-sponsored migration and amicable relations with trade unions. </p>
<h2>Reshaping lives</h2>
<p>By 1962, the one millionth Holden rolled off the assembly line, and Australian society had been transformed. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315846/original/file-20200218-10991-1wz5udf.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">Norm Meninga with sons Mal and Geoffrey in front of the family car in Bundaberg, c. 1965-1970.</span>
<span class="attribution"><span class="source">State Library Queensland</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p><a href="https://www.ausstats.abs.gov.au/ausstats/free.nsf/0/FCF944CBE191A019CA2573AD00200367/$File/13010_1963%20section%2014.pdf">Expanding rates</a> of car ownership fostered a unique link between the Holden and the emerging notion of the “<a href="https://www-tandfonline-com.ez.library.latrobe.edu.au/doi/abs/10.1080/10314617908595612">Australian way of life</a>”. This was a unique post-war construction, and one deeply related to the growth of manufacturing and a growing suburban landscape. </p>
<p>The new industrial economy reshaped the everyday lives of Australians, fostering booming home ownership and an ever-expanding market for consumer durables. This entrenched General Motors-Holden within the cultural imagination, enabling widespread acceptance of Holden as “Australia’s Own Car”. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=427&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=427&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=427&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=537&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=537&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315853/original/file-20200218-11040-1nnqb22.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=537&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Promotional pamphlet produced by General Motors-Holden, c. 1948.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>But this symbolism of Holden obscures a more complicated history, including large-scale <a href="https://trove.nla.gov.au/newspaper/article/236847923?searchTerm=strike%20at%20GMH&searchLimits=l-decade=196%7C%7C%7Cl-year=1964%7C%7C%7Cl-month=10">industrial dispution</a>, <a href="https://www-jstor-org.ez.library.latrobe.edu.au/stable/27516626?sid=primo&origin=crossref&seq=1#metadata_info_tab_contents">racial tensions</a> on the assembly line and a long-term decline in the industrial workforce. </p>
<p>The dominant imagery of the Australian way of life was male-dominated. Women’s roles were restricted to housewives and mothers. This worked to render the role of women in the firm invisible. But <a href="https://collections.slsa.sa.gov.au/resource/BRG+213/81/2/3">women had worked</a> at General Motors-Holden from its inception.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=782&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=782&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=782&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=982&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=982&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315861/original/file-20200218-11044-16lsmcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=982&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Women working at General Motors-Holden in 1942.</span>
<span class="attribution"><span class="source">State Library South Australia</span></span>
</figcaption>
</figure>
<p>Nostalgia for post-war stability ignores the instability faced by those who were excluded, and a growing dissatisfaction with the demands for social uniformity that accompanied the notion of an “Australian way of life”. </p>
<p>Yet the symbolism endured, perhaps best captured by Prime Minister Paul Keating in 1994 with the launch of the “<a href="https://pmtranscripts.pmc.gov.au/release/transcript-9205">Working Nation</a>” white paper. Keating chose to launch the white paper at the Holden factory, arguing for Holden’s place at the forefront of Australian nation building. </p>
<h2>Changing worlds</h2>
<p>The Australia of today is very different from the one that embraced Holden as a symbol of national culture.</p>
<p>The Holden car was a powerful symbol for many post-war migrants, as a source of both <a href="https://trove.nla.gov.au/newspaper/article/176527777?searchTerm=migrants%20%22General-Motors%20Holden%22&searchLimits=l-decade=195">employment</a> and <a href="https://academic-oup-com.ez.library.latrobe.edu.au/hwj/article/24/1/111/618748">inclusion</a> into the national myth.</p>
<p>But a once-great manufacturer is now a <a href="https://www.abc.net.au/news/2019-11-27/former-holden-workers-still-struggling-to-find-employment/11741876">painful public memory</a>, representing closures, lay-offs and long-term unemployment. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/an-end-to-australias-auto-dream-why-we-loved-holden-21368">An end to Australia's auto dream: why we loved Holden</a>
</strong>
</em>
</p>
<hr>
<p>With access to affordable housing and stable employment increasingly out of reach for a growing number of Australians, the place of the car in the Australian dream has shifted. But the Holden brand was always constructed to serve the interests of its parent company General Motors. </p>
<p>After ceasing Australian manufacturing, the Holden brand was disconnected from our national myths. The car of the last century is no more.</p><img src="https://counter.theconversation.com/content/131915/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jack Fahey 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>Thanks to savvy public relations, General Motors inserted itself at the heart of culture in mid-century Australia. But dreams don’t last forever.Jack Fahey, PhD Candidate, Department of Archaeology and History, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319072020-02-17T18:56:01Z2020-02-17T18:56:01ZWhy Australians fell out of love with Holdens<figure><img src="https://images.theconversation.com/files/315674/original/file-20200217-11044-160gcqs.jpg?ixlib=rb-1.1.0&rect=524%2C191%2C2261%2C1133&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://unsplash.com/@hbtography">Harrison Broadbent, Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The jingle used to tell us we loved “football, meat pies, kangaroos and Holden cars”. </p>
<p>These days we <a href="https://www.caradvice.com.au/817278/vfacts-2019-new-car-sales-results/">love</a> Japanese utes and small Toyotas, Hyundais and Mazdas more. </p>
<p>Monday’s <a href="https://media.gm.com/media/au/en/holden/news.detail.html/content/Pages/news/au/en/2020/feb/0217_Holden.html">announcement</a> from General Motors, Holden’s US parent, that the brand will be “retired” and local design and engineering operations cease is doubtless based on strong financial reasoning, but poor brand management is also part of it.</p>
<h2>The numbers didn’t stack up</h2>
<p>Sales of Holden vehicles and a <a href="https://www.budgetdirect.com.au/car-insurance/research/australian-car-sales-statistics.html">shift</a> from large sedans to small and medium sized cars and sportscars and SUVs didn’t help.</p>
<p>At its peak, between 2002 and 2005, Holden sold more than <a href="https://www.whichcar.com.au/news/the-decline-of-holden-and-the-commodore-in-numbers">170,000</a> vehicles a year. By 2019 it sold less than 40,000; none of them made here.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/VGW-WX77zjY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Holden ad, 1970s.</span></figcaption>
</figure>
<p>In November, it sold just 2,668 cars, down from 5,125 the previous November.</p>
<p>Global competition from Japan, Korea and Thailand for brands like Kia and Hyundai, <a href="https://www.carsguide.com.au/car-advice/australian-car-market-car-sales-statistics-and-figures-70982">added to its woes</a>.</p>
<p>Internationally, Holden was only present in two small markets, Australian and New Zealand, which between them don’t even account for 1% of global sales, and require steering columns on the right hand side of car. It has made Holdens hard to internationalise.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=288&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=288&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=288&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=362&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=362&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315680/original/file-20200217-10980-6lhlir.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=362&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The blue countries drive on the left hand side of the road.</span>
<span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/3/32/Countries_driving_on_the_left_or_right.svg">Wikimedia</a></span>
</figcaption>
</figure>
<p>Monday’s <a href="https://media.gm.com/media/au/en/holden/news.detail.html/content/Pages/news/au/en/2020/feb/0217_Holden.html">press release</a> blamed “highly fragmented right-hand-drive markets”, the cost of growing the brand, and the unlikelihood of achieving a decent return on the investment if it tried.</p>
<p>General Motors isn’t even going to bother to sell foreign-made sedans in Australia, although it will continue to sell speciality vehicles.</p>
<p>Yet its brand is ingrained in Australian history. </p>
<h2>Holden defined a brand</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315675/original/file-20200217-11000-g0p132.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&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">Australian logo, American company.</span>
<span class="attribution"><span class="source">AAP</span></span>
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<p>Brands are a combination of tangible and intangible elements. Among the tangible elements are visual design elements, like logos, colour, images and packaging, such as the Holden “Lion and Stone” and distinctive product features, such as the feel of the leather, the sound of a roaring V8 and the quality of the duco.</p>
<p>But that is only part of what makes a brand. Tangible elements can be easily copied and are a feature of nearly all products. The challenge is to develop and leverage intangible qualities. </p>
<p>These can include experiences (such as service) and feelings such as reputation, personality and <a href="http://www.ignytebrands.com/the-psychology-of-brand-personality/">values</a>. </p>
<p>Nostalgia is a Holden value. Its rich history, dating back to 1856, has helped define the brand.</p>
<p>Many of us who grew up in the 1970s remember family car trips to the beach in a Kingswood station wagon. In the 1980s, we watched <a href="https://www.mount-panorama.com.au/history/race-results/27-bathurst-1000-winners">Brock, Richards and Perkins</a> win Bathurst. Movies like <a href="https://www.imcdb.org/v589530.html">Puberty Blues</a> made the Holden Sandman panel van every young man’s dream, and every parent’s worse nightmare.</p>
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<a href="https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/315678/original/file-20200217-11023-1udmo6h.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&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="attribution"><span class="source">Paul Mayall / Alamy</span></span>
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<h2>General Motors killed it</h2>
<p>Being <a href="https://www.cmo.com.au/article/659053/marketing-professor-holden-brand-nostalgia-ain-t-what-it-used/">Australian</a> was at the core of that
identity. </p>
<p>General Motors took it away.</p>
<p>On October 20, 2017 it stopped production of all Australian-made vehicles and began importing Commodores from Germany.</p>
<p>Then in December last year it axed the Commodore, after 41 years.</p>
<p>It killed the value that was left in the brand.</p>
<p>We fell out of love with Holden because it fell out of love with us.</p><img src="https://counter.theconversation.com/content/131907/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gary Mortimer 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>Brand loyalty is a two-way street.Gary Mortimer, Professor of Marketing and Consumer Behaviour, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/713322017-01-31T19:04:55Z2017-01-31T19:04:55ZThe search for an economic solution for South Australia<p><em>This piece is republished with permission from State of Hope, the 55th edition of Griffith Review. Articles are a little longer than most published on The Conversation, presenting an in-depth analysis of the economic, social, environmental and cultural challenges facing South Australia, and the possibilities of renewal and revitalisation.</em></p>
<p><em>Here, John Spoehr looks at the challenges for South Australia with the approaching closure of the automotive industry.</em></p>
<hr>
<p>In September 2016, South Australia was buffeted by the most ferocious storm in half a century. Apocalyptic clouds gathered as thousands of lightning strikes hit the saturated landscape. </p>
<p>The nation watched the unfolding crisis as an intense low-pressure system, two tornadoes, flooding rains and high tides demonstrated nature’s raw and unforgiving energy. Cyclonic winds felled transmission towers in the north, triggering a blackout that plunged the state into darkness. Meanwhile, torrential rains threatened flash flooding, provoking two days of collective trepidation as swollen rivers broke their banks, destroying crops and inundating houses. </p>
<p>The blackout was met with incredulity, triggering a political storm centred on the state’s reliance on wind-energy generation. That transmission towers lay strewn in the landscape was an inconvenient truth – the power of wind rather than wind power was the problem. It was a cruel visitation in a state already buffeted by economic headwinds. </p>
<p>South Australia enters 2017 facing mass layoffs in the automotive manufacturing industry and the potential closure of the local steel industry. These two shocks combined threaten to obliterate more than 25,000 jobs. </p>
<p>With economic growth expected to remain subdued over the remainder of the decade, there were growing fears in late 2016 that unemployment and underemployment would rise sharply, exceeding levels reached in South Australia during the global financial crisis (GFC). While the GFC inflicted great economic damage and hardship internationally, Australia and SA fared much better than most expected. </p>
<p>In September 2008, then Premier Mike Rann boasted that careful management, and continued growth in mining, meant that <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">unemployment fell to 4.4%</a>. Rarely does Australia outperform the rest of the world during global economic crises, but the early adoption of stimulus measures, rather than austerity, bolstered investment and employment at a critical time.</p>
<p>While unemployment rose significantly in following years, as plans to open new mines were put on hold, it remained well below the frightening heights reached during the recessions of the 1980s and 1990s. The <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">national unemployment rate</a> stayed below, in trend terms, while SA’s unemployment peaked at 8.2%, a fifteen-year high, in July 2015. By August 2016 it had declined to 6.6%. This was exceptional by international standards. </p>
<p>Australia emerged less scathed by the global economic storm than many other parts of the world, but the high Australian dollar acted like a wrecking ball on SA’s manufacturing sector, and the collapse in commodity prices brought about a dramatic end to what was a modest mining exploration boom. The state lost thousands of manufacturing jobs during this period – taking total losses to around 25,000 over the decade. The closure of the automotive manufacturing industry follows this, threatening a period of slower growth and rising unemployment unless additional job-rich investment measures are put in place. </p>
<p>While so many other nations were plunged into deep recession by the global financial crisis, Australia avoided the calamity through both stimulus and sustained Chinese demand for the nation’s mineral resources. The 2008–09 Rudd government’s <a href="http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2009/009.htm&pageID=003&min=wms&Year=&DocType=0">A$42 billion stimulus package</a> did what it needed to do – fill the investment gap created by the sharp decline in private investment at that time. Without it, it’s certain that unemployment would have risen sharply and remained high for many years. By contrast, those nations that pursued austerity policies, notably Greece and Spain, experienced chronically high rates of unemployment and underemployment, creating great social and economic hardship for millions. </p>
<p>With Australia’s response to the global financial crisis fresh in the minds of some, and the closure of General Motors-Holden looming, federal policymakers have felt compelled to act more boldly to prevent escalating unemployment and hardship in the wake of the closure. With investment of more than A$1.3 billion per year <a href="http://www.flinders.edu.au/aiti/publications/publications-by-topic.cfm#Auto">lost from the SA economy as a result</a>, new projects are needed to fill the gap and prevent unemployment rising in early 2018. </p>
<p>While the project to construct 12 new submarines in South Australia will generate early site preparation work, their manufacture is not likely to begin until the mid 2020s. Temporary work on the construction of offshore patrol vessels aims to keep the workforce intact until the submarine build gets underway. </p>
<p>The social and economic costs of responding parsimoniously to the automotive closure are high. South Australia goes into 2017 with a male unemployment rate of around 7%, and male full-time employment growth in reverse. This is a diabolical combination. </p>
<p><a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">After peaking</a> at around 365,000 in 2008, total male full-time employment is now around 336,000. It threatens to get much lower. During the 1990s recession it bottomed out at around 313,000. </p>
<p>So with male full-time employment in reverse, job prospects for men in particular are poor – both in terms of quantity and quality. All the recent growth in male employment has been part-time, so we can expect underemployment to rise sharply with the automotive closure given the lack of full-time employment growth in industries where men predominate. While continued growth in employment in service industries has underpinned rising female participation in the workforce, much of this growth has been in casual and part-time jobs, fuelling rising underemployment for women. </p>
<p>Employment growth in South Australia <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6291.0.55.003">is largely concentrated</a> in health, aged care and community services, providing limited opportunities for workers with decades of experience in manufacturing. For those who do successfully make the transition into the service sector, it is often into less secure part-time and casual jobs, fuelling the rise of underemployment. For many others the risk of unemployment is high. </p>
<p>Around <a href="http://catalogue.nla.gov.au/Record/1842514">one-third of retrenched manufacturing workers</a> typically experience long-term unemployment after retrenchment, particularly during periods of slow growth. To avoid this it’s necessary to bring forward infrastructure and construction projects that provide much needed short-term employment opportunities while efforts are underway to accelerate the growth of more enduring jobs in areas where demand is strong. In other words, short-term job-rich stimulus needs to coincide with medium-term industrial transformation and diversification efforts in response to major shocks like the automotive closure. </p>
<p>The end of a boom in engineering and construction projects is compounding the poor jobs outlook. On the back of the 2009 stimulus package, substantial commitments to infrastructure expenditure by the state government boosted growth over the five years to 2016. </p>
<p>This included the new Royal Adelaide Hospital, which acted as a catalyst for investment in adjacent research and education buildings by the university sector. The great urban development that is taking place in the city of Adelaide will be transformative. Billions of dollars have been invested in a new health precinct, oval, light rail system and convention centre. This process of modernisation and invigoration has been accompanied by a significant increase in the residential population. </p>
<p>The bulk of this work is due for completion in 2017, when capital expenditure is expected to decline in the absence of new projects coming on stream. Agreement on a suite of new projects is urgently needed. </p>
<h2>Setting up infrastructure in the state</h2>
<p>Fortunately for South Australia, fear of an electoral backlash at the 2016 federal election appeared to motivate both the Abbott and Turnbull federal governments to break a recent drought on jointly funded capital works projects. One of the last acts of Tony Abbott as prime minister was to announce a commitment of A$790 million to the one billion dollar Northern Connector road project, a 43 kilometre freeway that will link Gawler and Regency Park. This was a breakthrough in federal-state relations at the time, opening the door for further possible infrastructure commitments from Canberra. </p>
<p>Of course, South Australia could choose to fund additional infrastructure projects through increased borrowings, given record low interest rates. Whatever the funding source, the immediate imperative is to sustain high levels of infrastructure expenditure in an effort to contain rising unemployment when the full impact of the automotive manufacturing closure hits in late 2017. This of course needs to coincide with efforts to accelerate the diversification of the South Australian economy into areas where domestic and global demand is strong. </p>
<p>Having made some progress in funding negotiations with the federal government, the SA government identified a suite of infrastructure projects for the federal government to consider co-investing in during the 2016 federal election. While no agreements have been struck to fund any new projects, the multi-billion dollar package of transport and infrastructure projects is not likely to disappear off the radar altogether, particularly with a state election looming. The state government will need to be an aggressive investment partner to get the package of projects off the ground. </p>
<h2>Industries struggling and closing down in 2017</h2>
<p>Having endured the ravages of extreme weather, SA faces an economic storm when General Motors-Holden and much of its supply chain closes in late 2017. This will be a more serious shock than the closure of Mitsubishi Motors in 2008 because it comes at a more difficult time in the state’s economic history, and will impact the entire automotive supply chain. </p>
<p>Estimates of the direct and indirect job losses in SA resulting from the closure have been as high as 24,000, depending on the assumptions used. While some strategies have been put in place by the state and federal governments to support workers and companies, the closure leaves a A$1.3 billion per annum investment hole in SA. While progress was being made towards filling this hole, there is a high risk that unemployment and underemployment will still rise. </p>
<p>SA’s economic woes were compounded when the struggling Whyalla steelworks was placed into voluntary administration in 2016. Whyalla is a quintessential steel town, home to about 22,000 people. </p>
<p><a href="http://www.flinders.edu.au/fms/AITI/Documents/AITI201601_ArriumImpactAssessmentFinal.pdf">Around a quarter of Whyalla’s 11,000</a> strong workforce is employed by Arrium’s steel manufacturing and mining operations. Closure of both would fuel a vicious cycle of decline in the absence of offsetting investments like expansion of BHP Billiton’s Olympic Dam operations. </p>
<p>Nothing short of transformative change will ensure the ageing steelworks’ future. This is likely to include the need for a major upgrade of ageing steel furnaces and the modernisation of systems to enable the manufacture of higher value steel products and a diversified product range. It will also require patient investment by the South Australian and federal governments to enable the plant to survive – something policymakers across the political divide appear to agree on.</p>
<p>Given the federal government’s response to the threatened closure of the automotive manufacturing industry, it was hard to imagine any substantial assistance to the ailing steel industry. Fear of a backlash at the 2016 federal election appeared to elicit a more pragmatic response. </p>
<p>In March 2016, the government announced that it would bring forward the upgrade of the Adelaide-to-Tarcoola railway line, directing a major steel order to the Whyalla steelworks. It confirmed that it would also be willing to provide a loan to Arrium as part of a joint state-federal government rescue plan. This stood in stark contrast to the combative approach taken during the height of the automotive crisis three years earlier when <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-demands-holden-makes-decision-on-future-rules-out-any-more-funding-20131205-2yu8i.html">Tony Abbott declared</a> he would “not chase them [GMH] down the road waving a blank cheque at them”. </p>
<p>With all the difficulties facing SA, the Turnbull government was under enormous electoral pressure from the surging Nick Xenophon party and a more united Labor Party to deliver some good economic news in the 2016 campaign. Having supported the Northern Connector, South Australians eagerly awaited the decision about where the nation’s new fleet of submarines would be manufactured. </p>
<p>Hopes faded in late 2014 that SA would remain the centre for naval shipbuilding when former federal Liberal defence minister <a href="http://www.abc.net.au/news/2014-11-25/johnston-wouldnt-trust-submarine-corporation-to-build-a-canoe/5917502">David Johnston declared</a> that he wouldn’t trust the Australian Submarine Corporation (ASC) “to build a canoe”. It proved to be a major error of judgement on his part when Prime Minister Tony Abbott sacked him from the ministry. </p>
<p>The day after Anzac Day 2016, Prime Minister Turnbull delivered welcome news to South Australian’s and South Australian Liberals worried about their flagging electoral prospects: French company DCNS was awarded the contract to design twelve new submarines to be built in Adelaide at a cost of around A$50 billion. In addition, the state would also be the base for the manufacture of offshore patrol vessels for two years before the project was transferred to Western Australia. These projects amount to a A$90 billion investment by Canberra in defence shipbuilding, enough to underwrite the defence manufacturing business for decades to come. </p>
<p>So long as a high proportion of the design, construction and sustainment work is undertaken locally, the submarine project has the potential to accelerate the transformation and modernisation of the manufacturing sector. Maritime defence projects – designing and building submarines – are among the most complex of engineering projects. </p>
<p>They require the development and application of advanced technologies by highly skilled workers. A network of sophisticated companies is needed to deliver and maintain a fleet of vessels that can endure incredibly demanding operational conditions for decades. </p>
<h2>Creating the jobs to suit future industries</h2>
<p>The great Swedish economist <a href="http://saabgroup.com/Media/stories/stories-listing/2014-03/can-an-aircraft-help-an-entire-industry-take-off/">Gunnar Elliasson has argued</a> that complex manufacturing projects like military aircraft and submarines represent “technical universities”, places where high value knowledge and skills are developed and successfully applied. Nothing can be taken for granted, however. </p>
<p>To extract the full benefit of these projects, it’s necessary to appreciate the value of complexity and put in place the required policies and practices to leverage the full range of opportunities that can flow from very large-scale knowledge-intensive projects.</p>
<p>Some of the institutional building blocks for extracting this value are in place in SA, including the Tonsley Innovation Precinct and Flinders University in Adelaide’s southern suburbs, the SA health and medical research precinct surrounding the new Royal Adelaide Hospital, the Waite Research Institute, Technology Park in Adelaide’s northern suburbs and the TechInSA bio-innovation precinct in Thebarton.</p>
<p>The successful implementation of highly complex defence projects relies on well-established global defence supply chains, dominated by the US, France, Spain, Germany, Sweden and Japan. </p>
<p>Locally owned defence electronics, systems integration and manufacturing companies play an important but ancillary role in all of this. While foreign players dominate the Australian defence industry, South Australia has developed foundational expertise and infrastructure to ensure that the state is able to play a major role in the delivery of ships for the Australian navy. </p>
<p>Without the ASC shipbuilding operations and Techport at Osborne, South Australia would have little to contribute. ASC has decades of experience in shipbuilding, delivering some highly sophisticated manufactured products, and the world-class facility at Osborne is able to draw on a highly experienced and skilled workforce. </p>
<p>Past experience with complex defence projects tells us that substantial economic benefit can be captured by harnessing so-called knowledge and technological spillovers – commercial applications of knowledge and technologies in the civilian sector. New and existing companies can benefit greatly from this, particularly where deliberate strategies identify and capture such spillovers. </p>
<p>One of the most likely is the exchange of high-value knowledge and skills among scientists and engineers, helping to accelerate both understanding and applications of advanced technologies such as 3D printing, nanotechnology and smart materials. </p>
<p>While many local jobs will flow from the shipbuilding projects, many more could be generated in industries such as medical devices, assistive technologies for the elderly and those with a disability, energy generation and storage, and autonomous vehicles and boats. Significant progress has been made in the medical and assistive-devices sector through the Medical Devices Partnering Program, run by the Medical Devices Research Institute at Flinders University. </p>
<p>Additional resources need to be invested in expanding and replicating the model, but this will take time. While the submarines won’t be in production until the 2020s, major site preparation and design work will generate short-term job opportunities, although not necessarily for those who are made redundant in the automotive sector.</p>
<h2>The nuclear waste debate</h2>
<p>While the search for economic Eldorados remains irresistible for politicians, few would have anticipated that the Jay Weatherill-led state Labor government would establish a Royal Commission into the nuclear industry. On 19 March 2015 the Premier did just that and <a href="https://nuclearrc.sa.gov.au">commissioned Kevin Scarce AC</a>, former governor, to investigate “the potential for increasing South Australia’s participation in the nuclear fuel cycle”. </p>
<p>The audacity of this was astounding, with no clear endgame declared. This was high stakes politics given the Labor Party’s historical opposition to nuclear power, processing and storage, and the premier’s ties to the left of the Labor Party. </p>
<p>Commissioner Scarce reported to the premier on 6 May 2016, dismissing nuclear energy generation and processing of uranium, but concluding that large-scale radioactive waste storage could deliver <a href="https://nuclearrc.sa.gov.au">a significant economic benefit</a>. This claim was contested by environmental groups, the Australia Institute and several unions. Putting aside the merits of the economic argument, it’s difficult to imagine the proposal will jump the bar of community support the state government has set itself to trigger a more detailed feasibility assessment. </p>
<p>Even Finland, which is well advanced in the construction of a waste storage facility, has indicated that it will not store other nations’ nuclear waste. It seems highly improbale that SA will become the international exception and take on nuclear waste from around the globe.</p>
<p>The premier made much of the need to get community agreement in order to further investigate the Royal Commission’s recommendations. In 2016, the state government commissioned the <a href="http://www.democracyco.com.au/">Orwellian sounding Democracy Co</a> to implement a “citizen’s jury” to test the proposition: “in what circumstances could South Australia pursue the opportunity to store and dispose of nuclear waste from other countries?” Citizen’s juries have been used before in South Australia, but to resolve far less complex problems like how to reduce the numbers of unwanted animals, and how motorists and cyclists might share roads more safely. </p>
<p>The juries were a manifestation of the Weatherill government’s “consult and decide” approach to governance, an attempt to avoid accusations levelled at the government in the past of being insufficiently consultative. While most South Australians were not particularly interested in the nuclear waste debate, thinking it unlikely to lead to anything tangible, a relatively small group of influential individuals, including Kevin Scarce, chancellor of the University of Adelaide, mining industry leaders and some academics, were strong advocates for a nuclear industry in South Australia. Key figures in the Weatherill government, including former industry minister Tom Kenyon, along with former federal Liberal MP Sean Edwards, have been enthusiastic advocates. </p>
<p>In November 2016, the citizens jury delivered it verdict on the Royal Commission’s proposals. Two thirds of the jury of more than 300 participants rejected the proposal, stating that they did not want to see SA storing high-level nuclear waste “under any circumstances”. Despite their judgement, the premier continues to consider the nuclear waste storage proposal, stating the jury’s verdict is just one of a broad range of community views he needs to take into account before making a final judgement.</p>
<h2>The worth of mining to the state</h2>
<p>Despite a number of high profile mining and energy projects failing to get off the ground, hopes remain high that the sector will eventually deliver a substantial jobs and growth dividend. While the much-hyped A$30 billion expansion of the Olympic Dam by BHP Billiton was put <a href="http://www.abc.net.au/news/2016-07-08/bhp-announces-scaled-back-olympic-dam-expansion-plans/7580668">on hold in late 2013</a>, a scaled-down version of the project is likely to proceed when commodity prices are more favourable, and more cost-effective extraction methods are available. </p>
<p>Less likely to proceed is the search for oil in the Great Australian Bight, with BP walking away from a billion-dollar commitment to deep-water oil exploration. While the minerals and energy sector will be a significant contributor to export income and tax or royalty revenue, it’s not likely to generate the thousands of jobs needed to replace those lost in manufacturing, particularly given the growing use of automation. After rising to around 9,000 at the peak of the exploration and investment cycle, <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0">employment in the South Australian mining sector</a> declined to just 6,000 in 2016. </p>
<p>South Australia’s jobs challenge is complicated by the revolutionary implications that new technologies have for the way we work. It forces a reconsideration of the employment growth potential of existing and new industries. While employment growth has always been impacted by technology, a new debate now rages about whether technologically induced job creation will be outpaced by job destruction flowing from automation and applications of artificial intelligence. </p>
<p>We have long been told that technology will generate more jobs than it displaces, but this is now much less certain. Existing technologies will automate many routine tasks, and more sophisticated jobs are now at risk as advances in artificial intelligence and machine learning are making it possible to also automate an increasing range of complex tasks such as medical diagnosis, debt risk assessment and human-robot interaction. </p>
<p><a href="https://www.technologyreview.com/s/515926/how-technology-is-destroying-jobs/">Some estimates</a> suggest that more than 40% of all jobs are vulnerable to high levels of automation over the next decade. <a href="http://www.abc.net.au/news/2015-06-16/technology-could-make-almost-40pc-of-jobs-redundant-report/6548560">More recent research</a> focusing on the automation of tasks rather than jobs suggests a much less dramatic outcome. Whatever measure you use, regions with industries that have a high proportion of jobs involving routine tasks will be significantly impacted. SA will not be immune from this.</p>
<p>While fears about disruption and automation are not without foundation, they tend to be technologically deterministic – overestimating both the pace of change and the relative advantages of automated solutions. There is little doubt that the current wave of technological innovations is truly transformative, particularly when paired with the power of digital technologies. Nanotechnology, biotechnology, photonics, 3D printing, artificial intelligence and simulation are among a suite of revolutionary technologies transforming industries and workplaces. </p>
<p>When applied holistically for the benefit of society, this new industrial revolution bristles with opportunities to build a more diversified, knowledge-based economy capable of generating rewarding, well-paid and secure jobs. Complex problem solving, creativity and design are foundational capabilities, alongside deep knowledge and critical insights from the social sciences, humanities, science, technology, engineering and mathematics. </p>
<p>Securing this knowledge-intensive social and economic development pathway will require sustained investment in the uptake and diffusion of technology by government and industry, along with the modernisation of social and physical infrastructure and the innovation ecosystem. </p>
<h2>Interventions from agencies and organisations</h2>
<p>Investment in modernising the Adelaide CBD has already delivered great benefits. Last year, <a href="http://www.eiu.com/public/topical_report.aspx?campaignid=liveability2016">The Economist Intelligence Unit ranked</a> Adelaide the fifth most liveable city in the world. While the state government has done a great deal to modernise and invigorate the city, much more needs to be done, particularly in suburban Adelaide. </p>
<p>The benefits of nation-building investments in suburban and regional development in the postwar period and the 1970s have been exhausted. This needs to be remedied by targeted investment in modernisiation of the state’s suburban centres, particularly in Adelaide’s northern suburbs where significant population growth will be accommodated over decades to come.</p>
<p>A strategy to bring disparate policy agendas together is urgently needed. The state government needs to be a more aggressive driver of this, boosting the capacity and capability of its relatively meagerly resourced economic and industry development divisions within the Department of State Development (DSD) to lead the co-design of sophisticated sectoral strategies in collaboration with industry, universities, agencies and NGOs. The DSD once boasted the most sophisticated manufacturing strategy in the nation, <a href="http://www.statedevelopment.sa.gov.au/industry/manufacturing/manufacturing-works-strategy">Manufacturing Works</a>. </p>
<p>Released in 2012, it was a blueprint for a more integrated and sophisticated approach to transforming manufacturing, increasing its complexity and global competitiveness. It needs to be refreshed and reinvigorated as part of a suite of strategies designed to accelerate industrial transformation and diversification in South Australian. </p>
<p>South Australia lacks well resourced economic and industry policy development capabilities in government, industry and academia. The DSD has limited capacity for economic development strategy and policy development. Meanwhile, the Economic Development Board has not renewed the substantial work it did on economic strategy in 2009. </p>
<p>The major industry associations – including Business SA and the Australian Industry Group along with Unions SA – make only modest contributions to economic development strategy, relying on the state government to play the lead role. Broadly speaking, SA lacks the sophisticated economic and industry strategy it needs to deal with the profound economic challenges it faces. </p>
<p>While the federal government made a contribution to this through its reviews of the South Australian and Victorian economies in 2013, the responses lacked grounding in a sophisticated national innovation policy and appreciation of the need for a more interventionist role for government in economic and industry development.</p>
<h2>Innovation in South Australia</h2>
<p>While the Turnbull government’s 2015 National Science and Innovation Agenda helped to fill the innovation-policy vacuum, real progress is slow. Significant institutional and cultural change is necessary to improve innovation performance, particularly in relation to the commercialisation of highly complex goods and services that sustain knowledge and skill-intensive employment. </p>
<p>This would go a long way to improving global competitiveness. National and state innovation-partnering programs are needed to support collaboration in areas with high growth potential like medical devices and assistive technologies, energy storage, prefabricated construction, and health and ageing services. </p>
<p>The one-off projects currently being funded by national funding schemes – including the Entrepreneurs Program, and the Australian Research Council and National Health and Medical Research Council – are important; they must be complemented by increased investment in grounded industry and community-linked research and development initiatives. </p>
<p>We don’t yet have the right models in place for doing this in a sustained way in Australia, although there are good international examples to learn from: the German network of Fraunhofer institutes, and Finland’s VTT, point to ways to accelerate knowledge transfer and industrial transformation. Fraunhofer IAO Stuttgart has partnered with the Australian Industrial Transformation Institute at Flinders University on a series of industrial-transformation projects in assistive technology and changing demand for goods and services arising from population ageing. The state government could help to accelerate the development of these strategically important international collaborations through partnership arrangements to extend the capabilities of SA’s universities at a modest cost of around A$25 million over five years. </p>
<p>While dark clouds gather on the economic horizon, the threat they pose could be minimised by job-rich stimulus measures to accelerate the growth of knowledge and design-intensive industries in response to both domestic and global demand, particularly from the Asia–Pacific region. At the same time, entrenched unemployment, growing underemployment, poverty and inequality must be confronted by well-integrated social and economic policies with the same commitment and vigour that we have seen in times of crisis when great storms, drought, economic shocks and recessions threaten hardship and suffering. South Australia must be well prepared and positioned to manage all of these challenges.</p>
<hr>
<p><em>You can read others from the Griffith Review’s latest edition <a href="https://griffithreview.com/editions/state-of-hope/">here</a>.</em></p><img src="https://counter.theconversation.com/content/71332/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Spoehr receives funding for industry and workplace research from the South Australian Government. </span></em></p>South Australia is facing a whole range of social and economic problems that are forming the perfect storm.John Spoehr, Director, Australian Industrial Transformation Institute, Flinders UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/667592016-10-11T02:17:29Z2016-10-11T02:17:29ZAustralia’s car industry ignored the elephant in the room: carbon emissions<figure><img src="https://images.theconversation.com/files/141156/original/image-20161011-3864-nf7o00.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's car industry got left behind on emissions standards. </span> <span class="attribution"><span class="source">Exhaust image from www.shutterstock.com</span></span></figcaption></figure><p>Ford’s closure of its Geelong manufacturing plant on Friday is part of a broader story about <a href="https://theconversation.com/the-ford-plant-closure-is-sad-loss-of-manufacturing-know-how-65651">Australia’s manufacturing sector</a>. But one side of this story has so far been overlooked: the role of Australia’s lax attitude to vehicle emissions. </p>
<p>Globally, car manufacturers are taking climate action seriously by significantly <a href="https://www.globalfueleconomy.org/media/203446/gfei-state-of-the-world-report-2016.pdf">improving fuel economy</a>, in turn reducing a car’s CO₂ emissions. </p>
<p>Repeated policy failure and a marked reluctance by the Australian car industry to shift from manufacturing mostly high CO₂-emitting vehicles contributed to Ford ending operations. The Australian car industry ignored the elephant in the room. </p>
<p>This effectively contradicts former-Treasurer Joe Hockey’s assertion that <a href="http://www.smh.com.au/business/g20/climate-change-is-no-impediment-%20%20%20to-economic-growth-says-joe-hockey-20141115-11nlzs.html">climate change has no impediment on economic growth</a>, as Australia gets left behind in a world embracing action on climate change.</p>
<h2>Warning signs</h2>
<p>In 2008, the international community launched the Global Fuel Economy Initiative (GFEI) to facilitate and promote large reductions of greenhouse gas emissions by establishing a global target to improve fuel efficiencies. The target included a 50% improvement in vehicle fuel economy in new light duty vehicles by 2030. <a href="http://ewp.industry.gov.au/sites/prod.ewp/files/submissions/Energy%20White%20Paper//EWPGP099-713.pdf">The GFEI offered to assist successive Australian governments</a> in the development of better fuel policy. </p>
<p><a href="http://onlinelibrary.wiley.com/doi/10.1111/ropr.12100/abstract">European car manufacturers made slow progress</a> and continued manufacturing larger high-performance vehicles. But in 2009, the European Parliament introduced CO₂ emission standards of 130 grams of CO₂ per km by 2015 and long-term target of 95g CO₂ per km by 2021. </p>
<p>By 2013, <a href="http://www.theicct.org/info-tools/global-passenger-vehicle-standards">80% of global passenger vehicle sales</a> were subject to CO₂ standards. Complementary economic measures were introduced to support the standards by influencing consumers into choosing low CO₂-emitting vehicles.</p>
<h2>Australia left behind</h2>
<p>In 2005, the Australian car industry adopted <a href="http://www.fcai.com.au/library/publication/1216168398_document_fcai_final_submission.pdf">voluntary targets of 222g CO₂ per km by 2010</a>. This wasn’t in line with international standards and masked the poor fuel efficiency of locally manufactured vehicles as shown in the chart below. </p>
<iframe src="https://datawrapper.dwcdn.net/GdtJp/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="503"></iframe>
<p>With voluntary standards, the local car industry was under no pressure from the government to improve its fleet’s fuel efficiency. The Australian car industry failed to meet the target. <a href="https://www.ntc.gov.au/Media/Reports/(DF694ECD-E315-41C8-367C-19D67D2A6FF5).pdf">Average emissions from cars manufactured in Australia</a> in 2010 were 247g per km – 11% higher than the voluntary target.</p>
<p>In April 2012, the Australian government mandated that 100% of all Commonwealth vehicles would be Australian made. This explicitly excluded acquiring vehicles on the grounds of “<a href="http://www.finance.gov.au/vehicle-leasing-and-fleet-management/fleet-guidance-and-related-material.html">environmental considerations, such as fuel efficiency</a>”.</p>
<p>In 2013, the government announced a <a href="http://www.pc.gov.au/inquiries/completed/automotive/report/automotive.pdf">Productivity Commission review</a> of the industry that would examine international competitiveness, exports, trade barriers and long-term sustainability. At this point the <a href="https://theconversation.com/holden-to-cease-making-cars-in-australia-by-2017-experts-react-21369">local car industry</a> announced its decision to abandon manufacturing in Australia. As a result, the commission didn’t examine the impact of climate policy measures on the local car industry, although it did suggest that environmental policies could serve as a barrier to international trade. </p>
<p>Industry actors also criticised other measures such as vehicle or excise taxes that it said would impede Australian exports.</p>
<p>For example, <a href="http://www.sciencedirect.com/science/article/pii/S096585641100053X">Ireland’s 36% vehicle tax</a> on new light passenger vehicles with emission greater than 225g per km would apply to most Australian-made vehicles. Such measures support emission standards, and are imposed on all vehicles sold (whether imported or manufactured domestically) for the protection of the environment. They have been effective in shifting consumer demand to fuel-efficient vehicles.</p>
<p>Under the <a href="http://www.wto.org/english/tratop_e/envir_e/envt_rules_exceptions_e.htm">rules of the World Trade Organization</a> national governments can ban imports that do not comply with product standards, if they do not constitute non-tariff barriers. To meet this exception, the policy must be measurable (such as an excise tax based on CO₂ emissions), apply to all goods sold (domestic and imports), and contribute to the fight against climate change. </p>
<p>The adoption of regulatory standards and supporting economic instruments, meant car manufacturers/importers will not be able to sell as many larger high CO₂-emitting vehicles. To sustain economic production runs, manufacturers will seek to sell these vehicles to countries with lenient or no standards, such as Australia, which then become “<a href="https://theconversation.com/could-australia-become-a-dumping-ground-for-high-emission-vehicles-38299">dumping grounds</a>”.</p>
<h2>Government and industry caught off guard</h2>
<p>In 2014, the Abbott government supported the <a href="http://www.g20australia.org/sites/default/files/g20_resources/library/g20_energy_efficiency_action_plan.pdf">G20 Energy Efficiency Action Plan</a>, which included “improving vehicle energy efficiency and emissions performance” by strengthening domestic standards in vehicle emissions and vehicle fuel efficiency. Despite the plan, there was no recommendation to introduce emissions standards in the government’s <a href="http://ewp.industry.gov.au">2015 Energy White Paper</a>.</p>
<p>Successive Australian governments, trade unions, and industry actors have all failed to appreciate the impact of climate action on the economic interest of the local car industry. The Australian government is now examining <a href="http://minister.infrastructure.gov.au/pf/releases/2016/february/pf018_2016.aspx">fuel efficiency standards</a> and complementary measures, but will only report next year. It’s a little too late to save the industry. </p>
<p>Forcing the local car industry to meet similar standards would have been to its benefit and would have outweighed the costs of being shut out from the market. As more global car manufacturers began adopting emissions standards more pressure was placed on car manufacturers to remain competitive. </p>
<p><a href="http://globalchange.mit.edu/files/document/MITJPSPGC_Reprint_13-20.pdf">Car manufacturers were known to lobby their governments</a> to adopt European emission standards to increase their competitiveness and restrict importation of high CO₂-emitting vehicles. The former Vice-Chairman on General Motors, Bob Lutz, said the <a href="http://www.autonews.com/apps/pbcs.dll/article?AID=/20110523/OEM02/305239961/1432#axzz2V8MLH900">fall of GM in the United States</a> was largely a result of a terrible government policy on fuel economy, which gave its competitors, the Japanese automakers, a free pass. </p>
<p>The <a href="http://www.manufacturing-policy.eng.cam.ac.uk/futures-documents-folder/eu-eu-manufacturing-industry-what-are-the-challenges-and-opportunities-for-the-coming-years/view">European Commission stated that</a> if a car industry fails to embrace a shift towards more fuel-efficient vehicles, it will continue to be structurally unprepared for the future.</p>
<p>To compete globally, the Australian car industry had to decide whether to embrace cleaner technology to meet the standards of its importers, or abandon the export market. Unfortunately for the workers, Ford chose to close its operations on October 7, and GM Holden and Toyota will close by the end of 2017.</p><img src="https://counter.theconversation.com/content/66759/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anna Mortimore 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>Australia’s lax attitudes to vehicle emissions has been overlooked in Ford’s exit.Anna Mortimore, Lecturer, Griffith Business School, Griffith 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/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/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>
<figure class="align-right ">
<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.tag:theconversation.com,2011:article/230712014-02-11T01:55:49Z2014-02-11T01:55:49ZToyota’s exit provides a blank sheet for creative manufacturing<figure><img src="https://images.theconversation.com/files/41196/original/77w6j83p-1392078498.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How about a stronger design and development sector within the car manufacturing industry?</span> <span class="attribution"><span class="source">KimManleyOrt</span></span></figcaption></figure><p>Yesterday’s confirmation that <a href="https://theconversation.com/toyota-names-2017-end-australian-car-making-to-cease-experts-react-23037">Toyota will cease its car manufacturing in Australia</a> by the end of 2017, combined with <a href="https://theconversation.com/holden-to-cease-making-cars-in-australia-by-2017-experts-react-21369">Holden and Ford’s withdrawal</a> by 2017 and 2016, signals the end of car manufacturing in the country after more than half a century. </p>
<p>But can car manufacturing in Australia find a new – albeit different – home in the creative economy? Chances are there will be many people now looking for solutions and new directions. Companies such as <a href="http://zoox.co/index.html">Zoox</a>, a Melbourne-based start-up design company, are already offering innovative ideas in this space, if not actual products.</p>
<p>The closure of Toyota – <a href="http://www2.toyota.co.jp/en/news/14/02/0210.pdf">as announced</a> by the company’s president – will create, directly, 2,500 unemployed people, totalling 6,000 jobs lost nationally from the car manufacturing industry alone, with the combined closures of Ford and Holden. Some estimates suggest the knock-on effect will impact 10,000 individuals or even 50,000, as <a href="http://news.ninemsn.com.au/national/2014/02/10/17/54/toyota-decision-devastating-says-actu">ACTU Secretary Dave Oliver suggests</a>, with the decreased demand of additional component manufacturing. </p>
<p>The concern for everyone in this environment is how those unemployed individuals will transition into new secure employment.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=388&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=388&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=388&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=487&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=487&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41198/original/wzhnmjm8-1392078714.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"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Joe Castro/AAP image.</span></span>
</figcaption>
</figure>
<p>The government’s Minister for Industry Ian Macfarlane <a href="http://www.theguardian.com/world/2014/feb/10/toyota-cease-manufacturing-cars-australia">commented</a> yesterday afternoon that the government would “manage the transition” of the thousands of workers who will now be seeking new jobs. He also said the face of the industry would change from what we know it as today.</p>
<p>I have <a href="https://theconversation.com/from-manufacturings-ashes-a-creative-economy-could-rise-21782">previously argued</a> for the government to concentrate its efforts in the training and education of the Australian workforce to strengthen and develop its creative economy. Within the car manufacturing industry, this could be achieved by bolstering a stronger design and development sector.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=815&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=815&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=815&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1024&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1024&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41195/original/nzb89rkm-1392077834.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1024&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Toyota Motor Corp. President Akio Toyoda.</span>
<span class="attribution"><span class="source">EPA/Kimimasa Mayama </span></span>
</figcaption>
</figure>
<p>Recent pressures facing other manufacturing sectors – such as the <a href="https://theconversation.com/spc-ardmona-decision-is-fiscal-policy-disguised-as-industry-policy-22574">controversies surrounding</a> SPC Ardmona last week – further call into question the viability of manufacturing in this country. </p>
<p>Australia, it seems, cannot compete with its manufacturing-savvy neighbours who produce items at a significantly reduced rate. Some economists, such as The Conversation columnist <a href="https://theconversation.com/profiles/jason-potts-105412/articles">Jason Potts</a>, argue the funding model of the government should <a href="https://theconversation.com/youve-got-7-billion-so-how-will-you-fund-the-arts-18839">follow the market demand</a> and not “prop up” the economy. </p>
<p>In my view, the Abbott government should take the high road by seizing the closure of Toyota as an opportunity to transform the Australian manufacturing sector. This would equate to a significant shift of money from “old” manufacturing industry subsidies to the “new” educative creative economies.</p>
<p>The end of car manufacturing is precisely the moment for the Australian government to amp up its support for creative enterprise – the “blank-sheet” moment.</p>
<p>Ford Australia has already started thinking about the car manufacturing process differently and is actively <a href="http://mobileinternetresearch.net/?p=244">seeking the input</a> of some of the country’s most creative designers and developers. The semantic shift to maintain a presence in the car manufacturing industry is represented by not manufacturing the car in Australia, but designing and developing its operating systems.</p>
<p>Autonomous automobility is becoming a reality, with <a href="http://investing.businessweek.com/research/stocks/people/person.asp?personId=752502&ticker=NSANY">Nissan boasting</a> it will have driverless cars on the road by 2020; and several states in the US have legislated the safe operation of driverless cars on their roads.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41193/original/vb9m7yc5-1392077676.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">The Zoox Boz car.</span>
<span class="attribution"><span class="source">Zoox</span></span>
</figcaption>
</figure>
<p>The Melbourne design start-up Zoox is set to disrupt the car manufacturing industry – at least <a href="http://zoox.co/design.html">according</a> to the company’s minimalist website.</p>
<p>They are not creating cars – they are creating “Level 4 mobility systems” (see artist’s impression above) – a term that stems from the <a href="http://www.nhtsa.gov/About+NHTSA/Press+Releases/U.S.+Department+of+Transportation+Releases+Policy+on+Automated+Vehicle+Development">US Department of Transport Policy</a> on automated cars. </p>
<p>Toyota’s president Akio Toyoda noted on Monday that it was economically unsustainable for the Australian arm of the company to import car components, manufacture the cars, and export them. Zoox has significantly reduced the components on their units to around 10,000 pieces (Tim Kentley-Klay, the founder of Zoox, notes that current car designs comprise around 30,000 individual pieces). Minimising the design of automobility is just one way we might think about manufacturing differently in this country.</p>
<p>Some of Zoox’s creative design ideas include better aerodynamics, with no need for a driver windscreen due to driverless technology; and as a bi-directional unit, the need for reverse has been eliminated. Creative enterprise thinking of this – and similar – quality signifies how automobility could improve our manufacturing process and not merely provide a sector subsidy Band-Aid.</p>
<p>Sadly, the Zoox L4 mobility unit – supposedly to be on the road in the year 2021 – will not save the jobs of the thousands of Australian workers facing unemployment benefits, but it is a reminder to the Australian government of where it needs to concentrate its future development to avoid these industrial sector tragedies. </p><img src="https://counter.theconversation.com/content/23071/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathon Hutchinson 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>Yesterday’s confirmation that Toyota will cease its car manufacturing in Australia by the end of 2017, combined with Holden and Ford’s withdrawal by 2017 and 2016, signals the end of car manufacturing…Jonathon Hutchinson, Lecturer in Online Media, Researcher on ARC Discovery project, Moving Media: Mobile Internet and New Policy Modes, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/230682014-02-11T01:47:06Z2014-02-11T01:47:06ZPolitical fortunes of two states ride on the end of the car industry<figure><img src="https://images.theconversation.com/files/41189/original/t726zfts-1392076156.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How will both sides of politics respond to the end of car manufacturing in Australia?</span> <span class="attribution"><span class="source">AAP/Joe Castro</span></span></figcaption></figure><p>The Conversation asked two experts in South Australian and Victorian politics to comment on the political repercussions of Toyota’s <a href="http://www.news.com.au/finance/business/toyotas-altona-plant-shutdown-to-hit-50000-jobs/story-fnkgdhrc-1226822990578">decision</a> to cease making cars in Australia – marking the end of car manufacturing in Australia – as both states, the (soon-to-be former) homes to Australia’s auto industry, gear up to go to the polls this year. </p>
<p>Approximately 2500 Toyota jobs will be lost in Victoria, with fears of tens of thousands of job losses from supporting industries. Victorian premier Denis Napthine is seeking an “adjustment package” from prime minister Tony Abbott. </p>
<p>In South Australia, auto suppliers are expected to be hit hard by the end of car manufacturing in Australia, with the 12,000 job losses caused by the planned closure of Holden in 2017 to multiply to 16,000.</p>
<hr>
<h2>South Australia</h2>
<p><strong>John Spoehr, Executive Director of the Australian Workplace Innovation and Social Research Centre at the University of Adelaide</strong></p>
<p>Could the collapse of the car manufacturing industry give South Australian Labor a fourth term when the state goes to the polls on March 15?</p>
<p>There is no doubt that recriminations over who is to blame for the collapse of the Australian automotive industry will play out in the South Australian and Victorian state elections. The scale of the job losses makes this inevitable, as does the hardline position taken on industry assistance by the Abbott government. </p>
<p>Prime minister Tony Abbott and treasurer Joe Hockey have made it clear that they have no appetite for continued assistance to the automotive sector. The auto industry has called their bluff. One by one they have announced closure plans. This is the worst possible news for the workers, families and businesses affected. It will have to play on their minds in polling booths.</p>
<p>The scale of the automotive industry crisis is sobering. Around 45,000 direct and a further 100,000 indirect jobs are impacted. Communities already struggling with high unemployment in northern Adelaide, western Sydney and Melbourne cannot absorb a shock like this. </p>
<p>Central to the debate over the weeks to come will be whether or not the federal government could have prevented or at least delayed some of the closures. Also in play will be the adequacy of the assistance packages it is willing to provide to South Australia, Victoria and New South Wales. </p>
<p>The initial assistance offer from the federal government is <a href="http://www.abc.net.au/news/2014-01-21/holden-taskforce-draft-report-released/5210642">just A$60million</a>. To put this in perspective, the losses associated with the collapse of the industry are likely to be in excess of $10 billion. State governments are already insisting that the national government deliver hundreds rather than tens of millions to the recovery effort. </p>
<p>South Australian premier Jay Weatherill and his Victorian counterpart, Denis Napthine, are making it clear to the federal government that more will need to be done.</p>
<p>Many are likely to see the federal government’s hardline position of denying further assistance to the industry as a major contributor to the industry’s collapse. This no doubt will be one of the key messages the Labor government in South Australia will use in the campaign ahead. It is a message that has the potential to erode the electoral advantage currently being enjoyed by the Liberal opposition.</p>
<p>There is a chance that the collapse of the Australian automotive industry might deliver a fourth term to the South Australian Labor government. At the very least, it could contain some of the losses.</p>
<hr>
<h2>Victoria</h2>
<p><strong>Zareh Ghazarian, Lecturer, School of Political and Social Inquiry at Monash University</strong></p>
<p>The news is particularly grim for Victoria, a state that has a proud history of manufacturing. </p>
<p>While debates will continue about the business decisions made by the car companies, especially about their responsiveness to market demands, the political ramifications of the industry’s demise are amplified in an election year. Victorians will be going to the polls on November 29.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/41197/original/bhmcxph7-1392078558.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Victorian Premier Denis Napthine is likely to press Prime Minister Tony Abbott for further federal assistance to ease the blow of Toyota’s withdrawal.</span>
<span class="attribution"><span class="source">AAP/Alan Porritt</span></span>
</figcaption>
</figure>
<p>The Coalition government already has a shaky hold on power. Ted Baillieu led the Coalition to victory in 2010 with a majority of just one seat. In recent months, the Coalition’s authority has been tested by the actions of MP Geoff Shaw, whose resignation from the parliamentary Liberal Party was integral to <a href="http://www.theaustralian.com.au/national-affairs/state-politics/baillieu-government-in-crisis-talks-after-mp-geoff-shaw-quits-liberal-party/story-e6frgczx-1226591459409">Baillieu’s downfall</a> in 2013. </p>
<p>Shaw has <a href="http://www.theage.com.au/victoria/geoff-shaw-lashes-out-at-liberal-sooks-20140210-32cyf.html">voted with the opposition</a> on several occasions. This has not only frustrated Denis Napthine (Baillieu’s replacement as premier), but it has also made the government appear disorganised.</p>
<p>Within this context, the Coalition has seemed unable to assert its dominance over the political debate. <a href="http://www.theaustralian.com.au/national-affairs/polling">Opinion polls</a> have reflected the government’s brittle support, with Labor appearing to be in an election-winning position.</p>
<p>A significant problem for the Victorian government now is that it appears to be distracted by internal machinations while the state’s manufacturing sector crumbles. Napthine has tried to be seen as being proactive. He will be <a href="http://www.abc.net.au/news/2014-02-11/toyota-shutdown-napthine-chases-assistance-package/5251058">meeting with the federal government</a> today to seek assistance packages for Toyota workers, and prime minister Tony Abbott has <a href="http://www.theguardian.com/world/2014/feb/10/toyota-shutdown-abbott-signals-help-victoria">indicated</a> he is open to further federal funding.</p>
<p>This, however, may not placate the workers whose livelihoods will be affected by Toyota’s decision. It may also not be not be enough to ensure that voters see the Victorian government in a more positive light.</p>
<p>On the other hand, the Labor opposition, led by Daniel Andrews, will be able to use Toyota’s decision as yet another political weapon against the government. It will fit neatly into the broader narrative the opposition has constructed about the government appearing to be ineffective and weak. Victorian Labor looks well placed to benefit electorally from the end of car manufacturing.</p>
<p>The decision of the car makers will leave significant economic holes in the Victorian economy. In a political sense, however, the decision will work to strengthen the opposition’s run to the polls while contributing to the sense that the Napthine government has been unable to manage the political debate.</p><img src="https://counter.theconversation.com/content/23068/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>The Conversation asked two experts in South Australian and Victorian politics to comment on the political repercussions of Toyota’s decision to cease making cars in Australia – marking the end of car manufacturing…John Spoehr, Associate Professor , University of AdelaideZareh Ghazarian, Lecturer, School of Political and Social Inquiry, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/230372014-02-10T08:14:41Z2014-02-10T08:14:41ZToyota names 2017 end, Australian car making to cease: experts react<figure><img src="https://images.theconversation.com/files/41148/original/3zfbhbwh-1392018564.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Toyota has surprised with an announcement it would finish manufacturing cars here at the end of 2017.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Toyota has confirmed it will cease its vehicle and engine production in Australia by the end of 2017, signalling the end of automotive manufacturing in Australia. The announcement follows decisions by <a href="https://theconversation.com/holden-to-cease-making-cars-in-australia-by-2017-experts-react-21369">Holden</a> to pull out in 2017 and <a href="https://theconversation.com/ford-to-pull-out-of-car-production-in-australia-expert-reaction-14584">Ford</a> by 2016.</p>
<p><a href="http://www2.toyota.co.jp/en/news/14/02/0210.pdf">In a statement</a>, Toyota said “various negative factors such as an extremely competitive market and a strong Australian dollar, together with forecasts of a reduction in the total scale of vehicle production in Australia have forced us to make this painful decision”. </p>
<p>Speaking at a later press conference, Toyota Motor Corporation president Akio Toyoda described the decision to end its 51 year history with Australia as “simply heartbreaking”.</p>
<p>An estimated 2500 Toyota workers will lose their jobs. The <a href="http://news.ninemsn.com.au/national/2014/02/10/17/54/toyota-decision-devastating-says-actu">ACTU has claimed</a> Australia will lose up to 50,000 direct skilled jobs and wipe A$21 billion from the economy. But industry minister Ian Macfarlane said the government would “manage the transition” in Australian manufacturing. </p>
<p>The decision comes just ten days after a <a href="https://theconversation.com/no-sacred-cows-productivity-commission-targets-toyota-22647">Productivity Commission position report</a> which recommended Toyota should receive no extra government funding. In December Toyota lost Federal Court action to cut workplace conditions and costs.</p>
<p>Expert reaction follows:</p>
<hr>
<p><strong>Sinclair Davidson, Professor of Institutional Economics at RMIT University:</strong> </p>
<p>Immediately after the Toyota announcement that it will be ceasing its Australian manufacturing in 2017 isn’t the time to be saying, <a href="http://www.theage.com.au/business/bracks-report-doesnt-stray-far-from-script-20080815-3wes.html">“I told you so”</a>. Rather we should consider the hurt and confusion of the employees. To a large extent the investment they have made in their careers, their human capital, has just depreciated. This is a cost that we don’t fully consider when advocating industry policy.</p>
<p>The fact of the matter is that government spending simply cannot sustain an industry. The best way to buy Australian jobs is to buy their product, not throw taxpayer dollars at the industry, or create artificial shortages, or tariffs and what-not. By propping up unsustainable industries we don’t only over-charge consumers and waste taxpayer dollars; we attract workers into the industry in the knowledge that down the track we will see them lose their jobs.</p>
<p>Some Toyota employees will get jobs elsewhere, others may never work again. Government should be looking at those policies that would ensure more than fewer work again. At the federal level that means liberalising the labour market, making it easier to hire people. At the state level that means governments need to be looking at the payroll tax and stamp duty - the former adds to the cost of employment, while the latter reduces labour mobility. </p>
<p>Government cannot create jobs; what government can do is make it easier for the private sector to create those jobs and make it easier for worker to move so they can take those jobs.</p>
<hr>
<p><strong>Remy Davison, Jean Monnet Chair in Politics and Economics at Monash University</strong></p>
<p>Toyota’s announcement today represents the end of automotive manufacturing in Australia.</p>
<p>In less than 10 months, Ford, Holden and Toyota have decided to close down their car manufacturing operations, affecting thousands of jobs in Victoria and South Australia.</p>
<p>If Toyota, the largest and the most efficient automotive producer in the world, cannot survive without industry assistance packages, it demonstrates how vulnerable car producers are if governments fail to support them.</p>
<p>Whereas Ford had no real export market, and plummeting Falcon sales, Toyota was exporting 70,000 locally-made vehicles per annum to the Middle East and other markets, with a target of 100,000 each year.</p>
<p>This is the snowball effect of the rapid shutdown of Australian car industry. Toyota, Ford and Holden are tightly integrated with the Australian automotive parts industry. In the wake of Ford’s and Holden’s announced departures, some components manufacturers have already decided to close their doors.</p>
<p>Toyota’s decision reflects that reality: if Toyota cannot source components in volume close to its plant in Altona, then it makes no economic sense to continue manufacturing locally. Like Nissan and Mitsubishi before it, Toyota has made a strategic decision to become a mere importer.</p>
<p>Victoria is the most affected by the decisions of Toyota, Holden and Ford, but South Australia, NSW, Queensland and Western Australia will also suffer job losses in the components sector, as a consequence of the car makers’ withdrawal.</p>
<p>The industry was not helped by a Productivity Commission (PC) position paper which viewed the sector’s future in pessimistic terms. The PC employed no modelling data to support its claims, although its final report – long after the horse has bolted – is not due until March.</p>
<p>Prime Minister Abbott stated in response to Toyota’s closure that, “while some jobs end, other jobs start”.</p>
<p>As Australia de-industrialises – terminally – in which industries are the secure jobs of the future to be found?</p>
<hr>
<p><strong>Phillip Toner, Honorary Senior Research Fellow Department of Political Economy at University of Sydney:</strong></p>
<p>The decision by Toyota to withdraw from local production, following the imminent closure of Ford and GM, was inevitable. The departure of GM and Ford, with the resulting loss of scale in the auto parts sector, simply meant that there was no way Toyota alone could sustain the complex chain of parts suppliers. What was Toyota to do, import all the components and simply assemble them here?</p>
<p>As I have <a href="https://theconversation.com/its-time-to-weigh-the-cost-and-benefits-when-it-comes-to-the-car-industry-5993">argued consistently</a> there is no sound economic argument to withdraw the modest government support from what was a high productivity industry that was at the centre of Australia’s (ever diminishing) engineering and applied science base.</p>
<p>The historic significance of the death of local car making is not lost on the neoliberals in the federal economic bureaucracy, the Liberal Party and even amongst some members of the Labor Party. It marks the burial of the key element of Chifley’s post-war reconstruction, the renunciation of an assertive role for the state in national economic development and a repudiation of industrial policy to shape the industrial structure and technological progress.</p>
<hr>
<p><strong>Paul Gollan, Professor of Management, Macquarie University</strong></p>
<p>Toyota’s decision to pull out of Australia’s car manufacturing industry by 2017 only underscores the importance of making Australian manufacturing more competitive by lifting productivity. The decision places further pressure on Australia’s manufacturing base and will raise the political pressure on what can be done to make Australian workplaces more productive.</p>
<p>Australia doesn’t have the systems in place to be able to encourage the sort of investment that’s required by organisations to make them more globally competitive.</p>
<p>It’s quite obvious we’re a big wage, relatively small market and for us to compete on manufacturing internationally then frankly we have to produce a higher quality product at a reasonable price. That requires greater investment in technology, skills and workers.</p>
<p>It is estimated that Toyota has received more than A$1 billion in government subsidies over the past decades, however the Abbott government made clear there would be no further government assistance. With the flourish of imported cars on the rise, a small local market and relatively high Australian dollar, and Ford and Holden soon to withdraw from car manufacturing in Australia, it was only going to put pressure on the local supplier network, something Toyota CEO Max Yasuda recently reinforced.</p>
<p>If we’re going to have manufacturing in Australia then we have to think about what sort of workplace we want to create. We need a creative workplace with a positive culture that enhances innovation.</p>
<p>What’s really required is a constructive dialogue between government, businesses, and unions for greater cooperation and inclusion that will create more capital investment confidence in the mid- to long-term ultimately contributing to a more cooperative, productive and internationally competitive economy engaging a high wage workforce.</p>
<hr>
<p><strong>Andrew Beer, Director of Housing, Urban and Regional Planning, University of Adelaide</strong></p>
<p>The announcement that Toyota will cease the production of cars in Australia by the end of 2017 comes as no surprise, with many commentators anticipating this announcement given the earlier decisions made by Ford and General Motors.</p>
<p>The decision, however, still comes as a shock for the affected workers, their families, the communities they live in and the Australian economy. In many ways it is one of the most significant events in the economic history of Australia over the last 60 years. It represents the end of an automotive industry that supported thousands of jobs, provided a proving ground for emerging entrepreneurs and underpinned much of the national effort in research and development.</p>
<p>While much of the debate over the next few days and weeks will focus on what governments should, or should not have done, it is important not to lose sight of more fundamental questions. Put simply, the failure of the car industry must force all Australians to question what future we want and what future are we likely to achieve? </p>
<p>How are we going to pay our way in the world, especially given the inevitably cyclical nature of commodity markets? We cannot expect to rely on mineral exports to pay our balance of payments indefinitely, and if the automotive industry cannot flourish with substantial government assistance how can any industry of any scale flourish? Yes the service sector is now the most significant part of the economy, but we cannot pay our way in the world by selling each other lattes!</p>
<p>Some of the fundamental questions we must answer relate to our system of industrial relations and the political attitudes that support them. Should we go down the path followed by Texas – a booming, high wage economy with a strong manufacturing sector – and introduce right-to-work legislation that undercuts organised unions? Or is there a better option available to Australia, perhaps more akin to Scandanavian or Baltic models of labour market organisation, with unions working in partnership with management to embrace a productivity agenda ahead of wage claims? </p>
<p>How also can we better support the development of innovation and new technologies? Australia has long punched above its weight in the commissioning and publication of fundamental research, but struggled to commercialise that innovative spirit. As a nation we have strong R but relatively little D.</p>
<p>Many of these changes need to come from outside the world of macro-economic policy, industry development or industrial relations. We need to reshape politics, universities, the primary and secondary education systems, the nature of our innovation system and our attitudes to growth. </p>
<p>American universities often do a better job than their Australian counterparts at encouraging economic growth and the transfer of new technologies into the marketplace because some have specific mandates to engage with their communities and help their regions prosper while most use a form of employment contract – the system of nine month salaries for academic staff – that encourages researchers to engage with wider society and industry.</p>
<p>Now is a time for a radical re-examination of Australian society and its economic future. A “good” crisis should never be wasted, and the demise of the Australian automotive industry – and its supporting industries – should tell us all that it is time for change.</p><img src="https://counter.theconversation.com/content/23037/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sinclair Davidson is Professor of Institutional Economics at RMIT University and a senior fellow at the Institute of Public Affairs. He has previously been funded by the Australian Research Council. He drives a Toyota.</span></em></p><p class="fine-print"><em><span>Remy Davison's Chair is funded by the European Union Commission</span></em></p><p class="fine-print"><em><span>Andrew Beer, Paul Gollan, and Phillip Toner 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>Toyota has confirmed it will cease its vehicle and engine production in Australia by the end of 2017, signalling the end of automotive manufacturing in Australia. The announcement follows decisions by…Sinclair Davidson, Professor of Institutional Economics, RMIT UniversityAndrew Beer, Director, Centre for Housing, Urban and Regional Planning, University of AdelaidePaul Gollan, Associate Dean, Research and Professor of Management, Faculty of Business and Economics, Macquarie UniversityPhillip Toner, Honorary Senior Research Fellow Department of Political Economy, University of SydneyRemy Davison, Jean Monnet Chair in Politics and Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/226472014-01-31T06:05:03Z2014-01-31T06:05:03ZNo sacred cows: Productivity Commission targets Toyota<figure><img src="https://images.theconversation.com/files/40284/original/h8ssxn52-1391146932.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Productivity Commission has recommended the car industry should receive no additional government funding.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Ford and Holden gone. SPC Ardmona in jeopardy. Toyota under threat.</p>
<p>The Productivity Commission’s (PC) <a href="http://www.pc.gov.au/__data/assets/pdf_file/0006/132981/automotive-position.pdf">position paper</a> on automotive industry support fires a clear shot across the bows of the manufacturing industry. No industry sector can consider itself an untouchable sacred cow, strategic asset or Aussie icon.</p>
<p>No industry is indispensable. No firm is too big to fail.</p>
<p>Don’t play chicken with this Productivity Commission. Or with this federal government. Because in this game of Russian roulette, as Holden discovered, all six chambers are loaded.</p>
<p>Although the final report is not due until March, the future painted by the PC is stark: Toyota should receive no additional funding; the industry’s future is in doubt, given the high costs of manufacturing in Australia, compared with China and Southeast Asia; the Automotive Transformation Scheme (ATS) should not be extended beyond 2020; state and federal governments should kill the Automotive New Markets initiative after it is ramped down in 2015-16; and the Green Car Innovation Fund should be aborted following its closure, scheduled for 2014-15.</p>
<p>The PC further argues that the Commonwealth and state governments should abolish their purchasing policies that require them to buy cars made in Australia.</p>
<p>And, in a recommendation that harks back to the 1990 federal election, the PC also argues that the A$12,000 import duty on used cars should be removed. Which is one way Australian consumers can indirectly subsidise the Japanese new car industry. Or buy a bunch of <a href="http://autowini.com/en/main.do">used South Korean cars</a>.</p>
<p>Used car imports drive more nails into the coffin of the Australian automotive components sector. Even in the absence of local car makers, some parts manufacturers would have sufficient scale to build, say, braking and suspension components for imported Mazdas, Kias, Toyotas, Nissans and Hyundais.</p>
<p>But not if used vehicles are imported. The volume of used parts available, while cheaper for the consumer and insurance companies, would render local manufacturing of components unviable.</p>
<p>To be scrupulously fair, the PC has been consistent in its approach to industry assistance for over a decade. Its <a href="http://www.pc.gov.au/projects/inquiry/auto/docs/finalreport">2002 car industry report</a> sought tariff levels of 5% by 2010. The 2008 <a href="http://www.pc.gov.au/__data/assets/pdf_file/0008/80765/automodelling.pdf">PC research report</a> recommended the cessation of auto industry assistance by 2015. It was sceptical of the Rudd government’s proposals for increased assistance, and its economic modelling for the Bracks report was pessimistic.</p>
<h2>From top gear to negative gearing</h2>
<p>The PC estimates that around $30 billion (in 2011/12 dollars) in assistance has been provided to the auto industry between 1997 and 2012. That equates to around $1.875 billion per annum on average.</p>
<p>The Federal Chamber of Automotive Industries (FCAI) claims the Australian auto industry generated A$160 billion in turnover in 2011, or more than 10% of GDP, plus 50,000 jobs directly employed within the industry.</p>
<p>By contrast, as a 2013 <a href="http://grattan.edu.au/publications/reports/post/renovating-housing-policy/">Grattan Institute report</a> found, property investment generates A$6 billion in rental losses annually and A$7 billion in tax breaks per annum, comprising $2.4 billion in negative gearing and A$4.5 billion in capital gains tax (CGT) exemptions. The bottom line cost to the federal budget is estimated at A$4.4 billion to 5 billion per annum.</p>
<p>If the Commonwealth were to be ungenerous and start asset/means testing pensions by including the family home, the Grattan report estimates that the full extent of government largesse could be as much as A$36 billion per annum.</p>
<p>Only <a href="http://www.theage.com.au/national/talks-test-the-water-on-negative-gearing-change-20110420-1doxq.html">1.2 million Australians own one investment property</a>. Only around 300,000 own three or more.</p>
<p>The PC argued in 2004-05 in response to the inquiry into first home ownership that negative gearing, and associated tax relief, should be reformed. The Howard government demurred. In 2011, the Gillard government <a href="http://www.theage.com.au/national/talks-test-the-water-on-negative-gearing-change-20110420-1doxq.html">dipped a cautious toe</a> into the negative gearing reform waters, but found the temperature unbearable.</p>
<p>Governments always have the privilege and the luxury to afford protection, subsidies and assistance to whichever sectors they choose. As the last 14 years have shown, Commonwealth governments have rained manna from heaven on the groups that will re-elect them. Or will shower their political party with donations.</p>
<p>Miners, property investors, the car industry, unions, the banks and the construction industry have been major recipients of this taxpayer funded largesse. The Abbott government has demonstrated it is committed to removing manufacturing industry assistance.</p>
<p>But the Coalition government’s reform agenda cannot be taken seriously if it is selective about the industries it chooses to cut loose. The inequities in Australia taxation system, comprising costly, market-distorting, inefficient negative gearing and CGT exemptions, are embedded structurally within the Commonwealth budget.</p>
<p>If the Abbott government is serious about root-and-branch reform, it needs to consider all industry sectors that receive subsidies, tax exemptions and myriad rebates.</p>
<p>The car industry is a politically easy target. But Canberra is not likely to find the vested interests of the property investment class such a pushover.</p><img src="https://counter.theconversation.com/content/22647/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Remy Davison's Chair is funded by the European Union Commission.</span></em></p>Ford and Holden gone. SPC Ardmona in jeopardy. Toyota under threat. The Productivity Commission’s (PC) position paper on automotive industry support fires a clear shot across the bows of the manufacturing…Remy Davison, Jean Monnet Chair in Politics and Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/217822014-01-09T19:07:09Z2014-01-09T19:07:09ZFrom manufacturing’s ashes a creative economy could rise<figure><img src="https://images.theconversation.com/files/38575/original/5rrhmsjj-1389074547.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The right policy settings will drive Australia toward a creative economy that produces knowledge and information.</span> <span class="attribution"><span class="source">Paul Gorbould</span></span></figcaption></figure><p>General Motors Holden’s decision to pull the pin on its Melbourne manufacturing plant spurred renewed <a href="http://theconversation.com/moving-on-holden-closure-shows-we-need-a-new-growth-agenda-21360">debate</a> around government-subsidised industry sectors.</p>
<p>But instead of throwing money into a flailing Australian manufacturing industry that simply cannot compete with its economically lean Asian neighbours, the Australian government needs to implement a long-term creative economy plan. </p>
<p>That means directing subsidies toward technology design and development in the manufacturing industry, and building a creative economy that generates knowledge useful to the manufacturing efforts of other nations.</p>
<p>The demise of manufacturing in developed economies like Australia also questions the impending changes in the labour industry, as <a href="http://www.theguardian.com/technology/2014/jan/04/robots-future-society-drones">“the robots take over”</a>. But what if Australia’s industry subsidies and research priorities were fashioned to help us become a world leader not in car manufacturing, but in the design of the computer systems inside the cars?</p>
<p>Some economists, like The Conversation columnist Jason Potts, are <a href="https://theconversation.com/youve-got-7-billion-so-how-will-you-fund-the-arts-18839">calling for</a> industry funding from the government to “be more like venture capital” and “fund the demand and not the supply”, to promote innovative market thinking and outcomes. In this capacity, government funding should not take the shape of bailout packages for dying industries, but should instead concentrate on the development of <em>new</em> skills and industries.</p>
<p>So: how can the Australian government invest money post-haste into developing the careers of those who will be on the front line in ten to 20 years time?</p>
<h2>Funding the future</h2>
<p>Recently, <a href="http://investing.businessweek.com/research/stocks/people/person.asp?personId=752502&ticker=NSANY">Carlos Ghosn</a>, the French-Lebanese-Brazilian CEO of Renault-Nissan, <a href="http://edition.cnn.com/2013/11/21/business/renault-nissan-ceo-wants-driverless/">predicted</a> that driverless cars will be on our roads by 2020, making the science fiction <a href="http://www.youtube.com/watch?v=Vrxyr1CjiSM">driving scenes</a> of the film Minority Report a not-too-distant reality.</p>
<p>We already have the beginnings of driverless car technology available now, beyond the cruise control fitted in all new cars. Some more expensive models have highway assist that not only controls our speed, but also our road position through a combination of GPS, radar and camera sensors. It has also been suggested cars will be able to perform lane changes by the year 2017, with some cars already gossipping with each other to alert your car of a sudden stop by another automobile three or four cars ahead.</p>
<p>Google is investing enormous amounts of time and money into developing <a href="http://en.wikipedia.org/wiki/Google_driverless_car">driverless car technology</a>. (Some say their aim to help us integrate our home, travel and office lives into the same activity; others argue it is to free up hours that could be spent using Google products).</p>
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<p>Australian policy controls should be set to allow Australia to benefit from this new wave of technology. General Motors Holden’s pull out follows the recent Mitsubishi and Nissan plant closures and places pressure on Toyota as the remaining manufacturer within Australia. A bailout package from the Australian government would not have made any difference.</p>
<p>It is time we move the Australian manufacturing debate beyond, as Labor leader Bill Shorten probed, whether the Prime Minister knew Holden planned to close. We should instead be holding a more nuanced discussion of how can Australia look towards a more prosperous relationship with these international conglomerate manufacturing entities.</p>
<h2>Local talent</h2>
<p>In November last year, Ford Australia hosted an <a href="http://mobileinternetresearch.net/?p=244">Applink Hackathon</a> in Melbourne, where software developers came from all over the nation to hack the latest operating system to be launched in the entire Ford range over the coming years.</p>
<p>The hackathon was an impressive two-day display of Australia’s information ecology, as amateur enthusiasts through to professional software programmers came together to advance the safety and functionality of the forthcoming Ford range, which uses the <a href="http://www.ford.com/technology/sync/">Microsoft Sync</a> operating system.</p>
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<img alt="" src="https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=706&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=706&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=706&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=887&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=887&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38633/original/3bkwv95s-1389144691.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=887&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">Ford invited software developers to hack their car computer operating system to make it more useful.</span>
<span class="attribution"><span class="source">Chris H</span></span>
</figcaption>
</figure>
<p>Ideas presented on the day included an integration with the MYOB accounting software system for tradespeople, a fire detection and communication application, and a locative application that enabled the user to find service stations and monitor fuel pricing.</p>
<p>The concept of a hack is not new in any regard. However, the idea of a hack for a car operating system could tell us something about a possible future role for Australia in car manufacturing that does not revolve around factory workers on Henry Ford assembly lines. Rather, a potential collaboration exists in the knowledge economy for the design and development of the systems that control automobiles.</p>
<p>A healthy political discussion then, should be focused on how an Australian education system could be bolstered to accommodate more creative designers and developers.</p>
<p>Sadly, this discussion does not help the families and communities of those affected by the jobs lost as part of General Motors Holden global restructure, and our deepest sympathies go out to those individuals, families and communities.</p>
<p>What this discussion may promote is an avenue for policy makers and creative economy thinkers to pursue, and is a sobering reminder in the prevention of future hardships of manufacturing workers as the Australian market evolves.</p><img src="https://counter.theconversation.com/content/21782/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathon Hutchinson 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>General Motors Holden’s decision to pull the pin on its Melbourne manufacturing plant spurred renewed debate around government-subsidised industry sectors. But instead of throwing money into a flailing…Jonathon Hutchinson, Lecturer in Online Media, Researcher on ARC Discovery project, Moving Media: Mobile Internet and New Policy Modes, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/217472014-01-07T01:07:10Z2014-01-07T01:07:10ZHolden’s issue advertising campaign misses the mark<figure><img src="https://images.theconversation.com/files/38538/original/2rx5n258-1389049364.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Holden's latest ad campaign promises "We're here to stay", but it seems to have misread the market.</span> <span class="attribution"><span class="source">AAP/Holden</span></span></figcaption></figure><p>In the shadow of its <a href="http://www.businessinsider.com.au/holden-sold-less-than-28000-commodores-last-year-report-2014-1">worst ever annual sales figures</a> – fewer than 28,000 Commodores sold in 2013 – Holden is persisting with an extraordinary advertising campaign to “explain” its decision to cease car making in Australia by 2017.</p>
<p>Little more than a week after the shutdown announcement in December, Holden launched TV spots with the theme: “We’re here to stay.” But has Holden misread the situation and the public mood?</p>
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<p>Coming so soon after Ford announced its planned withdrawal from Australian manufacturing from 2016, the Holden decision was sure to create even greater anger, with union leaders and politicians of all stripes weighing in.</p>
<p>In this volatile context, Holden chose a TV commercial to communicate its post-announcement plan. The advertisement doesn’t focus on great quality cars, but instead features a range of individuals, including customers, employees and sportspeople, standing by the Holden name. The voiceover states: “While in the future, we’ll no longer make cars in Australia, we’ll always be committed to making the best cars for Australia.”</p>
<p>It’s a strange claim and a stretch of credulity. By this argument you could say that Volvo, or Honda or Mitsubishi or any other overseas producer is making cars “for Australia”.</p>
<p>At the end of the ad, an individual seated at a design computer turns to the camera and says “Because we’re here to stay”. Really? </p>
<p>Issue advertising – using paid messaging in the midst of a high profile public issue – is always risky, and it is much less common in Australia than in some other countries.</p>
<p>A high profile Australian example would be the <a href="http://www.abc.net.au/news/2012-06-08/outrage-over-greenpeace-anti-coal-ads/4061238">Greenpeace advertisement</a> placed in overseas newspapers in 2012 urging companies not to invest in Queensland coal to avoid damaging the Great Barrier Reef. Then Treasurer Wayne Swan called it “deplorable and obnoxious”.</p>
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<a href="https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=470&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=470&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38539/original/b8j49xrr-1389049785.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=470&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">The Australian Medical Association (WA) took out full-page advertisements in the West Australian to address the debate about statins.</span>
<span class="attribution"><span class="source">AMA</span></span>
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<p>Or more recently, Western Australia’s peak medical body using newspaper advertising in November 2013 to <a href="http://www.ohscareer.com.au/news/statin-stoush-reaches-full-page-pitch">enter the debate</a> about the use of cholesterol-lowering medication.</p>
<p>Industry also uses issue advertising. One of the best known recent examples would be the Australian mining industry’s advertising campaign against the Labor government’s proposed mining tax. But such successes are rare exceptions, and corporate issue campaigns are much more likely to fail, like the cigarette industry’s advertising effort against plain packaging.</p>
<p>One obvious reason, of course, is that advertising generally has limited credibility. For example, a <a href="http://www.marketingprofs.com/charts/2010/3628/social-media-users-more-positive-about-brands">study</a> of 2,000 adults in the UK and US for the British company Alterian showed that only 5% of consumers trusted advertising, and only 8% believe “what the company says about itself”.</p>
<p>But there is no disagreement that successful advertising - including issue advertising - demands a clear understanding of the intended audience; a fully integrated strategic objective; and a simple, unambiguous message. </p>
<p>So the Holden campaign raises some important questions. Who is the real target audience? Politicians? Existing Holden owners? Potential Holden buyers? The broader public?</p>
<p>Certainly not the thousands of direct and indirect workers who will lose their jobs. And probably not the taxpayers, who will foot the bill for the A$100 million of government aid for manufacturing.</p>
<p>What’s the objective? To calm concern? To demonstrate a commitment to the market? To highlight that they propose to <a href="http://www.goauto.com.au/mellor/mellor.nsf/story2/43A9451C634C978FCA257C3F00028DE9">keep</a> their global design studio in Australia?</p>
<p>Another alternative might be that it’s not issue advertising at all. Perhaps it’s a really clever marketing play to keep the Holden name alive at a time when consumers are voting with their wallets and avoiding the iconic Commodore.</p>
<p>But Holden itself dispels that option. According to the company’s own <a href="http://gmauthority.com/blog/2013/12/holdens-latest-ad-says-were-here-to-stay-ad-break/">website</a> the purpose is: “To address the elephant in the room.”</p>
<p>Given the “elephant in the room” is the announcement that Holden will cease manufacturing in Australia, it’s hard to argue an equivocal slogan such as “We’re here to stay” can address the rather awkward reality.</p>
<p>Furthermore, why would Holden think paid advertising is the right tool to address such a contentious and highly political issue? </p>
<p>Finally, why do it at all? Ford made its withdrawal announcement in May 2013 and then stayed quiet. By contrast, Holden’s issue campaign can only serve to keep its decision in the forefront of public awareness with a message which, at the very least, is curiously ambivalent. </p>
<p>For Holden right now the best thing might be to deal with the local manufacturing issue behind closed doors, and leave paid advertising to promote its cars.</p><img src="https://counter.theconversation.com/content/21747/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Jaques is principal of a private consulting company which specialises in issue and crisis management.</span></em></p>In the shadow of its worst ever annual sales figures – fewer than 28,000 Commodores sold in 2013 – Holden is persisting with an extraordinary advertising campaign to “explain” its decision to cease car…Tony Jaques, Senior Research Associate, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/216792013-12-22T20:33:11Z2013-12-22T20:33:11Z2013, the year that was: Business and Economy<figure><img src="https://images.theconversation.com/files/38350/original/fs8yf5hj-1387499909.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Debt; dollar; deficit - the mantra for this year, amid a turbulent political period.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Debt. Dollar. Deficits. Three little words so close to the hearts of our contributors in a year dominated by a critical federal election, a waning mining boom and continuing international turbulence. </p>
<p>The September 7 election returned the public debate to its traditional default - the strength of Australia’s economy. As Bill Clinton’s strategist James Carville said, it’s the economy, stupid. And talk we did. During the campaign, various <a href="https://theconversation.com/electoral-promises-of-both-parties-hang-on-precarious-pefo-forecasts-17639">forecasts</a> were presented, then reformulated, budget emergencies were declared and denied and we were apparently awash with debt. </p>
<p>Amid these claims, the Conversation’s <a href="https://theconversation.com/au/factcheck">FactCheck</a> - launched especially to coincide with the election - delved into the evidence to present the facts on how <a href="https://theconversation.com/factcheck-how-strong-is-australias-economy-16716">strong our economy actually was</a>; whether our <a href="https://theconversation.com/factcheck-is-our-debt-and-deficit-going-the-way-of-the-disasters-in-europe-16710">debt was heading towards European levels</a>; how our <a href="https://theconversation.com/factcheck-do-other-countries-subsidise-their-car-industry-more-than-we-do-16308">car industry subsidies</a> stacked up against other countries (although it appears treasurer Joe Hockey may have missed this one); the <a href="https://theconversation.com/factcheck-is-australia-losing-one-manufacturing-job-every-19-minutes-15917">real rate of job attrition</a> in manufacturing; <a href="https://theconversation.com/factcheck-do-many-other-countries-restrict-foreign-investment-in-agricultural-land-17691">foreign investment restrictions</a> on agricultural land; and the Coalition’s <a href="https://theconversation.com/factcheck-is-the-coalitions-paid-parental-leave-policy-similar-to-overseas-schemes-17302">paid parental leave</a> scheme, amid many other topics. </p>
<p>This was the year everyone got sober, as the mining boom party ended and it became apparent Australia is now facing a <a href="https://theconversation.com/australian-governments-face-a-decade-of-budget-deficits-13616">decade of deficits</a>. While many of our writers this year debated <a href="https://theconversation.com/debts-and-deficits-why-a-string-of-deficits-does-not-necessarily-spell-the-end-of-the-world-13987">the merits</a> or <a href="https://theconversation.com/why-deficits-leave-us-ill-prepared-for-future-shocks-13753">otherwise</a> of running deficits, next year’s debate will centre on what policy levers will be used to balance Australia’s budget. The Abbott government have already indicated expenditure cuts, but what of the need for <a href="https://theconversation.com/meaningful-tax-reform-only-if-everything-is-on-the-table-13575">tax reform</a> to address Australia’s <a href="https://theconversation.com/federal-budget-2013-why-our-unsustainable-structural-deficit-must-be-tackled-13723">structural deficit</a>? Will there be the courage to <a href="https://theconversation.com/the-gst-debate-is-reform-necessary-13888">grasp the GST nettle</a>, for instance? </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=455&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=455&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=455&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=572&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=572&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38338/original/v8n2fw9v-1387497199.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=572&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Will treasurer Joe Hockey be able to bear a decade of deficits?</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>The looming structural changes and <a href="https://theconversation.com/topics/disruptive-forces">disruptive forces</a> sweeping through the economy finally became something we couldn’t ignore. In sectors such as manufacturing, announcements from first <a href="https://theconversation.com/ford-to-pull-out-of-car-production-in-australia-expert-reaction-14584">Ford</a>, and now recently <a href="https://theconversation.com/holden-to-cease-making-cars-in-australia-by-2017-experts-react-21369">Holden</a>, to cease making cars in Australia by 2017 reveal an <a href="https://theconversation.com/last-man-standing-what-now-for-toyota-in-australia-21468">uncertain future for the sector</a>. Some of our contributors were <a href="https://theconversation.com/fords-exit-spells-the-end-of-the-road-for-manufacturing-14594">bleak</a>: others see <a href="https://theconversation.com/a-view-on-australias-manufacturing-industry-13868">opportunities</a>. </p>
<p>This sector’s fortunes were inextricably linked to the strength of the Australian dollar - great for travellers who at times enjoyed an above-parity exchange rate and prospective home owners making the most of Australia’s <a href="https://theconversation.com/rba-cuts-interest-rates-to-2-75-the-experts-respond-14000">historically low interest rates</a>, but also troubling for currency-exposed businesses, including <a href="https://theconversation.com/cost-heavy-qantas-must-look-beyond-government-bailout-21206">Qantas</a>. </p>
<p>Amid the domestic focus, a number of international events dominated. In the debacle of the US government shutdown, our writers <a href="https://theconversation.com/explainer-why-the-us-government-is-facing-another-shutdown-18587">reminded us</a> there have actually been 18 shutdowns since 1976. In the fallout of the shutdown, the American dream may have <a href="https://theconversation.com/american-dream-retains-appeal-despite-tarnished-reputation-19704">retained</a> its appeal, but the Tea Party reached <a href="https://theconversation.com/us-debt-crisis-heralds-the-return-of-the-tea-party-19371">new levels of unpopularity</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38351/original/w8rsmspg-1387500010.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The US shutdown has been kicked down the road.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p>The crisis is over for now, but legislators have just kicked the can down the road – the dysfunction is <a href="https://theconversation.com/a-culture-of-dysfunction-is-washington-headed-for-groundhog-day-19417">here to stay</a>. But while the US style may have been awful, its policy substance is sound – and should be <a href="https://theconversation.com/us-economic-policy-the-right-settings-disastrous-process-19388">broadly continued</a>.</p>
<p>So what else for next year? The Abbott government has announced a <a href="https://theconversation.com/topics/commission-of-audit">Commission of Audit</a>, a <a href="https://theconversation.com/beware-the-veil-of-independence-in-government-reviews-21322">plethora of reviews</a> and far-reaching financial services reforms, as it moves to fulfil its pledge to cut red tape and streamline government services. From the looks of the <a href="https://theconversation.com/all-options-on-the-table-hockey-unveils-myefo-experts-react-21575">Mid Year Economic and Fiscal Outlook</a>, we can expect the Budget to End All Budgets in May. The new version of the NBN, complete with a new CEO and unburdened by previous promises of reach and speed, promises to take shape. </p>
<p>The veracity of Australia’s claim to be open for business - already tested with the <a href="https://theconversation.com/hockey-kills-graincorp-takeover-by-adm-experts-react-20941">GrainCorp takeover</a> - will come under further scrutiny with a number of <a href="https://theconversation.com/multilateral-regional-bilateral-which-agreement-is-best-19664">pending free trade agreements</a>, including the <a href="https://theconversation.com/topics/trans-pacific-partnership">Trans-Pacific Partnership</a> and bilateral trade negotiations with our largest trading partner, China.</p>
<p>Meanwhile, Australia will take to the international stage to host the <a href="https://theconversation.com/what-does-the-g20-actually-do-17464">G20</a> from Brisbane. We’ll see you there for all of it next year.</p>
<hr>
<p>Top five stories of 2013:</p>
<p><a href="https://theconversation.com/explainer-why-the-us-government-is-facing-another-shutdown-18587">Explainer: why the US government is facing (another) shutdown</a></p>
<p><a href="https://theconversation.com/the-truth-about-fbt-on-cars-meaningful-tax-reform-is-hard-16235">The truth about FBT on cars: meaningful tax reform is hard</a></p>
<p><a href="https://theconversation.com/making-cents-of-a-falling-australian-dollar-15846">Making cents of a falling Australian dollar</a></p>
<p><a href="https://theconversation.com/factcheck-is-australia-losing-one-manufacturing-job-every-19-minutes-15917">FactCheck: is Australia losing one manufacturing job every 19 minutes?</a></p>
<p><a href="https://theconversation.com/the-coalitions-nbn-policy-is-a-triumph-of-short-termism-over-long-term-vision-13333">The Coalition’s NBN policy is a triumph of short-termism over long-term vision</a></p><img src="https://counter.theconversation.com/content/21679/count.gif" alt="The Conversation" width="1" height="1" />
Debt. Dollar. Deficits. Three little words so close to the hearts of our contributors in a year dominated by a critical federal election, a waning mining boom and continuing international turbulence. The…Helen Westerman, Business + Economy EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/216352013-12-19T19:16:03Z2013-12-19T19:16:03ZToyota needs a new approach to avoid the road to nowhere<figure><img src="https://images.theconversation.com/files/38268/original/jcgdv7s6-1387427402.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Toyota is the 'last man standing' in Australian car manufacturing, but it needs to shift from an 'us and them' approach to industrial relations.</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p>The Productivity Commission will today release the preliminary report of its inquiry into Australian automotive manufacturing industries, ensuring the future of car manufacturing in Australia continues to dominate the news cycle.</p>
<p>The car maker’s move to cease its operations in Australia after 60 years leaves Toyota the “<a href="http://theconversation.com/last-man-standing-what-now-for-toyota-in-australia-21468">last man standing</a>”. The Federal Court’s decision to <a href="http://www.abc.net.au/news/2013-12-12/toyota-court-ruling-working-conditions-vote/5153410">block</a> Toyota from holding a ballot considering changes to its workplace agreement has led to even more speculation about the sector’s viability. (Toyota has since appealed.)</p>
<p>Many commentators have highlighted the benefits car manufacturing brings both in terms of employment, direct and indirect, as well as investment in research and development. But opinions are split when considering the way forward: is it assistance packages? An “employer-friendly” IR system that allows flexibility? Approaching the workers “as equals” and including them in decision-making? Investment in innovation?</p>
<p>The most probable answer is that a little bit of everything is needed. There are <a href="http://theconversation.com/concentrating-on-the-costs-of-the-car-industry-means-we-are-failing-to-see-the-benefits-10503">spillover effects</a> that need to be taken into account when deciding whether to continue with assistance packages for car manufacturers. There’s also a need for agility in the workplace: organisations (car manufacturers and others) need to keep abreast of changes in their sectors and build capabilities that allow them to respond to environmental changes. </p>
<h2>Combative approach needs to change</h2>
<p>Unfortunately there’s an “us versus them” assumption underpinning the existing Australian IR system - one that needs to change in response to 21st century needs. </p>
<p>The Australian industrial relations system has always been premised on the basis of collective bargaining, and in recent years, enterprise agreements. The major limit of collective bargaining is it focuses on wages and conditions of employment, rather than the value-add component of the employment relationship.</p>
<p>The current Fair Work Act provides little in the way of guidance for employees, unions and employers to adapt to a more high involvement management strategy, incorporating the ideas and views of employees to fully utilise their capabilities.</p>
<p>The current dispute at Toyota exemplifies the skewed focus of the IR system as well as its rigidity in times where agility is paramount. The recent decision by the Fair Work Commission requiring Toyota management to further consult its workforce does provide some recognition that a more consensus-based approach is required.</p>
<p>The focus on Toyota’s efficiency drive through the enterprise bargaining process is only part of the answer. A more integrated approach using a high involvement management strategy incorporating new systems and procedures that allow workers to have a say in the workplace could provide far greater value in the medium to longer term.</p>
<h2>The future for manufacturing</h2>
<p>There is a future for manufacturing in Australia, but it is not in large scale car manufacturing. Holden’s closure and the implications it might have for Toyota are significant, with a pressing need to look to alternatives to employment in car manufacturing.</p>
<p>Glenn Cross, the COO of <a href="http://www.ausbiotech.org/default.asp">AusBiotech</a>, an industry organisation for companies in the biotechnology sector has <a href="http://lifescientist.com.au/content/biotechnology/article/bioeconomy-in-transition-371176028#sthash.Ei0NFR7z.dpuf">said</a> the medical devices and diagnostics sector “has the ability to absorb skills from the automotive industry as well as add a new manufacturing and skills base through areas like nanotechnology, biomaterials and small-scale manufacturing”. How can that be facilitated?</p>
<p>Further, according to the latest report from the Australian Food and Grocery Council, there is tremendous opportunity for food exports given the “westernisation” of diets in Asia, an increasing demand for ready-made/easy-to-prepare meals and a desire for safe food products. The food, beverage and grocery manufacturing sector employs approximately 300,000 people – how can their jobs be protected and how can we add more?</p>
<p>Belgian think tank the <a href="http://www.lisboncouncil.net/">Lisbon Council</a> has discussed “the rise of the micro-multinational” drawing on the case of New Zealand micro-manufacturer <a href="https://www.ponoko.com/">Ponoko</a> which “pioneered the creation and exchange of downloadable products” via 3D printing. Through Ponoko, customers can arrange to have their products manufactured and delivered anywhere in the world, with low costs, less complexity and instant scalability. How can we encourage such entrepreneurial thinking to create jobs in micro-manufacturing?</p>
<p>With the imminent closure of Ford and Holden, we are witnessing the end of an era for Australian car manufacturing. Finding long-term solutions to the complicated “what’s next” question is premised on a collaborative approach between all relevant stakeholders (government, unions, and employers). </p>
<p>The task force that will work out where to spend the government’s A$100 million Holden assistance package will need to decide which subsectors show promise for growth; what support they need and; how to upskill manufacturing workers to be able to find employment in those sectors.</p><img src="https://counter.theconversation.com/content/21635/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>The Productivity Commission will today release the preliminary report of its inquiry into Australian automotive manufacturing industries, ensuring the future of car manufacturing in Australia continues…Paul Gollan, Associate Dean, Research and Professor of Management, Faculty of Business and Economics, Macquarie UniversitySenia Kalfa, Lecturer, Department of Marketing and Management, Faculty of Business and Economics, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/215802013-12-19T19:15:47Z2013-12-19T19:15:47ZLessons Holden might have learned from our worst car failure<figure><img src="https://images.theconversation.com/files/38120/original/pztqh8mw-1387335665.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Leyland P76 was supposed to rescue the company - but noone bought it.</span> <span class="attribution"><span class="source">Flikr/ peterhut</span></span></figcaption></figure><p>One of the main complaints thrown around since Holden announced it would cease manufacturing in Australia has been that it failed to make a product that the market wanted. Forty years ago, this complaint was levelled at another Australian car, the Leyland P76, described as “one of the <a href="http://news.drive.com.au/drive/motor-news/legend-of-the-lemon-20130614-2o7nf.html">costliest new product failures</a> in Australian history”.</p>
<h2>“Anything but Average” - but still a failure</h2>
<p>In the 1960s the company Leyland was struggling as it was no longer a direct branch of the British parent organisation, Leyland Motors. Envisaging an all-Australian car as the key to bringing Leyland Australia out of its troubles, the new company launched the Leyland P76 on 26 June 1973 with great fanfare.</p>
<p>The result of seven years of research, planning and testing, its slogan was: “Leyland P76. Anything But Average”.</p>
<p>The P76 was available as a five or six seat sedan, with an overall length of 4.88 metres. The standard model had a choice of a 2.6-litre six cylinder or a 4.4 litre V8 engine, which was front-mounted and drove the rear wheels. Based on European design, it had an unusual wedge shape with a forward opening bonnet and a large boot - big enough to hold a 200-litre oil drum!</p>
<p>Initially, the public response with positive, with around 2000 orders taken in its first week of release and Wheels Magazine naming it 1974 Car of the Year.</p>
<p>However, just 15 months after the launch, Leyland was in financial crisis. The P76 was withdrawn, 800 cars were forced to be sold at bottom-of-the-market prices, and there was pressure on the Whitlam government to nationalise the company. Leyland reported a loss of over $50 million and ended up ceasing car manufacturing in Australia.</p>
<h2>Too big, too thirsty</h2>
<p>A number of works (including mine) have addressed the P76’s failure. Most notably was a changing market that saw a swing away from big family cars to smaller, more reliable, economic cars, particularly after the 1970s Fuel Crisis. </p>
<p>Holden has also been facing a market that prefers smaller cars, with the Toyota Corolla, Mazda 3, and Hyundai i30 three of the top five cars sold in Australia. However, Holden continued to concentrate on building large cars like the Commodore and Cruze.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/38116/original/gth3zy6c-1387334956.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The P76 was too big and thirsty.</span>
<span class="attribution"><span class="source">Flckr/Andrew Robinson</span></span>
</figcaption>
</figure>
<h2>Too much competition</h2>
<p>Leyland Australia tried to take the “Big Three” head-on in the large car market, while the car industry was very fragmented with Japanese cars gaining popularity.</p>
<p>The current market is also <a href="http://www.abc.net.au/news/2013-12-11/consumers-spoilt-for-choice-in-australian-car-market/5148410">fragmented by more than 60 brands</a>. There are growing imports from Europe as well as emerging car manufacturers like Malaysia (Proton) and China (Great Wall), plus some interest in hybrid/eco-friendly cars.</p>
<p>Clearly, Australians are not buying cars based on whether they are locally made, and not everyone wants a car like the Commodore.</p>
<p>Holden has not focussed on exporting as part of its business model, unlike Toyota, and the high Australian dollar did not make the Holden competitive. Mitsubishi and Ford had already shown that car manufacture in Australia was not profitable, which added pressure on Holden and Toyota, and others in the supply chain. </p>
<h2>Dogged by problems</h2>
<p>Leyland Australia also had a history of failed car releases before the P76, such as the Morris 1500 and Tasman/Kimberly. Holden has also had problems with its product, with recalls issued for Holden Cruzes for a faulty fuel hose in 2011 and brake problems in 2012.</p>
<h2>Unions</h2>
<p>Leyland Australia was hit hard by a series of industrial disputes, which included strikes by storeman and packers and power black-outs in NSW. Holden has had relative peace with its workforce, although it has been argued this came at the <a href="http://www.theaustralian.com.au/opinion/letters/the-true-culprits-at-holden-are-the-unions/story-fn558imw-1226780965284">cost of wages</a> “twice as high as in Europe and four times as high as in Asia”, making the price of the final product internationally uncompetitive and unsustainable without government handouts.</p>
<h2>Government policy</h2>
<p>The final factor affecting the fortunes of both companies has been an ongoing stop/go" policy approach to in the car industry by government. </p>
<p>In 1973, the Industries Assistance Commission (IAC) concluded that the Australian market could only support three car manufacturers. Holden made its decision after the federal government made it clear there would be no extra money for Holden - even as the Productivity Commission inquiry into automotive assistance was underway. So 40 years later, despite tariffs, tax concessions, subsidies and grants worth billions, we are down to one.</p>
<p>A P76 can occasionally be seen driving on the road, but it is now regarded more as an oddity. It is possible some day in the future the sight of an Australian-made Holden may be seen the same way.</p>
<p>One stark difference will be the cost. The P76’s failure cost Leyland $50 million dollars, but the price for Holden and the Australian people will be a lot more. This reminds me of a famous (anonymous) quote: “Every time history repeats itself, the price goes up”.</p><img src="https://counter.theconversation.com/content/21580/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Waller 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>One of the main complaints thrown around since Holden announced it would cease manufacturing in Australia has been that it failed to make a product that the market wanted. Forty years ago, this complaint…David Waller, Senior Lecturer, School of Marketing, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/216102013-12-18T23:51:23Z2013-12-18T23:51:23ZAfter Holden: think national, act local<figure><img src="https://images.theconversation.com/files/38122/original/ykppw2qn-1387336082.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Motoring executives and politicians have met to discuss assistance for the manufacturing sector, but they shouldn't overlook the need for local leaders.</span> <span class="attribution"><span class="source">Joe Castro/AAP</span></span></figcaption></figure><p>The Abbott government has made its first move to assist the regions affected by Holden’s planned closure. A high-profile taskforce, to be led by prime minister Tony Abbott and include two other federal ministers, will have up to A$100 million to assist the process of adjustment in affected regions - primarily South Australia and Victoria. </p>
<p>The loss of industry has hit Australia hard in recent decades and a number of assistance packages have been rolled out to help communities and industries. </p>
<p>Australia, of course, is not alone in being affected by the loss of manufacturing capacity, though some nations, such as the United Kingdom, appear to be witnessing the <a href="http://www.theguardian.com/business/2013/nov/01/uk-manufacturing-demand-exports-employment-pmi">resurgence of manufacturing employment</a> as some firms <a href="http://www.thebiponline.co.uk/bip/uk-companies-consider-manufacturing-return-to-britain/">return</a> from overseas. In large measure this “re-shoring” of manufacturing jobs reflects a fall in the value of the pound stirling, but comparable national-level processes are unlikely to assist Australian manufacturers and their workers as our currency remains relatively strong. </p>
<p>Action at a national level is important in responding to “economic shocks” - only central governments have the resources and money to put forward a comprehensive program of action. But although such measures are necessary, they are not sufficient. </p>
<h2>Local leaders required</h2>
<p>International research suggests local planning and local action needs to be a fundamental component of any adjustment strategy, and essentially it is a matter of empowering local leaders to lead. National governments struggle to award priority to one region over others, even when they face considerable hardship.</p>
<p>Leadership at the local level is something that researchers have considered in detail. Good local leadership is very different from commonly held assumptions about “great leaders” acting in isolation to lead a community to a better future. </p>
<p>Instead good leadership at the local level is collaborative, and involves groups of individuals with a strong connection to the community working together. Ideally, these groups have a diverse range of skills and perspectives. Good leaders are task and outcome oriented, but they are not afraid to pay attention to the socio-emotional side of group dynamics. That is, they care about people and aren’t afraid to show it. </p>
<p>Good leaders at the local level are able to bring resources to the task of leadership - ideas, time, social networks - and are willing to use those resources to advance community wellbeing. </p>
<p>Importantly, local leadership isn’t limited to any group, gender, industry or occupation. There is a considerable body of research that shows effective leaders often come out of industry, but they may also be local government officers, economic development practitioners, students, retirees or members of one or more community groups. </p>
<p>In the 1990s, Port Lincoln on South Australia’s Eyre Peninsula was confronted by stark economic conditions as the tightening of quotas for Southern Bluefish Tuna undermined one of the key industries in the region. Key individuals from the industry transformed production, resulting in a more viable fishery and a more productive economy. </p>
<p>Elsewhere, Western Australia’s <a href="http://www.oilmallee.org.au">oil mallee</a> industry emerged from the efforts of public officials keen to improve the sustainability of farming practices and simultaneously diversify the region’s economic base. </p>
<h2>Anyone can apply</h2>
<p>The positive message here is that anyone within the community has the potential to emerge as a leader and most regions have considerable capacity to develop their local leadership. These leaders in turn can then identify specific actions that complement national programs intended to assist the adjustment process. </p>
<p>Good leaders do not inevitably emerge when a region, city or community is confronted by crisis. Too often external shocks such as the closure of a major plant are accompanied by internal failure, as local and national processes fail to shape a new future for the affected region. </p>
<p>What then does all this mean for those communities affected by the Holden closure? </p>
<p>First, governments should be looking to develop local responses to a challenge that will have very significant impacts at the local scale. Part of their response should include the mobilisation of local leaders and the associated provision of resources to help them with their task. </p>
<p>Second, discussion last week about the intended closure of Holden as a producer of cars generated considerable heat. The energy and commitment directed into posts on this website and others can be redirected into a community resource that assists the process of change. There are ways of capturing these ideas in a positive way and then using them to energise growth. At the very least, local leaders can consider these ideas as they plan for the future of their communities.</p>
<p>Governments and communities alike can encourage the <a href="http://www.tandfonline.com/action/showAxaArticles?journalCode=rsrs20&#.UrIwzmQW3Z5">development of local leadership</a> and the steps needed to foster the emergence of local leaders start with governments and local communities making a genuine commitment to dialouge and action. They then need to establish systems that assist the exchange of information. </p>
<p>It helps if central governments are willing to delegate some powers and responsibilities to the local level, but each must be willing to take action and honour their commitments. Finally, local interest groups need to be realistic and discipline themselves to understand the pressures on government and then work to achieve the best possible outcomes, while still holding high expectations. </p>
<p>Local leadership in the process of industry adjustment does not guarantee positive outcomes for affected individuals or communities. But it does enable those affected by such changes to take control of their lives. </p><img src="https://counter.theconversation.com/content/21610/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Beer 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 Abbott government has made its first move to assist the regions affected by Holden’s planned closure. A high-profile taskforce, to be led by prime minister Tony Abbott and include two other federal…Andrew Beer, Director, Centre for Housing, Urban and Regional Planning, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/215042013-12-18T19:17:21Z2013-12-18T19:17:21ZHolden, retirement ages and the myth of choice<figure><img src="https://images.theconversation.com/files/38166/original/tssh644s-1387346736.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Redundancies at Holden highlight the fact that around three quarters of those retiring early do so involuntarily</span> <span class="attribution"><span class="source">Julian Smith/AAP</span></span></figcaption></figure><p>Holden’s move to withdraw from Australian manufacturing draws attention to the significant problem of involuntary retirement in Australia.</p>
<p>While the official retirement age is 65 years, there are many who leave the workforce prior to that age for reasons outside their control.</p>
<p>Almost three-quarters of men and nearly one half of women that retire before the age of 55 do so involuntarily - a fact surely not lost on the almost 3,000 Holden workers that must now find alternative work or be forced into early retirement by 2017.</p>
<p>Health reasons are by far the biggest driver of early retirement, but retrenchment and inability to find work also play a role. Involuntary unemployment is most likely to occur to those who are least capable of re-entering the the workforce. For these workers redundancy means not only a loss of employment, but also exclusion from the labour market, as they struggle to find another job.</p>
<p><a href="https://theconversation.com/mitsubishis-silver-lining-for-holden-workers-21425">Research</a> shows around 12% of Mitsubishi workers that lost their job in 2004 were retired within three years, with an additional 5% not working due to a disability.</p>
<p>This suggests a positive outcome for most affected Mitsubishi workers. An indication of the ability of Holden workers to stay in the workforce and not be forced into involuntary retirement will depend on the individual characteristics of such workers including including work context, demographics, and human capital and finances.</p>
<h2>Who retires early?</h2>
<p>Workers in occupations such as “community and personal service”, “clerical and administrative workers”, “sales workers” and “labourers” are between 35 to 50% more likely to retire before the age of 60 than professional workers. Furthermore, the likelihood that professionals, technicians and managers work beyond 65 is more than 50% greater than in any other occupations.</p>
<p>While race has been a determinant of involuntary retirement in international studies, this is not the case in Australia. </p>
<p>A more telling determinant of early retirement in Australia is English language proficiency, with males with a strong command of English being almost twice as likely to work past 60 than are males with poor English. English proficiency is perhaps even more important for females with less than 10% of females with poor English working beyond 60.</p>
<p>When the broad definition of involuntary retirement is used, the proportion of female involuntary retirees increases significantly (but is still much lower than males) due to around 15 per cent of women below the age of 55 retiring in order to care for somebody. This is consistent with prior research that has found that two key drivers of early retirement in women are the desire for joint retirement of couples[3] and to care for a loved one.</p>
<p>Level of education is also a strong predictor of early retirement with males without a post-school qualification being twice as likely to retire before 60 than are males with a degree (35 v. 16.5%). For females the level of education is even more important, with one half of all females without a post-school qualification retiring before 55. </p>
<p>As almost one half of superannuation balances accrue in the last year decade of employment, it is hardly surprising that involuntary retirees tend to have lower retirement savings and therefore lower incomes post retirement. </p>
<p>It is clear that the occupations with the highest incidence of early retirement, community and personal service", “clerical and administrative workers”, “sales workers” and “labourers”, are also the occupation types with average weekly salaries below A$1,000 a week.</p>
<h2>Squeezing a balloon</h2>
<p>Research suggests that should involuntary unemployment be due to redundancy, low income workers will be more than twice as likely to experience job search exclusion than those with a salary above 65,000 (53% compared to 24%). </p>
<p>So as the data suggests, some Holden workers will be better placed than others, that is the professionals, technicians and management staff, those with strong English language skills, and those with post-school qualifications. </p>
<p>For those forced out of the workforce early, and who are therefore ineligible for the Age Pension, there is a likely to be a process of benefit substitution, that is a shift to an alternative social security program. Newstart allowance or a Disability Pension are the obvious support mechanisms, provided they can qualify.</p>
<p>Hence, the personal economic cost becomes a public cost. These individuals are also more likely to rely on the full Age Pension once they qualify.</p>
<p>Consequently we need as a nation to think carefully about the support we provide to the involuntary unemployed, in terms of benefits, retraining and employment support. The very high private and public costs of involuntary unemployment will only escalate with structural changes in employment, and of course, with any increase in the official retirement age as recently proposed. </p><img src="https://counter.theconversation.com/content/21504/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Ralston 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>Holden’s move to withdraw from Australian manufacturing draws attention to the significant problem of involuntary retirement in Australia. While the official retirement age is 65 years, there are many…Deborah Ralston, Professor of Finance and Director, Australian Centre for Financial Studies Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/214682013-12-16T03:33:43Z2013-12-16T03:33:43ZLast ‘man’ standing: what now for Toyota in Australia?<figure><img src="https://images.theconversation.com/files/37804/original/bvx78xwp-1387150520.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Toyota has a history of operational excellence in Australia.</span> <span class="attribution"><span class="source">Joe Castro/AAP</span></span></figcaption></figure><p>Now that Ford and Holden have announced the 2017 closure of their Australian manufacturing and assembly operations, what are the prospects for the industry and its key remaining participant, Toyota? Unlike Ford and Holden, Toyota has large and continuing export volumes from Australia. </p>
<p>Toyota began producing vehicles in Australia 50 years ago, and has a proud history of local industry participation. I have been studying this and other manufacturing industries for decades and must admit to being a great admirer of Toyota in particular: both its famous TPS (Toyota Production System), and how its runs itself as a company more generally. Toyota has exported over a million cars in total from Australia, currently at a rate of some 70,000 per year.</p>
<p>The wealth that Toyota brings to Australia is much more than through the jobs created, capital investments and even the multiplier effect, which is often estimated at about five or six times the direct effect, via supply chain jobs and business activities. </p>
<p>For example, I have often helped executives in other industries to understand from Toyota’s example the meaning and practice of “operational excellence”, such as 20 years ago when we introduced quality management into Australia’s leading bank at the time, adapting it straight from Toyota’s approach (we even coined the phrase “Become the Toyota of banking!”). From banking to mining, we often hear of direct or indirect transfer of capabilities and skills where techniques such as lean operations, applied first and best in Toyota, are being adapted and applied all over our economy. </p>
<p>Of course these techniques could in theory still be applied if Toyota was not present in Australia, but in practice it’s not so, because the training, networking effects and capable people who learn in the automotive sector, move through the economy and take their skills with them is a critically important “spill-over” effect, that I hope we never lose! It’s very difficult to precisely quantify this significant spill-over benefit to Australia, and sadly this leads many to discount, underestimate or ignore it in their cost-benefit analyses. </p>
<p>Toyota and the Commonwealth government will both continue to do their sums about what level of subsidy makes sense. Toyota needs and wants to make inroads into its major challenge, which is the high cost of production and overheads in Australia, relative to its other operations. The quality of Australian built cars is now excellent, and they have brought their innovations here (e.g. hybrid synergy drive), which Ford and Holden did not really do. </p>
<p>From Toyota’s perspective the decision to produce cars here was made by the legendary, now late Eiji Toyoda, and the company will respect that decision even decades later, such that it will take a long term, global strategic view of Australia’s position in its overall network. We should note that Toyota has only ever closed one significant operation, which was its Fremont, California (NUMMI) plant, in which it joint-ventured with GM, and this was done after GM essentially went broke during the global financial crisis (it was revived with the help of a US government industry rescue package). </p>
<p>Toyota has also put significant investments here around its assembly operations, including its own dedicated suppliers and its technology/ design centre, which also creates significant skills and knowledge that bounces around the economy. From a global perspective, Toyota also has seen and used Australia as a place to learn to do business the Western way, and this includes dealing with labour unions. This will all be stacked up against the $4,000 per vehicle cost penalty (higher production cost in Australia then elsewhere) that Toyota pays for the “privilege” of producing cars here.</p>
<p>For the Abbott government, we can only hope that they can fully appreciate the full set of benefits that come from having a car industry here, even if it only involves one “last man standing”. The alternative is an industrial and economic nightmare in the long run, with considerable loss of capability in both science and technology, and management skill. </p>
<p>To appreciate and fully take this into account when the government does its sums, a long term view will be required, because the short term numbers may well not stack up, and I fear that the short term perspective and politicking on “issues of the day”, of which most Australians have had more than a gutful, might lead the government to treat Toyota as they did Holden. </p>
<p>What needs to occur to keep an automotive industry operating in Australia? We need a tripartite approach, comprising governments, automotive companies (Toyota and key suppliers), and labour unions in a regular and continuing dialogue, and we need to change the question, from “What would it take to keep Toyota here?” to “What is required to get this world class company (Toyota), and others, to significantly expand in Australia?” We have great science and engineering in Australia, talented managers and a fine workforce, which can be joined in a partnership between a company as good as Toyota and a visionary government: but it needs an ambitious vision to start with.</p>
<p>The list of industries that have been almost or completely lost in Australia is getting too long, from textiles, clothing and footwear, to much of food, TVs and electronics, tyres, and very many others.</p>
<p>Before we let one of the world’s very best companies leave Australia, and take a critically important industry with it, we should debate the long term strategic factors, which go way beyond the next few years’ subsidy numbers. We should study carefully how countries like Thailand have built their automotive industry as ours declined, and find ways to lower our costs, raise productivity and drive innovations, using our first world infrastructure, technical prowess and managerial capability. </p>
<p>Those running Toyota will be strongly encouraged if our governments and unions treat them with (deserved) respect and work constructively to find a longer-term future for the industry. There are ways to drive productivity up and keep bringing innovations into reality: the question is can we work together and do it? </p>
<p>Putting it as directly as I can: can this country really be silly enough to let a high capability, innovative, export earning, world class organisation up and leave, and lead to the demise of a really important industry? Of course there is a price to the taxpayer beyond which we should not go, but the consequences of underestimating that number in the long term are dire, and a positive constructive approach and dialogue, along with the subsidy that every country provides to automotive assemblers, should go a long way. </p><img src="https://counter.theconversation.com/content/21468/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danny Samson 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 Ford and Holden have announced the 2017 closure of their Australian manufacturing and assembly operations, what are the prospects for the industry and its key remaining participant, Toyota? Unlike…Danny Samson, Professor of Management (Operations Management), The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/214222013-12-12T19:42:19Z2013-12-12T19:42:19ZMeasuring the fallout of Holden’s ‘perfect storm’<figure><img src="https://images.theconversation.com/files/37543/original/8pqs76kd-1386814946.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Those scrutinising government support of the car industry have changed their views over time.</span> <span class="attribution"><span class="source">judepics/Flickr</span></span></figcaption></figure><p>For many decades, Australians have regarded a local car industry as a demonstration of our domestic capability. Sometimes, we have paid dearly for our enthusiasm. </p>
<p>In the late 1970s, import quotas limited the choice of cars available to consumers. If a particular car had an import quota of zero, it was not available in Australia regardless of local demand. Protection from imports in the form of quotas and tariffs raised the price of cars far above that in countries without such protection.</p>
<p>Trade reforms over the past three decades have lowered the price of new cars. In 1986, a base model new Toyota Corolla cost around A$15,000 (according to redbook.com.au). That is around A$36,000 in today’s dollars, which can buy a mid-range car far superior to the 1986 Corolla. </p>
<p>From this we can infer that trade reforms have allowed the domestic car market to take advantage of changing car technology. The cars we drive now are safer, more economical and less polluting than those of the 1980s.</p>
<h2>The case for protection</h2>
<p>From the late 1970s, computable general equilibrium (CGE) models were used to examine the impacts of trade reforms on the economy, led by academics now within the Centre of Policy Studies. </p>
<p>Modelling showed that if trade reforms allowed import volumes of cars and other manufactures to rise, indeed jobs were lost in the directly affected industries. But other trade-exposed industries, including agriculture and mining, benefited from the improvement in international competitiveness that arose from reducing protection.</p>
<p>In the past few years, something odd has happened to modellers at the Centre of Policy Studies. They have changed sides. No longer are they advocating further unilateral reductions in trade protection. This is because if we are to import more, we must also export more. </p>
<p>The trouble with exporting more is it’s difficult to do so without driving down export prices. This means that for a given level of output, our spending power drops. Therefore, cheaper imports might be more than offset by the negative impacts of a loss in spending power. </p>
<p>If trading partners improve access for our exports in their markets at the same time as we cut protection further, then our spending power losses are alleviated. But this now involves multi-lateral, not unilateral trade reform.</p>
<p>The policy question in the car industry concerns subsidies. Is it worth paying subsidies to foreign owners of car companies so that car assembly and parts jobs stay in Australia? It depends on circumstances. </p>
<p>When Mitsubishi closed in Adelaide in 2006, some workers may have struggled to find new jobs, but others took their packages and started new jobs within days. </p>
<p>At the time, prices for minerals were rocketing. This caused a mining investment boom. With the boom came jobs. Closing a car plant in those circumstances resulted in little economic damage. </p>
<h2>The economy has shifted</h2>
<p>Now the mining investment boom is likely to slow. Since this period is likely to coincide with the closure of the car industry, now that Ford and Holden are closing, with a real fear that Toyota will follow, there is a substantial risk affected workers will not move readily into new jobs. That is, in a labour market less buoyant than that of 2006, a closure of the car industry may cause quite a dent in the economy. </p>
<p>In these circumstances, the costs of subsidies paid to car manufacturers to keep the domestic industry going might be less than the economic losses from closure. </p>
<p>The trouble is that subsidies tend to be permanent, not temporary. Since there are circumstances in which closure of a car plant will not harm the economy, subsidies are not always worthwhile.</p>
<p>This raises a final question. If Australians are so keen on a domestic car industry, why have they not translated this into purchases of Australian-made cars? Demand patterns, not government policy, are driving the nails into the car industry coffin.</p><img src="https://counter.theconversation.com/content/21422/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Glyn Wittwer received funding from Allens Consulting to examine the impacts closing down the car industry in February 2013. He sometimes has access either to the aged Australian-built car or the fully imported car at home, though other household members have priority.</span></em></p>For many decades, Australians have regarded a local car industry as a demonstration of our domestic capability. Sometimes, we have paid dearly for our enthusiasm. In the late 1970s, import quotas limited…Glyn Wittwer, Senior Research Felllow at the Centre of Policy Studies and IMPACT Project, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.