The end of an era is nearly upon us. Australia will no longer be home to automotive production after October of this year. It’s a sad time as we bid farewell to the local production that has given us some incredible cars, some even lucky enough to cross borders and make their way to America.
But, one Australian economics commentator, Jason Murphy, doesn’t believe it should be all sad and full of sorrow, arguing the process has been underway for 30 years. In an effort to drive down consumer prices of goods, Australian governments have continuously opened its borders to free trade and flooded markets with cheaper goods.
At its peak, Australia produced almost half a million cars in 1974, but never recovered to reach those levels again. Governments slowly enacted a plan to phase out subsidies for local automakers, something Murphy calls a “managed declined.”
Instead of letting the whole industry implode at once, something many felt was inevitable, subsidies became fewer and fewer over the years. Finally, in 2014, the government pulled the life support altogether. Ford, Holden and Toyota all announced production would end by the year 2017.
“Making things is officially over. [Australia] is now a country whose economy is about doing things and helping people,” said Murphy.
“It was a bit like rearranging deck chairs on the Titanic,” said Tom Conley, a lecturer in political economy at Griffith University in Queensland.
While the end of production is expected to slash the Australian GDP by as much as two percent, and lead to hundreds of thousands of lost jobs, Conley described a “but” situation.
The blow is softened by Australia’s unique advantage of having an abundance of natural resources while also being relatively close to China. As many other economies suffered from the ravages of the great financial crisis, Australia, riding the once-in-a-generation mining boom, saw its living standards soar as China’s economic development took off in the last decade. That all helped make the decline of the manufacturing industry “economically palatable,” said Conley.
It’s not an ideal situation, but it’s something. Now, we count on locals and enthusiasts abroad to tell the stories Holden, Ford and Toyota penned during decades of local operations.
Comments
Which other countries with less than 30 million inhabitants have an automobile industry just for their own national market?
And when did GM Holden shut down manufacturing in New Zealand?
Have a look at worldwide statistics of automobile production per country at the world automobile industry association OICA
http://www.oica.net/category/production-statistics/
here are those countries, taken from world production statistics published by OICA, the international association of automoblie manufacturers, pertaining to 2016
The first two column show the population and the country’s name,
followed by the number of passenger cars produced in 2016,
and then the nuber of cars produced per 100 inhabitants and year
02.064.241 Slovenia 133.702 6,48
05.435.343 Slovakia 1.040.000 19,13
05.503.879 Finland 55.280 1,00
07.076.372 Serbia 79.360 1,12
08.773.686 Austria 90.000 1,03
09.799.000 Hungary 472.000 4,82
10.045.200 Sweden 205.374 2,04
10.341.330 Portugal 99.200 0,96
10.578.820 Czech Rep 1.344.182 12,71
11.354.665 Belgium 354.003 3,12
17.123.600 Netherlands 42.150 0,25
19.760.000 Romania 358.861 1,82
23.545.680 Taiwan 251.096 1,07
24.435.300 Australia 149.000 0,61
Except Taiwan and Australia, all countries listed are member of the European Union or Serbia which is close by. Serbia has a FIAT factory. In Finland, Valmet is producing small series for e.g Mercedes. Similar for Austria with Magna Steyr. Netherlands builds mainly trucks and buses, but also Tesla is producing there for Europe. In Slovenia, there is a plant of Renault, producing also Smarts
All this is not for the respective national market of the country, but for the common internal market of the EU, and the world.
I am astonished by Taiwan. I don’t know what is being produced there.
The Common EU market holds up because the borders are land based, not separated by sea (shipping) – trucking & rail movements in the EU are cost effective. It is a severe foible by the UK to leave the EU. Manufacturing of UK made goods into the EU will suffer because new goods and ideas will still have to come up to EU regulations but EU manufacturers will just be “there” & understand their requirements implicitly. Isolationism is not the way forward in this day and age. Good one UK!
Slovakia has the Skoda under the Audi Group. My guess is their closest neighbours are somehow tied into Skoda manufacturing??
NZ vehicle manufacturing died in the 1980s under the Lange government. His Finance Minister Roger Douglas at the time was a hard out economic, neo-liberal reformist (totally counter to the socialist/unionist principles of the Lange Labour Govt.). He killed off state subsidies to industries (car manufacturing), lower trade tariffs on almost everything (including fully built up vehicles) and privatised a myriad of govt. departments. To be fair the car manufacturing industry was based on CKDs (complete knockdown kits) which were just assembled in NZ, not designed and built from the ground up. There was never such a thing as a NZ model, like the Commodore/Falcon were to Australia.
Er, both Škoda and Audi are part of the Volkswagen group…
ACEA, the European manufacturers association (www.acea.be), lists three car assembly plants in Slovakia:
• in Bratislava: Volkswagen. VW Touareg; Porsche Cayenne parts had been produced there and shipped to Leipzig (Germany) for assembly (this moved to Leipzig), also some parts for the Audi Q7. What else? My information is not up to date.
• in Trnava: PSA. I think they produce the smaller cars of both brands.
• Žilina: Kia (Hyundai)
Tata’s Jaguar-Land Rover is planning to build a factory in Slovakia.
Major passenger car factories in Czech Republic are in
• Kolin: TPCA = Toyota Peugeot Citroën Automobile Czech. The smallest ones Peugeot 108, Citroëen C1, Toyota Aygo
• Mlada Boleslav + Kvasini: Škoda (VW group)
• Nosovice: Hyundai
All these are just production facilities of an integrated production process spanning several countries, producing for an internal market of 500 million people.
The same applies to most of the automobile industry in Great Britain. All of those are foreign owned, with minor exceptions like Morgan. Ford is producing only engines, others get their engines from the continent. The only more or less self-contained is Indian owned Jaguar-Land Rover, which does not yet have a second foot on the continent. So there is not a cleavage of “EU-manufacturers” vs. “UK-manufacturers”.
Brexit only risks to throw a spanner in the European wide integrated production processes. I think that while tariff barriers might be erected, which make cars more expensive for all of Europe, the British will take great care not to break the EU-wide standardization of automobiles, thus remaining technically part of the Common Market, but without having a say about the evolution of those regulations, the modern way of common weights and measures of the previous centuries.
Think about how the TTIP negociations aimed at harmonizing such regulatory restrictions of trade between the US and EU, especially for the automobile industry. Those following this blog for a long time will remember that the Opel Adam was found to be not able to be “federalized”, i.e. modified for US specifications without a huge and very costly effort.
Only after writing the above, I read the April 27 statement “Brexit should not undermine automotive competitiveness, manufacturers and suppliers warn” by both the ACEA and CLEPA (European Association of Automotive Suppliers).
http://www.acea.be/press-releases/article/brexit-should-not-undermine-automotive-competitiveness-manufacturers-and-su
Let me quote the beginning:
“Automotive manufacturing is a highly complex industry. A single vehicle part may be composed of over 30 components, and undergo over one hundred process steps to become a finished product. It may pass through 15 countries, and cross borders multiple times in its material journey. A single vehicle, in turn, consists of around 30,000 parts.
Vehicle manufacturers currently operate some 300 assembly and production plants in Europe. They often manufacture engines or transmissions in one country and assemble the final vehicle in another. ”
Worth reading in full. There is a link to the ACEA position paper on Brexit, a seven page PDF document. Also worth reading.
They failed to mention the inception of the Button Plan in the eighties was what was the real catalyst to the end of Australian manufacturing as a whole, not just the automotive industry.
I didn’t know about this Button Car Plan.
There is an article on it on the English language Wikipedia (en.wikpedia.org)