"Staying on the assembly line" article from "The Age"

[Dr Smith]

An interesting article to counter the anti-car industry assistance campaigners...(who are mainly economists earning $250K+ lol,)

The Age, 19/7/12
http://www.theage.com.au/opinion/pol...718-22ajq.html

Don't be too quick to begrudge our struggling car industry its millions in government assistance - the benefits are felt throughout the entire economy.
IT IS easy to misread this week's decision by Ford Australia to further reduce its workforce.
The knee-jerkers will, of course, jump to the conclusion that Ford's move means that the $35 million of government money invested with the company earlier this year was wasted, has been lost or flushed down the drain.
Warming to their task, they will go on to say that the whole 2008 New Car Plan - a scheme with a 10-year horizon - is also a failed cause, a poor use of incentives that only produces a misallocation of resources in the economy.
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But they would be wrong. The Ford decision has been made in response to current market conditions. No one predicted in 2008 that the Australian dollar would rocket above parity with the US dollar.
The $35 million investment, in addition to a $68 million outlay by the company, is part of a product engineering plan that will see a new model Falcon produced after 2014.
Just as the recently released model features a world-leading fuel-efficient engine, the 2014 model will incorporate other fuel-saving and emissions-reduction technology that will ensure the Falcon remains one of the best large cars available anywhere.
But even that is only a narrow view of what is happening.
The assistance provided to the car industry not only allows the country to be partly self-reliant for transport equipment, it can perhaps be more accurately seen as assistance to the whole manufacturing sector.
What is difficult to discern, especially for economists who deal only in numbers, is the role that the automotive industry plays in the raising of standards generally in quality, technology, service and many other facets of manufacturing overall.
Making cars is the most complex mass production task, drawing on a wide variety of materials, technologies and management skills to pull together 10,000 parts to make a single product, in a seamless process that gets faster every year, and with fewer defects.
The need to meet the requirements of the car assemblers drives parts makers to continually improve their own performance by adopting new technology, reorganising production processes and generally improving every part of their operations.
Apart from the automotive business awarded to these parts makers, these improvements are a key benefit of having a domestic car industry.
It allows these smaller enterprises to expand into non-automotive areas, applying their state-of-the-art skills to other products. There are many examples, but a few will demonstrate the point.
A company that makes mobile electricity generators, gT-Energy Technology (gTET), uses a heat pump system developed by a car parts supplier. The company's generators use waste heat from industrial processes to produce electricity, cutting some electricity bills by 50 per cent.
Another company, Backwell IXL, is a Geelong neighbour of, and supplier to, Ford. It applies its automotive skills and quality standards to keep its IXL Tastic bathroom heater/fan/light units competitive at a time when almost all appliances appear to be made in China.
Diver Consolidated Industries makes heat shields for use in engine bays and has applied this technology to the production of heat-resistant window shutters to improve the protection of houses in bushfire areas. There are also more direct benefits accruing to parts makers in the form of exports to car makers around the word, business they would not have won if there were no domestic car industry.
In conjunction with the industry's co-operative research centre, AutoCRC, Adelaide rear vision mirror manufacturer SMR Australia has developed a new lightweight mirror that will be exported around the world.
Leading parts maker Futuris Automotive Interiors has developed a radical new car seat, also in conjunction with AutoCRC.
Using a man-made fibre, the seat shape is knitted and then sent to the car plant, where it is stretched over a seat form and heat treated, setting hard as a hollow structure ready to be upholstered.
In an era when weight and emissions reductions are paramount, these products are set to make significant contributions to our economy.
With the dollar rampant and car makers around the world happy to send vehicles to Australia at unrealistic values just to keep their factories in the northern hemisphere running, it's no wonder that local car makers are under pressure.
But it's as well to remember that before this temporary resources and currency boom happened, the automotive sector was a major contributor to the health of the Australian economy.
In 2000, when the Australian dollar was below US60¢, production was at near-record levels and exports absorbed more than half the output. In fact, overseas sales generated $5 billion in income, more than the wheat crop.
Those figures have taken a beating thanks to the resources boom and the resultant high dollar, but even the experts say the resources boom won't last forever - just like the 1950s wool boom did not last forever.
The role of the New Car Plan is to ensure that when the resources boom does finally subside and the currency comes back to somewhere near its historical average, the can industry will still be here, creating value, employing people and underpinning the manufacturing sector.
Ian Porter is an industry and policy analyst.

[falconnut]

As long as we are in the black why dont we give Ford Australia more money to keep australian cars alive?

I am dead serious the government needs to go get their piggybank.

[Wretched]

I have gone on record many times here indicating I am against blank cheque handouts and subsidies to car makers by governments at all levels.

If there had to be subsidies shown it needs to be incentive based. That each maker must outline steps that they will take to improve the product, exceed standards, etc. This way the investment by the governments is not wasted on churning out a product that is the result of a lack of insight, not up to standard and really not what the market wants.

Any handouts or subsidies should be matched by a multiple from the parent organisation, production cannot just rely on government help, that is a business fail and it should be left to die.

It will be interesting to see what the government and Ford will do. I do agree that governments should be looking at local product for their vehicles but at the same time the local makers need to be building something more suitable for public consumption. The Territory is one such vehicle and the Cruze another.

[csv8]

Why are we giving Afghanistan $250m a year ?plus all our other foreign aid, with no benefit to us ??? that money should be spent on indigenous health, hospitals, education etc..oh..and the car industry...

[aussie muscle]

Rather than handouts, they should just buy lots of Falcons. that has direct benefits to both company and govt. i'm sure Ford can make sure their product meets the needs of most depts. (i'm sure if you scrutinized their justifications, most would be covered by Focus, Falcon, Ranger and Territory.)

[xtremerus]

They are NOT black cheques.
They do roughly what you propose.

[jpd80]

Originally Posted by falconnut

As long as we are in the black why dont we give Ford Australia more money to keep australian cars alive?

I am dead serious the government needs to go get their piggybank.

I think that's Ford's plan, don't you?

No Falcon advertising, easing back on fleet sales, reductions in production and staff......oooo we're going broke..

The elephant in the room is Territory sales with little or no discounting while Ford cant give Falcons away..

[stang65]

Finally an article that makes sense at the end of the day i don`t give a crap which company we subsidies in Australia so long as it keeps Australian jobs.

It`s not like you can go up to the government and say hey I want some of that tax money you were going to give to one of the companies. We pay taxes fact if it goes to helping keep jobs in Australia it`s all good.

[Buntz]

Originally Posted by jpd80

I think that's Ford's plan, don't you?

No Falcon advertising, easing back on fleet sales, reductions in production and staff......oooo we're going broke..

The elephant in the room is Territory sales with little or no discounting while Ford cant give Falcons away..

I hope you're joking. If that is Ford's plan I wish them all the worst with it.

Originally Posted by Wretched

I have gone on record many times here indicating I am against blank cheque handouts and subsidies to car makers by governments at all levels.

If there had to be subsidies shown it needs to be incentive based. That each maker must outline steps that they will take to improve the product, exceed standards, etc. This way the investment by the governments is not wasted on churning out a product that is the result of a lack of insight, not up to standard and really not what the market wants.

Any handouts or subsidies should be matched by a multiple from the parent organisation, production cannot just rely on government help, that is a business fail and it should be left to die.

It will be interesting to see what the government and Ford will do. I do agree that governments should be looking at local product for their vehicles but at the same time the local makers need to be building something more suitable for public consumption. The Territory is one such vehicle and the Cruze another.

I started off disliking you're post, liking it, and then in hindsight disliking it again.

The old adage: "Gotta spend money to make money" rings true here. Every government around the world aids their car manufacturers. It's pretty much a hand in hand. Car manufacturing offers a level of employment, employment infrastructure, and tax income to sovereign states that is up there with the best. Germany has a multi-billion euro economy built around it's automotive sector. ZF Friedrichshafen alone - which I believe to be majority owned by the town of Friedrichshafen and the German government - has operating margins of about 10 billion euro annually give or take. With about a billion euro in profit after operating costs and tax. That's huge. More than our car industry alone. But the German tax payer forks out for these companies. And Germany is the strongest financially of a collapsing Europe.

It's ignorant to be against government subsidisation of just the car industry. They subsidise just about all industry for the purpose of the returns, benefits to economy and government coffers. Taxes keep countries running, and so it's people need to earn money to pay them. So we give some of them away to make sure we can keep paying them.

I agree with you that Car Manufacturers shouldn't just expect handouts, but should work with Government on making competitive products. However, Australia does make world class cars. Holden has proved that. And the current Falcon and Territory are strides ahead of the commodore, but they only go to New Zealand. To me seems like sabotage on Fords part as regards Falcon... but they are still employing Australians who contribute to our economy and our little circle of life. So some chunk change from the GovCo is really nothing in the scheme of things.

[washoutbeach]

Ive thought about this and decided that the pen pushers are complete tossers.

Its times we spoke up for our industry and forced our governments and their agencies to buy Australian cars only.

They do that in Victoria and its gone really well.

Then we can have a vibrant virile industry continuing to make some of the best cars in the entire world.

[mik]

that`s a pretty fair article i think, and if any of the big makers close there doors completely on manufacturing, i suspect the hand outs from govco would be looking like spare change compared to what a large a motor company puts back into the economy in taxes, technology,skills, keeping people off social security.

[ebzery]

we need to protect australian industry in any and all ways we can.
the future of australia depends on it.
in the 70s when we still had industrys australia had great declines in many rural communitys, expect this to happen again if the government dosnt takeup protectionism in its programs.

[Bossxr8]

I'd gaurantee Ford would pump a hell of lot more money into the government coffers than what the government gives them in terms of handouts.

Just factor in how much tax money thousands of employees pay each year, not to mention company tax, GST and all the other government scams that go with selling cars like LCT etc.

[GCRXR6]

Originally Posted by ebzery

we need to protect australian industry in any and all ways we can.
the future of australia depends on it.
in the 70s when we still had industrys australia had great declines in many rural communitys, expect this to happen again if the government dosnt takeup protectionism in its programs.

We Aussies are the only ones who can protect our industries. We can do this by buying comodities that are manufactured in this country. Why don't we get it? Are Australians really bloody stupid?

[jpd80]

Originally Posted by Bossxr8

I'd gaurantee Ford would pump a hell of lot more money into the government coffers than what the government gives them in terms of handouts.

Just factor in how much tax money thousands of employees pay each year, not to mention company tax, GST and all the other government scams that go with selling cars like LCT etc.

1. Businesses do not pay GST, they pass it on to the mug at the end
2) How much income does Ford pay if they make losses?
3) Ford is able to carry those losses forward to years where they make profits.

So that leaves us with employees, I think Ford manufacturing is is around 1600 plus a few small Aussie supplier firms.
In an Australian workforce of around 11 million, that really is small beer..

[tranquilized]

A contradictory article in the Age today;

http://www.theage.com.au/opinion/pol...719-22d11.html


Unless you have some knowledge of the industry, it really must seem as though the government is just throwing money down the drain with these subsidies. Its not until you look a bit deeper that it starts to make a bit more sense, as the article in the OP states. Its an interesting debate though, taking up a fair bit of media space atm.

Taking up a lot of forum space now too!! Another new thread just started...

[GTPete]

Govco pledged a billion dollars to Afghanistan last week makes the governments Ford contribution look like a gold coin donation.

[falconnut]

Originally Posted by jpd80

I think that's Ford's plan, don't you?

No Falcon advertising, easing back on fleet sales, reductions in production and staff......oooo we're going broke..

The elephant in the room is Territory sales with little or no discounting while Ford cant give Falcons away..

Its what happened in America and Europe in 08 and now i guess we are just catching up.

Either way Ford Australia are NOT trying hard enough to save their brand.

[castellan]

Originally Posted by Wretched

I have gone on record many times here indicating I am against blank cheque handouts and subsidies to car makers by governments at all levels.

If there had to be subsidies shown it needs to be incentive based. That each maker must outline steps that they will take to improve the product, exceed standards, etc. This way the investment by the governments is not wasted on churning out a product that is the result of a lack of insight, not up to standard and really not what the market wants.

Any handouts or subsidies should be matched by a multiple from the parent organisation, production cannot just rely on government help, that is a business fail and it should be left to die.

It will be interesting to see what the government and Ford will do. I do agree that governments should be looking at local product for their vehicles but at the same time the local makers need to be building something more suitable for public consumption. The Territory is one such vehicle and the Cruze another.

I think they have subsidies for people starting in the building industry to.

[Bossxr8]

Originally Posted by jpd80

1. Businesses do not pay GST, they pass it on to the mug at the end
2) How much income does Ford pay if they make losses?
3) Ford is able to carry those losses forward to years where they make profits.

So that leaves us with employees, I think Ford manufacturing is is around 1600 plus a few small Aussie supplier firms.
In an Australian workforce of around 11 million, that really is small beer..

I was referring to tax's etc when Ford sell a car. The buyer has to pay GST and all of the other government taxes and charges that go with it, so selling a car brings the government money. I didn't mean to infer Ford payed that stuff.

Ford have over 3000 employees still.

[graham7773]

I'm with the previous post saying "it's the mug buyer who pays all the tax etc". On the question of subsidies, how many businesses in Australia go to whe wall each year with commensurate losses of jobs and no subsidies in sight? I am talking about 1000's of jobs, just gone! Specially in the manufacturing and farming industries. Even with subsidies, Mitsubishi sank and Ford accepted $134000000 then we hear that 400 Ford jobs are going, going, gone. I may be wrong but subsidies do not seem to be helping except to pay for CEO bonuses. For what?

[jpd80]

Originally Posted by Bossxr8

Ford have over 3000 employees still.

Yeah but only around 1800 at Geelong and Broadmeadows, cutting that by 440 will bring them down to a combined 1460..