The continuing focus on the future of General Motors’ local operation and the broader automotive manufacturing industry is wholly out of proportion to the industry’s significance in the wider economy.
The car industry employs 46,000 people. The total transport equipment manufacturing sector employs 76,000 people, according to Australian Bureau of Statistics data. That’s around 8% of the total manufacturing workforce, and two-thirds of one per cent of the entire Australian workforce. To put that in perspective, that’s around half of the number employed in food manufacturing and food retailing, and the same number as employed in each of the telecommunications, super and insurance funds industries.
Greens MP Adam Bandt today tried to claim that the closure of Holden, coupled with the government’s mooted 12,000 public service job cuts, might send the economy into recession. For a start, the 12,000 cuts are on hold because Labor got there first, and were intended to be over four years, while Holden wouldn’t close until 2016, so presumably Bandt is warning of a recession in 2016-17. And even if 58,000 jobs disappeared overnight, it would be well under 1% of total employment. There’s more risk of policy-makers and politicians talking us into recession than there is of the automotive sector’s closure pushing us into one.
Bandt and others, like departing Fairfax economics writer Tim Colebatch and even Robert Gottliebsen (who yesterday predicted “five tidal waves of unemployment”) are reflecting a 1980s mentality. Back then, vehicle manufacturing by itself provided nearly 2% of all Australian jobs in a huge manufacturing sector that employed 17% of all workers. Back then, vehicle manufacturing employed not much less than half of the entire professional services workforce. Now, it employs less than 10% of that sector.
And in any event, looming unemployment is no reason to avoid hard decisions. Unemployment was 9.5% and heading up when Bob Hawke announced his industry statement of March 1991 that slashed tariffs, including for motor vehicles (at that stage 35%!). At that point around one in seven Australian workers was employed in manufacturing.
If unemployment at below 6% isn’t a good time to take another step in that direction then when is?
Speaking of tariffs, if GM and Toyota do decide to pull out, then there will be no further point in maintaining the existing 5% tariff on imported vehicles or the punitive tariffs on second-hand imports (subject to suitably stringent safety standards). The removal will be a boost for Australia’s automotive retail sector, which employs nearly 70,000 people, as well as cutting the price of vehicles for all Australians.
The decision point comes as the US Treasury sold the last of its US$50 billion in shares in General Motors bought in a bailout during the financial crisis. “All three US automakers are profitable, competitive, and growing,” Treasury Secretary Jack Lew said.
One of the reasons they’re profitable is that governments around the world insist on throwing money at them for the privilege of making cars in their countries. It’s an obsession that Australia has no need to continue.
Bernard, isn’t 8% of our manufacturing workforce a significant slice? Is there another manufacturing segment that contributes more than 8%? If not, then we are debating whether to shut down the biggest manufacturing employer in the country. Once these things go, they never come back, the skills are lost, and the hollowing out of the Australian workforce continues. Is there not a business case to consider here as the relative costs of support versus the economic benefits of retaining the industry.
On this subject Bernard is just plain wrong. The leading industrial countries do everything to attract encourage and retain auto manufacture in recognition of the benefits in terms of jobs, technical advancement and economics; so they are all wrong and he is right?
Bernard counter intuitively recommends that we destroy our car-makers because they are a footnote in our economy, not the huge employer they once were. Well, Bernard nowhere else have import restrictions been lifted to the extent that we now have more car makers competing here than in the USA.
Each import lessens the opportunity for local car makers to make a quid, exacerbating their decline. Each import adds to the huge public debt burden, that we gloss over, whilst this Government blames its predecessor for the Australia’s massive debt, when the culprits are closer to home.
And finally Bernard welcomes the day when we can import second hand cars from overseas; what so that shonky dealers can sell decrepit, unsafe vehicles to the disadvantaged in Australia? I’ll stick with locally made thanks.
Bernard, the social cost of shutting this industry down is far in excess of what the industry package will cost. This is not a question of choosing a different path – this government does not want to invest in educating the workforce, present or future, to a first world standard.
Remember Lehmann Bros? The economic dries would not help them and this miscalculation has cost the whole world trillions of billions!!!!
Get real Bernard – the auto industry is supporting retail jobs at Coles, Woolies, Maccas and Newsagents. Cut it down as the mining boom is coming off and we have a perfect storm and an instant underclass of serfs.
The latest China’s international trade figures, which were released during last weekend, are good but only limited to the Export from the Chinese side. The figures of Imports into China are weak and have actually dropped significantly. It means China’s demands on importing goods from other countries, e.g. Australia etc. has been reduced substantially.
This is a not a good signal to Australia.
In such unfavorable case, the Australian government should consider to adopt stronger monetary easing policy to drive the AUD downwards healthily. So, our Export competitiveness can be strengthened again and, our economy can be improved.
This should also help our car exports to oversea markets.
Your article is a very poor put-down of the arguments marshalled to keep the auto vehicle industry going. Indeed it was petulant and demeaning of Colebatch. You give me the impression that you think you have lost the argument when you have actually written better stuff than this arguing for no protection. Quoting Adam Bandt’s view won’t help your case. Not mentioning the high Australian dollar in your put-down is an awful look.