Thursday, December 12, 2013

Going, Going, Gone!

This decision by GM to exit manufacturing in Australia should come as no surprise - to anyone. By the way, in regard to the fallout from the decision, there is plenty of blame to go around - GM, the unions, the workers and the various governments. They’ve all contributed impressively to the eventuality.

The unions bled the company; the company acquiesced; and the stupid governments (both Liberal and Labor) didn’t insist on higher productivity, they just doled out taxpayer dollars and hoped it would fix the problem.

So, with no-one doing anything about the structural reasons for the decline in manufacturing cars in Australia, is it any wonder we’ve ended up where we are. Will Toyota withdraw? Of course it will.

It is simply too expensive to manufacture cars in Australia. We are a sophisticated society that demands high living standards, and the high wages that pay for them. If productivity doesn’t match the wages demanded, then that industry is unsustainable - simple as that.

Productivity and efficiency is the simple formula which all companies, governments and workers must look to, to make business sustainable and profitable. Profit is NOT a dirty word, it’s ESSENTIAL.

Labor governments abhor productivity inquests, because they are enslaved to the unions and are simply required to support higher wage claims.

Liberal governments don’t like productivity inquests either because they inform the harsh reality of output matching costs, and that means a fight with the unions.

Interestingly in the entire history of the Australian automotive industry from 1948, in my opinion, only four politicians have ever truly understood, and tried to relate, productivity and efficiency to wages - and they were ALL Labor identities.

John Button, Paul Keating, Bill Kelty and Simon Crean. Button and Keating were far sighted statesmen-visionaries who were realistic about what needed to happen to make Australia competitive; and the two union-related men (Kelty and Crean) were realistic enough to know that you can’t have higher wage claims without increased productivity and efficiency.

As far as I’m concerned, no-one else has made any significant effort to realise the dream of blending the needs of industry/community/government to make our car industry sustainable and profitable.

Of course, I’ll be guilty of fabulous hindsight, but I have been saying (at least for the last 15 years), that car companies needed to be creating very flexible plans for the future, because doing the same old, same old had a very limited tenure.

By the time you add up environmental considerations, agitation from green groups, rising fuel costs, congested cities and roads, lack of infrastructure spending and inflation-boosted car ownership costs, then BIG cars were on life-support, and smaller cars and alternative fuels would be the only direction the market was going to follow.

I’m sorry for all the people at Ford and Holden; and the associated supplier support companies who are going to lose their jobs, but with a bit of clear thinking, re-structuring the Australian industrial landscape is not impossible, and it just may be possible to avoid long term unemployment on a scale not seen in Australia - ever!

Clear thinking? Don’t look to our politicians to provide it. The current lot (led by Tony Abbott and Bill Shorten) will just knee-jerk their way through the immediate future, without any real vision or answers.

Could we initiate a Think Tank including Paul Keating, Bill Kelty, Simon Crean , Martin Ferguson and Malcolm Turnbull to put their heads together and lead a restructuring solution? I wish!

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