Auto industry pleas heighten fears for Aussie carsUpdated 2...

Auto industry pleas heighten fears for Aussie cars
Updated 2 hours 25 minutes ago

As Holden talks of cutting costs and after Ford's talk of factory closures, fears have been heightened for the future of Australia's automotive industry.

Greg Hoy
Source: 7.30 | Duration: 7min 53sec

Topics: automotive, company-news, australia

Transcript

LEIGH SALES, PRESENTER: When the Ford Motor Company announced last month that it would shut down its production lines in Melbourne, there were fears it marked the beginning of the end for car making in Australia.

Those fears have been heightened today with Holden announcing radical plans for cost cutting at its plants in Victoria and South Australia.

Holden isn't saying exactly what it means by "labour-related cost reductions", but some reports say workers will be asked to take a pay cut of up to $200 a week to ensure the car maker's survival.

Today's news has also renewed the debate over the value of billions of dollars in taxpayer-funded subsidies injected into the car industry.

Greg Hoy has this report.

GREG HOY, REPORTER: The aftershocks from Ford falling over as a local car maker continue across the industry. Today Holden told 2,100 of its workers in Adelaide they must improve productivity and reduce pay and conditions or Holden will have to follow Ford and exit Australian manufacturing.

JOURNALIST: What did you make of the meeting today?

FORD EMPLOYEE: If you really wanna know, they talk like politicians: full of s**t.

JOURNALIST II: Are pay cuts on the table?

JOHN CAMILLO, AMWU: No. We are discussing a number of issues. At this stage, no-one's put anything forward.

GREG HOY: Unions say that they simply won't consider pay cuts, so what happens then?

MIKE DEVEREUX, CHAIRMAN & MD, HOLDEN: No stone will be left unturned.

GREG HOY: Does that mean pay cuts?

MIKE DEVEREUX: It means that no stone will be left unturned.

GREG HOY: There was also a stern warning for Canberra: unless government funding is maintained or improved, Holden says it will also have to leave. This raises pressure on the Opposition plan to slash car subsidies by $500 million in two years. Some in Labor, however, are also concerned about subsidies given Ford is leaving despite receiving $1.1 billion in government subsidies over 12 years.

CESAR MELHEM, VICTORIAN LABOR MP: I think Ford should do the right thing by reimbursing Australian taxpayers and Victorian taxpayers some of that money was paid to them.

GREG HOY: Victorian Labor MP Caesar Melhem says Ford failed to produce a promised left-hand-drive Territory for export, delayed delivery of a fuel-efficient diesel model for seven years and cancelled the commitment to make locally a smaller car, the Ford Focus.

CESAR MELHEM: They sit on their backside and just business as usual. That's why they've got themselves in trouble. Ford failed.

GREG HOY: Perhaps some of the subsidies given to Ford should then be refunded. Do you think that's a fair thing?

BOB GRAZIANO, PRESIDENT & CEO, FORD AUSTRALIA: I believe every agreement that we've had has been fulfilled.

GREG HOY: The Federal Government insists there have been greater benefits.

BILL SHORTEN, EMPLOYMENT MINISTER: When you look at what has occurred in the last 13 years both under Labor and our predecessors is that there are 50,000 jobs in the automotive industry. There are plenty of small and medium enterprises who sustain a living, who sustain jobs.

GREG HOY: 1,200 jobs at Ford, however, won't be sustained, which frightens Australia's auto supply sector, the car components manufacturers that employ 29,000 Australians.

JIM GRIFFIN, CEO, DIVER CONSOLIDATED INDUSTRIES: Ford's extremely important to the automotive supply chain in Australia. Of the three car manufacturers in this country, you could argue that Ford probably has the highest amount of local content. So losing them out of the Australian industry is certainly going to be a significant blow.

GREG HOY: Socobell Automotives employs 400 people producing plastic parts for Ford, Holden and Toyota.

ROSS BELLESIS, MD, SOCOBELL: Any industry that's become extinct in this country, it's gone through transitions of once upon a time being large and viable, then medium, then small and extinct.

GREG HOY: So is Australian car manufacturing headed for extinction?

BILL SHORTEN: Let's not run up the white flag on automotive manufacturing in Australia. A combination of building cars that people want to drive rather than building cars and assuming people will just come and buy them regardless of what they're like, that's important.

GREG HOY: Australia has gradually slashed tariffs on imported cars from 57 per cent in 1984 to 3.7 per cent today. Government prefers to subsidise car makers. Precise figures are kept confidential, but Toyota and Holden are said to have received $2.3 billion over 12 years. Unlike Ford, they have developed smaller, more fuel-efficient vehicles and export markets. They and their many suppliers say it's been a bargain for taxpayers.

ROSS BELLESIS: If you get look at subsidies for our industry on a per capita basis, in Australia we're running at around $18 a head of government subsidies for the car industry. In Germany it's $90 a head. In the US it's a staggering $265 a head. So in actual fact, I believe we are undersubsidised.

GREG HOY: So does Holden's president and managing director Mike Devereux.

MIKE DEVEREUX: We need competitive, consistent, clear policy over time that allows us to actually face the realities of what other countries do, be that currency manipulation, be it tariff walls that they put up, be it co-investment attraction. The world is not always a nice place. We live in the real world and we have to deal with those real-world realities head on.

GREG HOY: Opponents, however, believe such government assistance promotes inefficiency and should be abandoned.

BILL SCALES, FMR CHAIRMAN, AUTOMOTIVE INDUSTRY AUTHORITY: The Government has been providing the wrong sort of assistance to the industry. There is no doubt that organisational specific or company specific or even industry specific assistance by government simply doesn't work.

GREG HOY: Bill Scales is former chairman of the Industry Commission and the Automotive Industry Authority under the Hawke government.

BILL SCALES: Ford proves that it doesn't work.

BILL SHORTEN: I believe that supporting the automotive industry has a multiplier effect in terms of funding research and development, funding the training of apprentices and also a lot of smaller businesses benefit from the existence of an automotive industry in Australia.

GREG HOY: Car component manufacturers agree, but increasingly are hedging their bets on whether the last two Australian car makers will survive. Manufacturers like Mark Albert of MTM are using government research subsidies to develop export products and reduce reliance on local car manufacturers.

MARK ALBERT, CEO, MTM AUTOMOTIVE COMPONENTS: Government subsidies have helped us tremendously in exporting our product all over the world. Currently we're exporting to North America, China, we did India last year, South Africa, Malaysia, Argentina and Thailand.

GREG HOY: Regardless, this large employment sector will for now continue to rely heavily on the two car manufacturers left standing. So the decades-old debate will continue: should government do more to safeguard their survival or, like other industries, stop subsidising them completely?

BILL SCALES: There's nothing intrinsically better about the automotive industry than there is about the mining sector or agriculture or tourism.

JIM GRIFFIN: The skills it provides, the volume, the training, the employment, it's absolutely paramount that we don't let it die. It's a shame Ford's gone. We can't let Toyota and Holden go.

LEIGH SALES: Greg Hoy reporting.

http://www.abc.net.au/news/2013-06-18/auto-industry-pleas-heighten-fears-for-aussie-cars/4763718?section=business