Amongst all the emotional rhetoric and dubious numbers being visited upon us by various interest groups and pollies after the announcement by GM that they will be folding their tents, there seems to be very little sensible analysis of the whole picture. Comment has all been focussed on the current supply chain, the economic and social impact of its crumbling, and what others should have done in the past to prevent it, and now clammering for compensation.
Compensation for what?
Lets have a look at some of the more common blathering.
- Holden is a national icon. GM is a huge multinational company, with problems facing it appropriate to its scale. Australia is a pimple on its arse, no matter how much we blather about “Holden, the national icon”. Why should we continue to support its operations here? If they are not commercially sustainable on their own merits, experience suggests, it is just a matter of time, and the longer we administer the medicine, the more painful the withdrawal.
- The workers need compensation. Fair enough, there will be pain in many households supported by Holden, and Ford over Christmas. However, compensation for what, where are the lines drawn? These workers have had many years of news that their employers are in the edge, so the announcements should not be a surprise, and now they have 4 years notice, and generous redundancy. There are many thousands of worker that have been displaced over the past 20 years who would have killed for just a month of notice and modest redundancy, let alone the largess heading the way of displaced auto industry workers.
- The supplier businesses need compensation. Similarly, the manufacturers in the supply chain, now to be supplying only Toyota whilst they remain manufacturing here, are facing tough times. Should be no news in any of this for them, so failure to adapt over several strategic horizons should not be an excuse for handouts.
- Employees pay taxes. So, the argument goes, being employed, even by a subsidised industry, owned overseas, is better than having them unemployed and the industry closed. This is the sort of economic and social poop, ignoring the lessons of many past disruptions that even the far left should be embarrassed about.
- The industry is the engineering University of Australia. There is some real truth in this, the capabilities nurtured by the car industry have benefited many other industries. However, as the decline in manufacturing in this country is across the board, not just in the car industries, perhaps we should be considering engineering capabilities in the wider context than just one industry that is clearly at the end of its life as it has been run to date. Australia has several sources of potential international competitiveness, mining engineering and technical mining services, solar engineering are just two. The fist of these we squeezed mercilessly for current income, disregarding the long term opportunities to build sustainable engineering capabilities, the second of which we actively encouraged to go overseas to find financial and technical support. How stupid are we?
- Loss of sovereignty. Perhaps the most spurious of the lot. As it goes, without the car industry we have no ability to defend ourselves, no national pride, no capacity to be Australian. Given that only 20% of the cars sold over the last couple of years have been manufactured here, this argument holds little water.
The solutions for the car industry have been obvious for a while, and although not easy, or without risk are not inconsistent with the commercial choices faced by any firm in an industry facing disruption. A few companies have embraced them. Futuris, a former subsidiary of Elders, and a major suppliers of car seats went offshore several years ago, and are reaping the rewards, and there are others, although way too few, who have moved to accommodate the long term trends in the industry, and have prospered.
Here is where I have problems. We are focussed on the political cycle, short term returns, ideology lacking foundation in the real behaviour of real people, and an expectation that it will be all done for us, by the “government”, forgetting that the government is us, spending our money in ways that suit them, and their political priorities, that have little to do with the long term development of engineering capabilities in the country.
Bit like Canute up to his arse in waves bitching about the tide.