Australian car industry bailout doomed to failure

MEDIA RELEASE - 09/11/2008

The Australian government’s $6billion car industry bailout is simply rearranging the deckchairs on the Titanic, says a leading car industry expert.

Clive Matthew-Wilson, editor of the car buyers’ Dog & Lemon Guide, says that unless Australia is prepared to block all imported cars, its industry is doomed.

“While I sympathise with the workers and businesses who rely on the car assembly to survive, the government’s package is simply corporate welfare that will not save the industry.”

“The Australian government can throw $6 billion or $600 billion at the car plants, but they still won’t be economically feasible.”

“The decision to close or continue with the Ford and General Motors’ plants cannot be made in Australia. This decision will be made in America, and probably sooner rather than later.”

“Both Ford & General Motors are currently on life-support in America. Ford hasn't made a full-year profit since 2005, while General Motors last posted an annual profit in 2004.”

“The U.S. government will rescue Ford & General Motors because it has no choice. However, as part of their rescue package the U.S. government will almost certainly force Ford & General Motors to dispose of their unprofitable overseas assembly plants. The Australian Ford & General Motors plants will be near the top of the list for closure.”

“The Australian government rescue packages will merely postpone the inevitable. The sad fact is, car manufacturing in Australia was only marginally profitable even in good times, and the good times are long since over.”

Both Ford and Holden have recently announced layoffs at their Australian plants, which Matthew-Wilson believes is “the beginning of the end”.

A closure by Ford and Holden would see Toyota as the sole volume manufacturer in Australia. Toyota is the most successful car manufacturer in the world and can afford to wait out the recession. However, Matthew-Wilson added:

“Car companies exist to make money. If they can make more money assembling cars in Thailand than Australia, then that’s what they’ll do. Their only loyalty is to their profits.”

Matthew-Wilson added:

“Please don’t shoot the messenger. I’m well aware of how many Australians rely on the car assembly industry for their jobs and I would love to be wrong, but I don’t think I am.”

“The Australian car industry can re-focus on small cars, green cars, blue cars or red cars. None of this will make any difference in the longer term.”

“The bottom line is this: the average Australian manufacturing job pays around $26 per hour. China’s car workers are being paid as little as $1 per hour. There’s simply no way Australia’s car plants can survive against that sort of competition.”

“If the Australian government simply shared the $6billion among the affected car workers, these workers could pay off their mortgages or perhaps start small businesses. At least that way the money wouldn’t be wasted. As things stand, the government’s $6billion will do nothing but fill the coffers of a few multinational corporations, while doing nothing to solve the underlying problems.”