Death of Australian car output leaves chasm

[kscarbel2]

Bloomberg/Reuters  /  October 19, 2017

As thousands of people attended an automobile rally in Australia's blue-collar heartland on Sunday, many knew it was also a funeral procession for the nation's car industry.

General Motors closed its Holden factory in the South Australian suburb of Elizabeth on Friday, ending more than a century of car manufacturing in the country. Hundreds of workers will be left jobless, just weeks after Toyota Motor Corp. shut its plant in neighboring Victoria state, where Ford Motor Co. closed two sites last year.

Current and former workers and other car enthusiasts gathered outside the factory Friday to greet the last car off the production line.

"The end of Holden making cars in Australia is a very sad day for the workers and for every Australian. It is the end of an era," Prime Minister Malcolm Turnbull told reporters at a regular briefing on Friday. "Everyone has a Holden story."

Rising discretionary income and record-low interest rates have encouraged consumers to buy new vehicles, but many turned against the large passenger cars for which GM Holden is known.

"Consumers want fuel-efficient small cars and sports utility vehicles, and overseas manufacturers have been able to profit from changing tastes," said William McGregor, industry analyst at ‎IBISWorld.

Monthly SUV and crossover sales hit a record in June, surpassing 40,000 light vehicles, data from Australia's Bureau of Statistics show.

GM Holden, whose SUV range proved unpopular with Australians, will shift production to Germany where advanced automation will help keep costs low as it revamps its lineup.

GM Holden began auto production in 1948 with then-Prime Minister Ben Chifley driving the first vehicle off the production line, declaring it "a beauty".

"I have bought four of them," said Shane Oliver, an AMP Capital economist who described the closure as a "sad day".

"But it's clear that not enough Australians' agreed, opting for foreign-made SUVs instead," Oliver added.

End of local icons

The closing of GM, Toyota and Ford plants mark the end of home-grown icons such as the Holden Commodore and the Ford Falcon driven by Mel Gibson in the original "Mad Max" movie. But they also strike an economic blow, especially in the rust belt state of South Australia, where recent signs of recovery haven't been enough to stop people leaving in droves.

"It is clear that the automobile industry is a very significant industry that once it is gone, will leave a very deep economic gap, an investment gap and an employment gap," said John Spoehr, a professor of economics and director of the Australian Industrial Transformation Institute at FlindersUniversity in Adelaide. "Holden injects a billion dollars plus into the South Australia economy. So its loss is going to be very significant."

More than 25,000 people attended the weekend parade in Elizabeth, including Holden workers past and present, to watch around 1,200 vintage models take to the streets. The last Holden built in Australia -- a VFII Commodore Redline -- rolled off the production line Friday more than 50 years after the factory opened.

South Australia, which is 60 percent desert, gained little benefit from the mining boom that spread wealth among other resource-rich states. Instead it suffered from the side effects of the soaring currency and rising wages. While its jobless rate has this year dropped from 7 percent to 5.8 percent, a record 6,900 more people departed the state than arrived last year.

Migration

The state has a "solid foundation from which to absorb this shock," South Australia Premier Jay Weatherill said in a television interview Friday. "Of course it will put upward pressure on the unemployment rate, but I think it will be temporary, I think it will be manageable."

Victoria is better placed to absorb the shock of its closures. The state is booming, with net interstate migration soaring over the last five years to a record 18,000 arrivals in 2016 as workers moved for jobs and slightly cheaper homes than New South Wales, the most populous state.

"Victoria's economy is more diverse and has stronger business services and financial services sectors, and stronger population growth, which help mitigate impacts," said Spoehr. "The opportunities for workers in other sectors of manufacturing are more substantial too."

Still, the jobs market in Australia has been an economic bright spot of late. Despite losses from car manufacturing, more than 800,000 jobs have been created since the first closure was announced four years ago. In the past 12 months, most new jobs have been in health care, construction and education.

Australia's car industry traces its roots to 1901, when land surveyor Harley Tarrant built the first gasoline-powered car in a small workshop in Melbourne. By the end of the century, Holden's Commodore was the country's best-selling car and remained so until 2011. As well as the currency, there was fierce competition from low-cost labor in countries such as China and Thailand.

The pressures took their toll. Ford, Holden and Toyota said separately in 2013 and 2014 they would cease production Down Under. At that time, just over 11,000 people were employed directly by the three automakers in Australia, according to the Productivity Commission.

"If only Australia had held its nerve, the car industry might have just hung on, and taken advantage of new innovation in hybrids, driverless cars etc.," said Tim Harcourt, an economist at The University of New South Wales Business School, who advised on a state-commissioned review of the car industry in 2008. "Australia failed. To hang out the car industry to dry is very sad."

'Ripple effect'

Since the announcement of the closure of the Elizabeth plant, almost three quarters of departing workers have found jobs, according to Holden, which has provided career counseling, interview training and other services. While many of the 950 workers who remain at the factory will wake up without a job on Saturday, it's not just them who will feel the pain.

"We are more concerned with workers of the supplier companies, and then the general ripple effect on the wider community as the economic activities slow down," said Peter Sandeman, chief executive officer of Anglicare SA, a Christian charity which helps South Australian communities.

Sandeman estimates another 2,500 jobs will be lost in the region from suppliers, and the effect will be palpable. Over the past year, his organization has seen an increasing demand in Elizabeth for emergency assistance, including groceries and meals, and he expects that to only rise further following the Holden plant's closure.

The Holden factory in Elizabeth was completed in 1962 and a year later, Queen Elizabeth II, after whom the suburb was named, visited and toured the plant. Filling its gap will be daunting: the last car plant to close in the state -- Mitsubishi Motors in 2008 -- triggered the biggest annual exodus of people to other states in 12 years.

There are some brighter spots on the horizon. The government has announced an A$89 billion ($70 billion) shipbuilding plan, which includes constructing 12 submarines mainly in South Australia and should generate thousands of jobs. But the key part of the program isn't scheduled to start until the early 2020s.

"That's four or five years away," said Scott Batchelor, South Australia vehicles secretary of the Australian Manufacturing Workers' Union. "That's a long time between the auto industry closing-down and then people getting employed in shipbuilding."

.

[Swishy]

Well eye got one 1974 Holden ute tuckd away 

it will B a barn find wen ppl will ask 'wotsa Holden'

 

we have owned from new

 

cya

§wishy

[Timmyb]

What irks me is how much money the government has thrown at the local car manufacturers (mostly Holden) to keep local jobs. Then they turn around and say it not economically viable. 

Yes it is sad to see them go, but fact is people wanted smaller cars, more fuel efficient and they didn't change. 

Anyway, we are rumoured to get the camaro, and already have the mustang so I'm happy with them two racing at Bathurst. 

Edited October 20, 2017 by Timmyb

[mrsmackpaul]

40 minutes ago, Timmyb said:

What irks me is how much money the government has thrown at the local car manufacturers (mostly Holden) to keep local jobs. Then they turn around and say it not economically viable. 

Yes it is said to see them go, but fact is people wanted smaller cars, more fuel efficient and they didn't change. 

 

Couldnt agree more 

You are so right, we can blame all of us as we didnt support them but then again they didnt try to do the right thing and move with the times 
We can also blame the governments that took all the import duties away 
But it gets a bit more complicated than that 
Why did the import duties vanish ??
This lies squarely with the UK's insistence with joining the EEC (Eastern European Community) or the EU as we know it today 
For this to happen they (the UK) had to stop having protected markets in the Commonwealth, for people that havent grown up in the Commonwealth this wont meant much 
The Commonwealth was the British Empire and all exports thru out the Commonwealth were export duty free and the Commonwealth dealt largely in its self, the UK bought almost of the exports from around the Commonwealth and the Commonwealth bought almost all of the UK's exports 

This is why we had crappy pommy trucks and cars for so long 

Anyway when the the UK joined the EU the Commonwealth countries lost the export markets over night and this caused a huge amount of financial trouble around the Commonwealth
The only way that other countries around the world would allow countries like Australia to start exporting to them was for Australia to drop our tariffs that protected ours and the UK's industries 
The unknown down side to  all this was all the cheap imports from Asia as Asia was mainly a nothing on the world stage back 
But once the flood gates were opened there was no turning back 

The irony is that the UK and the big business in the UK that forced the UK government to join the EU as they  (the big businesses) thought they could compete in Europe found they never could and as a result almost of the UK's manufacturing has gone 

And now the UK is doing it's best to leave the EU 

This I am afraid is to little to late 

Yes we all have a hand in what has happened here 

As another side note, I find it interesting how that Mack and Kenworth still make trucks here and there is a waiting list and I think it is 12 months for Kenworth and and 9 months for Mack 
It does show if you make what people want you still can compete 

Paul

 

Oh yeah I still drive a Holden dunny door X six 1 tonner and the Princess has her Dunny door Adventurer    wagon and no I wouldnt buy another Holden even if they still were making them, the build quality is crap I would by the dirty old XF Falcon   

[mrsmackpaul]

[kscarbel2]

Demise of Australian carmaking acts as a warning to rich nations

Financial Times  /  October 21, 2017

General Motors’ unit closure raises questions over manufacturing in developed states

A curtain has come down in Australia. General Motors’ Holden subsidiary closed its last major car assembly plant in the country on Friday, bringing to an end a century-old industry that forms the bedrock of Australia’s manufacturing industry.

It follows similar decisions by Ford and Toyota to cease local manufacturing as the carmakers failed to cope with reduced tariffs on cheaper Asian imports following the inking of free trade deals that flooded the market with cheap imports.

But the problems are not isolated to Australia. It is one of a number of developed economies struggling to compete as global car manufacturing increasingly shifts to the emerging markets such as Mexico, where the cost of production is lower.

The Holden closure raises questions and intensifies the debate over the long-term viability of production in the world’s richest nations.

“The global shift in production is one of the consequences of free trade deals between countries with big labour costs differences,” says Felipe Munoz, global automotive analyst at Jato Dynamics.

In North America, carmakers are still investing in Mexico, despite the threats by US President Donald Trump against carmakers that shift production out of the US.

Audi has begun using the country as the centre for global production of the Q5 premium SUV, while BMW is also opening a plant to produce 3-series sedans for the global market there.

Toyota will also move production of the Corolla to Mexico, while General Motors is expanding its plants in the country.

Ford had planned to make its next Focus model in Mexico, although it has shifted production to China.

Volvo, which is owned by China’s Geely, also uses China as a global export base for the S90 saloon.

In Europe, there has been a flurry of investment by Jaguar Land Rover, Volkswagen and Mercedes-owner Daimler in car plants in central and eastern nations Slovakia and Poland, where manufacturing costs are a fraction of those in Germany and the UK.

Manufacturing in high-cost countries such as Australia “only really makes sense when you have an export hub,” says George Galliers, an auto analyst at Evercore ISI.

Nations such as the UK and Germany are dependent on exports — close to 80 per cent of cars made in both countries are sold abroad.

This emphasis on exports puts the focus on free trade agreements, FTAs, which proponents of Brexit in the UK have cited as a way to open doors to selling the country’s cars to nations such as the US and China.

But in Australia, where a free trade deal with Thailand saw the market flooded with cheaper cars, and the US, there is more negative and hostile mood over the benefits of free trade agreements.

More than any other, the Nafta agreement between the US, Mexico and Canada highlights the perils of FTAs for the developed countries.

Nafta helped the Mexican car manufacturing sector boom from a cottage industry to a global powerhouse in two decades. But for the US, it saw jobs drain away to the cheaper south.

This pressure on jobs prompted Mr Trump to call Nafta the “worst deal in history” and also led to the US pulling out of the Trans-Pacific Partnership — a deal between 12 nations that border the ocean including Japan and America.

“It is crucial that an FTA actually works for businesses in practice,” says Jessica Gladstone, a London-based partner at law firm Clifford Chance. 

“For without careful consideration, a deal could leave significant non-tariff barriers in place, which could see the benefits negotiated being neutralised altogether."

Since Canberra signed a free trade deal with Bangkok in 2005, Australian consumers have bought 2.26m vehicles imported from Thailand, according to Australia’s Federal Chamber of Automotive Industries. 

Yet when Holden and Ford attempted to export Australian-made cars to Thailand, they complained they often faced hidden non-tariff barriers that made exports unsustainable.

“The Thai free trade deal was a one way agreement. It didn’t provide a level playing field to our car manufacturers,” says Paul Bastian, national secretary of the Australian Manufacturing Workers' Union.

Although a flood of cheap cars undoubtedly gave more people access to cars, a move with potential benefits to the wider economy, the measure took its toll on the industry, and car production halved between 2004 and 2012 to about 220,000 vehicles — Toyota 100,000, Holden 80,000 and Ford 40,000.

Scrapping high tariffs on imports also created a hyper-competitive domestic car market, where 67 brands sold 350 models in 2014 in a market with 1.1m annual sales worth A$40bn. This was more than in either the US, where sales were 17m, or China, with 23m sales in the same year.

“Competition is intensifying,” says Roy Green, dean at University of Technology Sydney’s business school. “Thailand is already a powerhouse in Asia and is absorbing almost all of Toyota’s Australian production. China is a new emerging global powerhouse.”

He says for carmakers to survive in high cost economies they need to embed a high level of robotics and automation in operations; fully integrate into global markets and supply chains; be able to customise products for individual customers; and provide world-class design.

The rising use of robots may help to tip the balance back in favour of developed countries, says Dr Sam Luttrell, an Australia-based partner at law firm Clifford Chance.

“The car industry is one of the most heavily automated industries in the world,” he says. “Robots perform most of the major steps in the production line. When robots do the work, wage costs start to be replaced by electricity bills.”

That will be little comfort to the final 900 workers at Holden’s Adelaide assembly plant or others in the industrial world where aggressive cost competition is having a similar impact.

“It is very rare to lose an entire industry and the demise of the auto industry in Australia is a salutary warning to other nations about what can happen if you are ambivalent about the industry,” says John Spoehr, director of the Industrial Transformation Institute at FlindersUniversity. “It consolidates elsewhere.”

.

[kscarbel2]

Holden brand will live on

Financial Times  /  October 21, 2017

General Motors may have stopped making cars in Australia but it is retaining design and engineering teams and the Holden brand — one of the oldest in the global automobile industry, writes Jamie Smyth.

“Holden’s lion and stone emblem is an iconic brand in Australia,” says Richard Ferlazzo, GM Australia’s design director. “We will still be selling Holden’s here. It’s just they will be sourced from other global GM plants.”

Holden’s next generation of Commodore, due to be launched next year in Australia, will be sourced from factories in Germany. The company plans to release a total of 24 car models by 2020, which the company says highlights its commitment to the brand.

“In today’s environment, it doesn’t make sense to manufacture here but it certainly makes sense to design cars in Australia,” says Mr Ferlazzo, who heads a team of 100 designers.

“The smarts and skills are already here and we have good links with universities.”

Holden was founded by James Alexander Holden, a saddle maker in Adelaide in 1856. The company diversified into coaches and built its first car body a century ago. In 1931 GM acquired the company, which began manufacturing the first Australian-designed car in 1948.

Generations of Australians have grown up with the Holden brand, which once commanded almost half of all car sales. But the brand has suffered from cut-throat foreign competition and in 2016 sold just 94,308 cars — one of its worst results on record equating to a market share of 8 per cent.

Holden’s team will work with half a dozen other GM teams in Brazil, US, China and South Korea to design commercial vehicles and other transport solutions.

It will also partner with GM’s Detroit design team to develop futuristic concept and show cars for global auto shows.

“Australia has high standards in industrial design, which is why the carmakers are retaining operations here when manufacturing ceases,” says Roy Green, dean at University Technology Sydney business school.

Ford, which closed its last car assembly plant in Australia last year with the loss of 600 jobs, is also retaining design and engineering teams in Melbourne.

This year it is investing A$450m in local research and development, up 50 per cent on 2016. It will have a 2,000 person strong team in Australia, including 1,750 engineers, designers and technicians.

Holden’s Melbourne design and engineering teams will be the only GM team, which do not have access to a manufacturing plant in the country.

“It’s handy to have production on site but not essential,” says Mr Ferlazzo.

[mrsmackpaul]

As a off topic un related but sort of related thing 

Siddons of Sidchrome spanner fame, (I suspect only Australians will know what Im talking about here) anyway they made all sorts of things including spanners and sockets and they had a life time unconditional guarantee
You broke one with 10 feet of pipe and 25 stone gorilla hanging off the end they just gave you a fresh one 
Anyway in the 80's they sold out to Stanley the yanky company and they said the reason they sold out was they couldnt compete because the cost of energy in Australia not the common myth that is always put forward that the wages are to costly

With the way power prices have jumped in Australia in recent years I would think this would been a even greater influence than before 

Funny thing is we dig our coal up and export it China and around the world 
We also dig up our iron ore and send it around the world 
And our bauxite 

our oil and gas

And then we buy back the finished product 

Now either I'm not the sharpest tool in the shed because either these over seas companies are making the products for less than cost or maybe just maybe Australia is selling the raw products for less to the overseas countries than they do to Australian companies

I know we almost give our iron or coal and gas away for a lot less than it is sold for in Australia 

Dunno the whole shows on the nose I reckon 

Paul    

[kscarbel2]

You're 500 percent right Paul.

But let me update you that China is no longer a low cost production location. Those days are over. There's plenty of foreign plants there but most only produce for domestic consumption due to protectionist government policies, and again, the fact that the current higher production costs there don't make the product price competitive for export.

Places like Thailand and Vietnam, for example, have replaced China as attractive low cost production locations for the global market.

I don't knock China and India for their protectionist policies. They rarely kowtow to big business, as in the US and Australia. They realize that a strong domestic economy ensures a strong country (i.e. the US 50 years ago).

I'll tell you a quick story. China agreed to buy MIcrosoft XP operating system software years ago for all their government computers, and then Microsoft announced they would end XP support in 2014. In big business-run America, the government was silent. But China told Bill Gates directly that if they ceased support of XP, they would never buy another Microsoft product again, and would make selling in China (the world's largest market) a nightmare for him. The result was, Microsoft quietly flip-flopped and still today provides security updates for XP in year 2017.

[kscarbel2]

GM execs reflect on Holden's legacy, and its future

Michael Wayland, Automotive News  /  January 27, 2018

"Beloved."

That's how General Motors product boss Mark Reuss paid tribute on Twitter last year to Holden, the automaker's operations in Australia, where GM ceased vehicle manufacturing last year.

Holden continues to operate in Australia, but the Oct. 20 closing of the GM plant in Elizabeth, South Australia, marked the end of auto production in the country after nearly 100 years, as globalization allowed automakers to move manufacturing to less expensive countries. (British industrialist Sanjeev Gupta is proposing to revive the plant to build EVs, reports say.)

Stateside, Holden's legacy rides on in vehicles such as the Pontiac G8, Pontiac GTO — all built in Australia.

It also remains in the experiences of some of GM's top brass who rose through the ranks at Holden, which likely will remain an executive testing ground despite the end of domestic manufacturing.

"We've gotten a lot from Holden," Andrew Smith, executive director of Cadillac global design, told Automotive News. "We've used Holden as a way to give people opportunities to show leadership. Its future is different, but it still has a future."

Besides Smith and Reuss, who was managing director of GM's Australia and New Zealand operations before GM's 2009 bankruptcy, others whose careers passed through Holden include GM North America President Alan Batey; Mike Simcoe, GM global design chief; and Phil Brook, GMC-Buick U.S. vice president of marketing.

Automotive News interviewed several of the executives about the end of manufacturing and the brand's future. Here's what they said.

■ Phil Brook

An Australian native who held several roles at Holden such as marketing director, director of sales and head of the unit's national dealer network:

"I spent a long time there. It's sad for the brand. It's sad for the country because basically that was the final car plant in Australia after 60-plus years of building cars.

"I guess it's an economic reality of where the world's at and where Australia is at and it's isolation. … There are just so many things that were challenging. But as one door closes, another one opens. They have a very robust plan moving forward."

■ Mike Simcoe

An Australian native who began his career as a designer at GM Holden in 1983:

"At an emotional level, in some ways, I relate it to the fact that we no longer have a design center in Europe. Business dictates rationalism of things like that. The rational side of my brain is there and understands the business.

"But at the same time, I'm Australian. I'm concerned that there's no manufacturing industry down there, and in Germany, I would love to have a design center still.

"There's an emotional level of disappointment, but the reality is the rationalism of having to do what was done makes a lot of sense. But, hey, never say never."

■ Andrew Smith

An Australian native who started with Holden as an intern under Simcoe:

"It's tough. I'll be frank. It's kind of personal. My father was a Holden dealer and I was the director of design for Holden for about a year and a half. I was kind of sad. But at the same time, the world moves on.

"Product development — specifically advanced design — has a really flourishing future in Australia. It's in fact one of the feeders for designers and engineers into General Motors. ... We use our advanced facilities there as a way to find new talent."

.

[41chevy]

On 10/21/2017 at 9:37 PM, kscarbel2 said:

You're 500 percent right Paul.

But let me update you that China is no longer a low cost production location. Those days are over. There's plenty of foreign plants there but most only produce for domestic consumption due to protectionist government policies, and again, the fact that the current higher production costs there don't make the product price competitive for export.

Places like Thailand and Vietnam, for example, have replaced China as attractive low cost production locations for the global market.

I don't knock China and India for their protectionist policies. They rarely kowtow to big business, as in the US and Australia. They realize that a strong domestic economy ensures a strong country (i.e. the US 50 years ago).

I'll tell you a quick story. China agreed to buy MIcrosoft XP operating system software years ago for all their government computers, and then Microsoft announced they would end XP support in 2014. In big business-run America, the government was silent. But China told Bill Gates directly that if they ceased support of XP, they would never buy another Microsoft product again, and would make selling in China (the world's largest market) a nightmare for him. The result was, Microsoft quietly flip-flopped and still today provides security updates for XP in year 2017.

They may not be the cheapest NOW, but their time on top for low cost manufacturing, severely damaged the economy and skill pools of the U.S. and many other industrialized nations. When those skills, jobs and procedures are lost due to the jobs leaving, 95% of those skills do not ever come back.     Paul