Ford Motor Company Will Stop Manufacturing Vehicles In Australia

Most of what follows was not written by me. Although I have lived mostly in Australia for more than 40-years, I was only generally aware of the insidious, but gradual, winding down of local manufacturing. Unlike the UK, which has had to depend heavily on its service industries, Australia has been cushioned by its status as one of the world's leading primary producers. As someone observed during the 1970s, our value to our friends and allies is as a mine, a farm and an 'aircraft carrier' (strategic outpost).

 More than 20-years ago I was teaching Commerce, aka practical business methods, to a class of poorly motivated Year 10 boys. I challenged them to look through their possessions and find something not made in China. I then suggested that the future belonged to those with the education, skills and motivation to join the "knowledge" economy. There was no WWW, Windows had yet to overtake MS-DOS and my pep talk to my pupils received the predictable response. Among them were found some who referred to the SBS as "wog vision". Enough said!

What has kept the United States afloat since 2008 is, in no small measure, its domestic market, its abundance of natural resources and the willingness of its people to accept lower wages as part of the sacrifice necessary to keep costs and prices down. No matter where you go in the US, or how you choose to spend your time and your money, you receive better service and value than you do in Australia, the UK or many parts of the EU.

I am not arguing in favour of the way ordinary wage and salary earners are treated in the United States as compared with similar occupations in Australia. I am arguing for a change of attitude on the part of Australians, especially towards education towards which we pay only lip service.

Much is said of the need for improvement but nothing is done about the social and community issues impacting on our public schools. Far too many children in junior high school lack motivation, self-discipline, parental supervision and basic skills that might reasonably be expected of a 12-year old child who has completed seven or eight years of schooling.

It was hard not to preface this with my tuppence worth after a career spent mostly in secondary school classrooms of one sort or another. This summary came to me courtesy of an old school friend who went to become a senior banking official. It speaks for itself.

Whoever takes office on September 8th will need to address the issue of the decline of Australian manufacturing, notwithstanding the fact that - whatever the rhetoric - governments exercise very little power over the economy in a democratic society.

 Ford Shutdown of Manufacturing in Australia

I've got an old mate who spent his working life with the Ford Motor Company, mainly as a computer programmer, and after the recent announcement of Ford closure in Australia, I asked what his feelings were.

Sorry? Yes - I feel I have been let down, but I am more sorry for Australia. The problem is not just Ford, it is the whole of Australian primary and secondary industry.

When I joined the industry in 1960 Australia had the following Automotive Manufacturers:- Ford Australia - (Plants in Geelong, Ballarat, Broadmeadows, Sydney, and Brisbane). Australian Motor Industries. - (Standard Motor Company and Mercedes Benz, Rambler, and Fiat tractors, - plants in Melbourne and Sydney) British Motor Corporation - (Austin, Morris - Plants in Melbourne and Sydney) Chrysler Australia- (Plants in Keswick, Mile End and Finsbury, Continental and General Distributors -(Peugeot - plant in Heidelberg Melbourne) - bought out by Mitsubishi Fiat - (tractor assembly at the Pressed Metal Corporation plant in Sydney) General Motors Holden - ( Plants in Port Melbourne, Dandenong, Adelaide, and Sydney) International Harvester- ( Plant in Geelong) Leyland Motors - (Albion and Scammel , Plants in Melbourne and Sydney) Renault (Australia) - (assembled by Clyde Industries, Victoria) Rootes ( Australia) - (Plants at Port Melbourne and Dandenong) Rover ( Australia) - ( Pressed Metal Corporation Sydney - most of the land rover was made and assembled in Oz) Volkswagen (Australia) - (Plant in Clayton Victoria) Willys Motors (Australia) - (Plant in Rocklea, Brisbane) White Trucks (Brisbane)

There was also another company assembling one of the early Japanese imports at Kangaroo Point. Then of course there was our own Repco, a major automotive parts manufacturer and engine re-builder at that stage, and a company which was then more than capable of building the first all Australian car.

These were not fly-by-nighters, some of them were in existence as early as 1914 - one hundred years ago !! From that foundation the only one left is GMH, whose very existence as a manufacturing facility is hanging by a thread.

I have no idea what has happened to all the major parts and machine suppliers, Duly and Hansford, Bendix, Borg Warner, Pilkingtons Glass, Zenford, Small, A.C.I, McPhersons, and countless others, all appear to be dead. Do you believe that all fourteen of those fifteen major companies were incapable? Shortly to be fifteen out of fifteen???????

We now have a relative newcomer, Toyota, with a plant in Altona, which will, in all possibility, be last man standing.

You think the Automotive industry is the only casualty? In the last few months Australia has also shut down the Shell refineries in Sydney and Geelong. Don't even worry about the long-dead fasteners, carpet, textile, shoe, clothing etc. industries - they are as numerous as prayer notes in the Wailing Wall.

It's time to ask the hard question, - is something wrong with Australia?

When I left Ford, in round figures it employed 5,000 at the Geelong site, 6,000 at the Broadmeadows site, 700 in the Sydney plant, and 300 in the Brisbane plant - 12,000 people. That is only the start. Then there are all the outside contractors directly dependent on the Company, we used to estimate this conservatively as about another 33% - 4,000. A straight 16,000 total. Then there is on top of that all the people who serviced those 16,000 - I have no idea how you calculate that, and it is a bit nebulous anyway as the 16,000 are still there, just at a lower level of economic importance.

It is blatantly obvious that our political system just does not work - I have been voicing this for the last thirty odd years. I have no idea what it should be changed to, the basis is sound, but the implementation leaves a lot to be desired. The political intelligence of the bulk of the Australian voting public is heading to absolute zero, and our politicians depend directly on that.

We continue to elect governments time after time on the basis of platforms of promises to be broken. Promises bordering on lies and deceit. We elect governments that have financial abilities that would make Bart Simpson appear genius material.

Just take a quick look at Singapore - about 10% of our population, no natural resources, just about no industry, and yet they have a large network of underground trains running every three minutes everywhere - just on a scale basis alone we should have about ten such systems here in Oz - well at least one in all the capital cities - that leaves the cost of four of them to throw in a decent road system between the capitals.

As soon as someone hears that they pop up with "yes ! but look at their social welfare system !" my answer - exactly - look at it, almost non-existent from the government, the family is the social security system.

I have seen our system, which is great in principle, abused right left and centre by those it is meant to protect, what should be a safety net is fast becoming an albatross around our necks. Come hell or high water that system has to be returned to the safety net it was intended to be. I don't know about now, but in Germany it was exactly a safety net and nothing else - if you were out of work you received a percentage of your wage for a period of time ( three months? I forget exactly), and then it took a dive to an "emergency payment" which bought food and not much else.

All the government sponsored gifts for new houses, births, carbon tax offsets, GFC handouts etc. are not gifts - they are the currency with which our politicians appear best familiar, in plain English, bribes - bribes for the next election. Time to cut that nonsense - it should never have started.

What is happening in Australia is the failure to recognise the concept of adding value. Build something - make something - repair something - create something - move something - sell something useful - all add value and this is the only thing that creates a healthy economic structure. Add to that the essential services and you are still in business. Replace that lot with fancy accountants, counsellors, psychologists, dole bludgers, excessive bureaucrats, excessive government, teachers who only put in a fraction of the hours of real workers, and a myriad other similar other sinecure type jobs and you land right in the proverbial can, just like Oz.

Have you ever thought what happens in the next war? You think there won't be one? There have been humans fighting humans ever since one stuck his stone axe in somebody else's skull. You think that is going to miraculously stop? Go talk to the fairies.

What do you think wins wars? Certainly not bureaucrats, counsellors and psychologists - not even servicemen alone. It is pure manufacturing muscle - whoever can build the most missiles, aircraft, bombs, guns etc. and have servicemen to deliver the intended result to the enemy. That is what wins wars. What are we going to build them with now? Do we now let our servicemen down as well?

Have a look back at what Ford Oz built for the last major war. Ford turned out thousands of those huge army transporters, hundreds of those huge landing barges, tracked Bren-gun carriers, Ford blitzes, Bofors guns, and no doubt other things that I have either forgotten or never heard of. The Chrysler plant in Adelaide contributed a similar effort, largely in the aircraft sector. Who is going to repeat those efforts?

Our recent engineering workforce had the ability to tool up a plant like Fords and make virtually anything at the drop of a hat. We made all sorts of odd things that nobody knows about - bits for the aircraft industry, tooling for carbon fibre parts for the French Airbus, tooling for those huge Boeing tail spars, blocks for Scalzo engines, right down to microscopic gears for eye surgery instruments. We completed huge tooling contracts for our 'opposition' in the automotive industry. How wrong we were - the real opposition were those WE put in charge of our own country.

Then there are the unseen things - such as the flow of information and skills from the private sector to the Australian Government excuse for an armaments factory. Probably all but dead by now, but when I was active I attended many meetings at the armaments factory, Monash University, and other venues where engineers from private industry passed on manufacturing engineering related information. Much of it gleaned from first hand international experience, and much of it our own experience.

So that is just a small shot at how our politicians have betrayed us and set Oz up for a right royal shafting. A real enemy could not have done the job better. You bet your sweet ass I'm sorry.

P. S. I don't care who you pass this on to - I will probably get an earful from someone who hasn't had his/her feet on the ground for 99% of his/her next to useless existence, but I can handle that.

My own view is that we do have a problem although I do not believe that it is related to our ability to defend ourselves. I am more concerned that, for our own sakes, and for the sake of the environment, we should strive towards self-sufficiency in all things. Globalisation contributes to resource depletion, pollution, environmental degradation, Third World poverty and climate change. It is not for me to spell out how and why this happens; it is well documented.

The communities best equipped to survive future challenges will be those which grow, produce, manufacture, buy and sell locally. There is a movement devoted to the study, theory and practice of sustainability. Its called Deep Ecology. I'd be inclined to vote for someone in September who at least knows what this means. It does not mean that I endorse all the policies of The Australian Greens.

As a rider to the above, my friend in banking also mentioned the point at which, to him, it seems the wheels came off Australian government financial regulation with far reaching consequences for all Australians to this very day.

Thank you for your recent e-mail.  I do not know if you teach Australian 20^th century history, but you have probably heard of Stanley Melbourne Bruce, who I came across while researching the Commonwealth Bank of Australia.  It turns out that he was a bit of a spiv, not only because he was always dressed in top of the range suits and wore spats, but because he changed the CBA’s operating procedures from state banking to private (fractional reserve) banking and in the process condemned all Australians to permanent debt slavery.  As a result of his stupidity (he may also have been bribed) the Australian government since that time has had to pay market rates on its loans, instead of the 2/3^rds of one percent it had paid up to 1924.  Market rates were also applicable to home loans, where formerly only a handling charge was levied.  Within five years his govt. had borrowed £230 million from the international bankers in London and state and federal debt had reached £1 billion.  By 1927 there was a large budget deficit.  I wonder if the “history” books ever bother to mention these facts.

 

Interest is the price we pay to use money we would not otherwise have the use of.  Raised by parents and grandparents who had lived through the 1930s, I was taught that saving is good, borrowing is evil and debt something to be avoided at all costs.

In this day and age the cost of avoiding debt is a simpler, less extravagant and wasteful lifestyle, just as it always has been.  Many, however, would point to the impossibility of home ownership and major community projects like the Sydney Harbour Bridge, and the Snowy Mountain Scheme, without first borrowing.  These are questions to be decided by those skilled in such matters. 

What is clear is that we need to learn the lessons of 1929 and 2008 and keep repeating them like a catechism.  An over reliance on credit is a house, or a nation, built on sand.

Reducing Carbon Dioxide Emissions: Tax households, or target polluters?

Whatever the merits of Australia's proposed carbon tax in terms of CO2 emissions reduction in the long term, in the short term it is - quite simply - a consumption tax.

The lion's share of the direct tax will be borne by electricity producers and suppliers who rely almost entirely on coal fired generating plants. Australia's coal, cheap and abundant as it is even given the high wages - by world standards - paid to our miners, is brown coal, high in sulphur and not particularly clean burning by comparison with quality black coking coal. Be that as it may, faced with a choice between absorbing the tax and passing it on to consumers, there is little doubt that the net effect of the carbon tax will be higher prices for ordinary households across the entire range of household expenditure, not least of which will be an inflated electricity bill.

Shops open until late seven days a week in air-conditioned malls, the proliferation of household appliances and electronic gadgetry, office workers putting in unconscionable hours in heated, air-conditioned, brightly lit buildings which never close as cleaners and maintenance workers move in overnight; as a nation we use electricity prolifically. A tax on electricity consumption is, ultimately, a tax on almost everything Australians do, use, buy and sell.

Without entering into the detail of the controversial climate debate, one fundamental question must be asked of this new tax.

Will Australia's carbon tax succeed in reducing CO2 emissions, assuming other nations adopt equally effective measures, in time to arrest climate change before the Earth's atmosphere reaches the hypothetical tipping point where human activity becomes, as it was perhaps in the distant past, irrelevant to the natural course of events? The threat presented by this is that, once nature reasserts itself, it will do so in a manner inimical to life on Earth as we know it. Even now every natural disaster, or incidence of extreme weather, is singled out by some as further evidence of human induced global warming and the dire consequences thereof if unchecked.

A carbon consumption tax carries with it the expectation that, in the long term, energy producers will move away from fossil fuelled generators in an attempt to avoid the tax. In the short term coal burners will not be able to do this, so the cost will be passed on to consumers who can do one or both of two things: try to use less electricity - which is a challenge for most - or spend less on other things such as food, clothing, travel & entertainment to keep the household budget balanced. The government says that some of the proceeds from the tax will be used to compensate lower income households, but where is the incentive for both households and energy producers to invest in clean energy?

Other than forcing up the cost of living for all Australians, and marginally adding to the government's tax coffers when net of hefty administration and compliance costs along with compensation payments, it is difficult to envisage any short term impact on the volume of CO2 emissions. Producers cannot alter their mode of production overnight. Consumers may choose to reduce spending in other areas without moderating electricity consumption. Households may actually use more electricity if people with less disposable income, thanks to increased costs, choose to spend more time at home.

A blanket consumption tax of this nature may motivate people to rethink the manner in which they both source and consume electricity, but where is the incentive for both consumers and producers to make the switch to clean, green energy sooner rather than later? Only those companies and individuals with a surplus available for investment in new technology will be in a position to act. Everyone else will be playing catch up as the cost of living increases. People living and working in rented premises may not be in a position to substantially modify their energy environment. Those wealthy enough to absorb higher costs without changing their lifestyle may choose to carry on as usual without any substantial leverage for change.

Economists who, rather than scientists, are behind this tax believe in the power of the market to change individual behaviour. It may be asking a little too much of the market to expect a simple, but nevertheless all encompassing, tax to force people to make the necessary changes in time to avoid irreversible climate change.

If the scientists are right, only immediate, dramatic and far-reaching modifications to our lifestyle can avert a looming catastrophe. At this point the political will to make such changes is lacking almost entirely. Short-termism is the disease of the modern world. We lack both foresight and hindsight. For the me generation, now is everything. Few of our leaders are immune from this moral and intellectual myopia, be they politicians, economists, or business moguls. Elsewhere carbon taxes and emissions trading schemes have been distorted and perverted in the name of financial gain for banks and financial institutions. As a species we seem incapable of right thinking and meaningful action even when our very survival is at stake. According to the Mayans, human beings have destroyed the world before now. Will we do it again?

Returning to the everyday, the question arises whether anyone has seriously contemplated the manner in which a carbon tax will operate and its likely impact on our lives. So far the political debate has revolved around the real or imaginary perils of climate change and the fear of being left behind in the race to reduce emissions. The Gillard Government appears to be asking for a blank cheque from the electorate to deal with the problem in its own time and as it sees fit. Details have yet to be announced.

In the absence of informed debate it was refreshing to find an article, aptly titled "Carbon Omissions" by Canberra Times reporter Rosslyn Beeby in the June 4th edition. Although she devotes considerable space to rhetoric from our own Ross Garnaut, material which has been widely mentioned in all sectors of the Australian media, the meat of the article is derived from United States sources. It is these which I found most convincing and from which I have no hesitation in borrowing, placing my trust in Beeby's rendition.

In the United States the Centre for American Progress, the American Enterprise Institute, the Bipartisan Policy Centre and the Economic Policy Institute all argue that a carbon tax will help to reduce the national debt. That in itself should be enough to convince the likes of Tony Abbott and Joe Hockey that Malcolm Turnbull and Kevin Rudd are right about the carbon tax. If the tax does nothing else, reducing a nation's debt in these uncertain times is a laudable objective.

The Centre for American Progress takes it further by arguing that a necessary component of a CO2 reduction package must be an import tax on oil from other parts of the world. So, presumably, the aim is not only to burn less oil but to make sure that its our own and that we are the only beneficiaries from its extraction, refining and consumption. Low and middle income earners would be compensated not by direct payments but by reduced income taxes, the short fall in revenue met by the carbon tax and the energy import duty.

To this point the American proposals have much in common with our own. They are fiscal and rely on making the use of fossil fuels more expensive as an incentive to cut consumption and reliance on imports. There is no direct encouragement for people and organisations to embrace renewable energy other than an understanding that common sense will prevail and individuals will seek to meet their energy needs in the most cost effective ways accessible to them.

An impressive departure from what may loosely be termed mainstream thinking on emissions reduction is the proposal by the Brookings Institution for a direct, rather than indirect, approach by targeting the Big Polluters directly. This would take the form of a National Clean Energy Standard as an alternative to carbon pricing. Clean up the energy industry, and there is no need for anyone else to reduce their electricity consumption with all that that entails for the individual and the economy as a whole. The choice between an all encompassing, expensive to administer tax which may hurt people more than its helps the environment, and cutting emissions at source, seems to be a no brainer.

According to Harvard University economist Michael Greenstone, the weakness of a carbon tax is that it would "raise energy prices in a visible way, even though the money goes back in [some] consumers' pockets through tax credits". Greenstone proposes legislating a 'technology neutral' clean energy standard forcing all United States electricity generators to cut carbon dioxide emissions. The standard would become more rigorous over time aiming for a 50-percent reduction in emissions per megawatt hour by 2035. He goes on to mention a number of ways in which emissions cuts could be achieved.

Greenstone is one of the few commentators to factor in the real cost of emissions from fossil fuels. Carbon dioxide is 'clean' and relatively inert at normal atmospheric pressures, harmless to animals and beneficial to plant life. It is this quality of CO2 as much as anything else which attracts the attention of those who downplay its role in climate change. For the past half-century or more, however, we have been aware that fossil fuel emissions are harmful to human beings and to the environment in ways almost too numerous to mention. Of all the products of fossil fuel combustion, CO2 is arguably the least harmful in the short term.

A reliance on fossil fuels in general, and imported fuels in particular, is seen as impacting both on national health and national security. In time to come the wars in the Middle East may be seen as less about human rights, freedom and democracy than about oil security. It is scarcely reassuring that so much of the world's oil is found under the sands of the planet's least evolved and most unstable oligarchies and that the revenue from the sale of this oil to Western nations is used to fund international terrorism and Islamic radicalism.

Closer to home, the United States Academy of Sciences recently estimated the "total non-climate change related damages associated with energy consumption and use at more than $120-billion ... nearly all of which resulted from the effects of air pollution on our health and wellness".

Greenstone: "We estimate it costs about 3.2-cents for an existing coal plant to produce a kilowatt hour of electricity. This appears to be a bargain but the reality is that this kilowatt hour causes 5.6-cents of damages to our well being". Our energy sources, says Greenstone, "Only appear cheap because their costs to our health, the climate and national security are obscured or indirect". Take climate change out of the equation, and we still face the deadly impact of pollution on human and other life forms, and the irreparable environmental impact of certain types of mining.

In Australia we can look forward to a future where satellites may be used to monitor emissions on a global scale, leaving nowhere for polluters to hide, and our trading partners may raise barriers against imports from non-carbon-regulating regions. We must tackle emissions, but is this best done by curbing emissions at source, a direct approach as outlined by Greenstone and others, or an across the board carbon 'consumption' tax, an indirect approach with unforeseeable consequences.

Ross Garnaut has argued that even a $26 a ton carbon price will achieve only a 15-percent reduction in emissions by 2020, and that with the proviso that the balance after compensating households is directly invested in renewable energy. This is the weakness of the indirect approach where a substantial proportion of the revenue raised is swallowed up in administration costs and compensation payments. There is no guarantee that any part of the compensation to households will be applied constructively to reduce energy use and/or embrace renewables.

It is time for Australians to turn off the political noise and turn on to thinkers like Michael Greenstone. We can choose to tinker with the economy, possibly to the detriment of all with no benefit to the environment, or we can take direct action to change the way in which we live and work. The Federal Government could make a start by pressuring New South Wales to get behind the solar panel subsidy, and to look for ways to encourage landlords to enable their tenants to embrace green energy. While politicians posture for the cameras and pander to the likes of Murdoch, precious hours of sunlight are being wasted.