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post #1 of 19 (permalink) Old 12-21-2014, 06:41 PM Thread Starter
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Australia’s Once-Vibrant Auto Industry Crashes in Slow Motion

http://www.nytimes.com/2014/12/14/au...tion.html?_r=0
Australia’s Once-Vibrant Auto Industry Crashes in Slow Motion
By JOHN MELLORDEC. 12, 2014


MELBOURNE, Australia — There has been a car industry in Australia for about as long as there have been cars. But within two or three years, the last of the continent’s auto plants will go dark.

At the turn of the 20th century, while visionaries in the United States and Europe labored on horseless carriages, Australians were also creating them. In 1896 in Melbourne, Herbert Thomson built a steam car for sale using Dunlop pneumatic tires made in Australia. In 1901, Harley Tarrant began selling cars made mostly from Australian parts.

Over the next century, American automakers including General Motors, Ford and Chrysler came to dominate the market, turning out cars from factories set up in nearly every Australian state. Toyota, Nissan and Mitsubishi later joined them.

But the end is nigh. Auto plants have been closing, one by one, over five decades. The three remaining carmakers here — Toyota, Ford and the Holden subsidiary of G.M. — are shutting their manufacturing operations over the next few years.

Government policy has played a large role in the contraction; the Australian market has gone from one of the world’s most protected to possibly the least-protected among auto-manufacturing nations.

The Australian car industry had always benefited from barriers to imported vehicles. Those who bought early Thomson steam cars and gasoline-powered Tarrants were industrialists, wealthy ranchers, bankers and politicians who saw merit in protecting the home industry.

So early adopters in the 1900s who wanted foreign-made cars, and there were plenty of them, could only import the chassis complete with engine, transmission, axles and wheels — and the hood and the grille. The rest of the car had to be manufactured, mostly by hand, by body builders who generally evolved from outfits that had made coaches and buggies for the horse trade.

Holden started in the leatherwork and saddlery business in 1856, but by the early 20th century was making motorcycle sidecars and car bodies for chassis from G.M. In 1931, G.M. bought Holden Motor Builders and plans were laid for a distinctly Australian car, which finally arrived after World War II, in 1948.

That car, derived from a Chevrolet design, spawned a thriving manufacturing and tooling industry that helped to drive Australia’s rapid industrialization after the war. Internally designated the 48-215, but generally known as the FX, the Holden of 1948 was marketed as “Australia’s Own Car.”

Ford followed with a locally built Falcon, made mostly of Australian parts, in the early 1960s. Chrysler added a local version of the Valiant.

In 1925, Ford built a factory west of here in Geelong, Victoria, to assemble the Model T. The plant, a design pulled from a drawer in Dearborn, Mich., could withstand six feet of snow on the roof — even if snow never figured in Geelong’s weather reports. The building still exists and will outlive production by Ford Australia.

Chrysler also became a significant contender before it sold out to Mitsubishi. And given Australia’s strong cultural links to the nation that colonized it, British cars were also popular — though they never challenged American cars on the sales charts.

The Rootes Group of Britain made Hillmans and Humbers in Melbourne until that operation was absorbed by Chrysler. The British Motor Corporation fielded Austin and Morris automobiles.

Assemblers abounded. Renault and Peugeot had a shared plant, and Triumphs were assembled alongside Studebakers and Ramblers. Volkswagen had a run for a decade or so before Datsun moved in; later, assembly of Volvos was added. At various times, Mercedes-Benz, Citroën, Fiat, Land Rover and — briefly — Alfa Romeo built cars in Australia.

Holden also assembled Vauxhalls, Buicks and Chevrolets. Chrysler built Plymouths, Dodges and Simcas, and Ford made various American and British cars, including the Cortina, Escort and Fairlane.

Yet from the 1950s to the mid-1960s, all this frantic endeavor generated total annual sales of just 200,000 to 300,000 vehicles. In time, much like G.M.’s once-mighty command of the American market, Holden attained a 50 percent share of the market here, repatriating huge profits to Detroit.

G.M. Holden and Ford eventually designed specific models for the harsh Australian roads, and to meet local tastes for large 6-cylinder cars and station wagons.

Australians are especially fond of car-based pickups known as utes, Ford claims to have developed the world’s first utes in the 1930s after a farmer’s wife wrote to the company asking for “a car to drive to church on Sunday and which can carry a pig to the market on Monday.” Today, Ford Falcon and Holden Commodore utes are regarded as Aussie sports cars, and there is even a racing series for them.

Ford and G.M. Holden erected engineering and design centers and built elaborate proving grounds. Australia became one of the few countries that could take a concept from a clean sheet of paper through the design, engineering and tooling processes, and ultimately build the car in domestic plants.

Eager to preserve the industry’s manufacturing base, successive governments added local-content benchmarks of up to 95 percent for higher-volume cars. Toyota and Nissan began building cars in plants that had previously assembled a raft of brands. By the mid-1970s annual sales topped 500,000, of which more than 400,000 were locally made.

As imported Japanese cars gained a foothold in the 1970s, tariffs were raised and import quotas were imposed to protect the investments of G.M. Holden, Ford and Chrysler.

By the 1980s, auto trade barriers were ubiquitous and onerous. The import duty was 57.5 percent of the price of a car once it reached the docks in Australia, and importers needed import licenses based on average sales in previous years. Licenses could be traded, and demand was so great that the effective import duty on some cars was 150 percent.

Australians were paying too much for cars, and special interests began to exert their influence to reduce trade barriers.

In 1984, the import licenses were eliminated and import duties began to be reduced, with the goal of giving local carmakers and their suppliers time to compete without protection.

But the pressure proved too much. In 1990, Nissan closed its plant and began importing all of the vehicles it sold here. Mitsubishi pulled the plug in 2008 to concentrate on imports. At Ford, the last of the Falcon GTs, a favorite of enthusiasts, came off the line in October, and the company plans to halt all production in 2016. G.M. Holden and Toyota say they will close their operations the following year.

As if the drop in tariffs was not enough — today’s import duty on cars is about 3.5 percent a mining boom drove up the Australian dollar and effectively cut the prices of imported cars.

This generated an avalanche of competitors from overseas. In the decade ending in 2013, more than 20 brands were added to the market. Today, including trucks, there are 66 brands on sale from around the world, including China and India.

But, in a market of 1.1 million annual sales, 33 car brands sell fewer than 10,000 units a year. Of those, 25 sell fewer than 2,000. Australian buyers can choose from a staggering 2,200 versions of passenger cars and light trucks.

The net effect is that no single local model sells in enough volume to maintain a production line. Sales of the Holden Commodore, until recently the country’s most popular car, will total only about 31,000units this year.

The domestic plants tried to build cars for export. But export programs that were viable when the Australian dollar traded at 80 cents to the American dollar turned sour when the local currency soared to $1.05 United States, wiping thousands of dollars per car out of the profit margins. Additionally, the mining boom pushed up wages at the car plants, putting further pressure on production costs.

The export initiatives of Australian managers were not always aligned with the strategies of the corporate headquarters, where boards were often not eager to send Australian-made cars into other world markets.

And even relatively low sales of uniquely Australian cars to high-volume markets in the Northern Hemisphere translated into big business for an Aussie car plant. From roughly 2000-6, car exports thrived and the overall production rate of cars held at around 400,000 units a year even as local sales of the cars declined.

But the global financial crisis that began around 2008 cut demand in the Middle East, where Australian cars had been selling briskly. When G.M. shut Pontiac in 2010, Holden lost its export market for the G8, a highly regarded sedan based on the Commodore. (Though G.M. has revived the same basic car as the Chevrolet SS sport sedan and Caprice Police Patrol Vehicle.)

As local volumes declined, successive governments began providing subsidies to bolster the industry. Billions of taxpayers’ dollars were passed on to carmakers and parts suppliers. G.M. Holden, for example, received $1 billion over a decade, although it was required to invest $3 for each $1 from the government.

As volumes fell and exports eroded, a new coalition government lost patience and ended the subsidies.

Still, there are modest signs of life in the industry. Ford Australia is a key engineering and design center for the parent company. The latest Ford Ranger pickup, now offered in 160 countries (but not the United States), started here as a clean-sheet design. Ford Australia is about to introduce a Ranger-based S.U.V. called the Everest that will be sold around the globe.

G.M. Holden is also keeping its Melbourne design center open, and recently reversed a decision to close its proving grounds. The operation played an important role in the design and development of the Chevrolet Camaro and has forged a strong reputation within G.M. as a creator of highly regarded concept cars.

Toyota Australia also has a more modest design center, but has not announced its future plans.

As for manufacturing, the shutdown dates are on the calendar. For Australians, all that’s left is to sit and wait for the inevitable end of a venerable, distinctive and once-vibrant industry.

John Mellor, an automotive analyst in Australia, is the publisher of GoAuto.com.au.
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post #2 of 19 (permalink) Old 12-21-2014, 06:54 PM
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Vibrant? Hyperbole.
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post #3 of 19 (permalink) Old 12-21-2014, 07:00 PM
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I think u mean hyperhole.
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post #4 of 19 (permalink) Old 12-21-2014, 07:02 PM
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post #5 of 19 (permalink) Old 12-21-2014, 07:18 PM
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Goverment gave the auto industry support, but they just kept building cars that were not selling. The cars fell short on equipment, but not on price. Cheaper and better equiped cars were coming into Australia even with the protection from the government, but the car markers would not move with the times. Wheels likes to compare the HSV GTS V to the likes of the BMW M5 and the Mercedes Benz CLS63 AMG and even the Audi RS7. Then tell us how great the HSV is that it scores a 9/10 and the others only Audi 8.5/10, Merc 8/10 and the BMW 7.5/10, but these cars are being marked down because of price, they are all far better then the HSV. Better and much more equipment. The HSV should be compared to other cars it is closer aligned to, that would be the FPV another dead Aussie car maker, I think that speaks volumes as to why they are on the way out the door.

If the had adapted to the changing market eariler maybe they would have been around for longer then they will be. A lost industry and one we won't have back in a long time caused by the industry tells the people what they want and listening when the people told they different. It will be sad to see it go, the lost jobs, the other component makers that will follow. Hopefully the car makers around the world will listen to their customers and not follow suit too.

To those who have or will lose their jobs from this I am sorry, but I also don't have an Aussie made car for a reason. This is not the fault of the workers but of the managers and high level execs.

Dean
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post #6 of 19 (permalink) Old 12-21-2014, 07:31 PM
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I have no opinion on this.
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post #7 of 19 (permalink) Old 12-21-2014, 07:47 PM
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Teachers unions, no doubt...always the teachers unions.

Neoliberal policies wreak havoc upon indigenous industries
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post #8 of 19 (permalink) Old 12-21-2014, 08:16 PM
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Quote:
Originally Posted by GreenT View Post
I have no opinion on this.
Yeah sure..

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post #9 of 19 (permalink) Old 12-21-2014, 09:52 PM Thread Starter
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I am just relieved its not those bloody Germans again...
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post #10 of 19 (permalink) Old 12-21-2014, 11:14 PM
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I wonder if that delightful Beetle model and crate survives. What a cracker. I would sell the wife's car to own that but suspect would be still well short.
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