Bringing back Australian Manufacturing: Discard programmed obsolescence

[Value Collector]

You are looking at things from a purely capitalistic viewpoint.

There are other considerations like national security, supply line security and self reliance which actually have a value in an increasingly uncertain world.

The more the world relies on trade with each other the more national security we all have, there is a reason Europe was constantly at war when they were all mercantilist.

We could reduce our economy to us all just being subsistence farmers, and live like a third world country and feel happy that we don’t import anything, but that would be pretty silly.

I would much rather divert capital to truly profitable export industries and use the profits to buy all the stuff we couldn’t be profitable in, and provide jobs that are better than sweat shops.

 

[sptrawler]

I would much rather divert capital to truly profitable export industries and use the profits to buy all the stuff we couldn’t be profitable in, and provide jobs that are better than sweat shops.

Until you run out of raw material to export, then the problem becomes we really can't compete with Asian sweatshops, so where we finally end up will be quite interesting.

 

[SirRumpole]

I would much rather divert capital to truly profitable export industries and use the profits to buy all the stuff we couldn’t be profitable in, and provide jobs that are better than sweat shops.

The future o f manufacturing is robotics, that's where the jobs will come from, designing and maintenance of manufacturing machines, not in human 'sweatshops', and if we make no attempt to improve our technology then we get left even further behind.

 

[Value Collector]

The future o f manufacturing is robotics, that's where the jobs will come from, designing and maintenance of manufacturing machines, not in human 'sweatshops', and if we make no attempt to improve our technology then we get left even further behind.

Yep, I agree, and that might change the investment dynamics and make it worth deploying capital into making bonds undies here. But those investments will happen naturally, just like manufacturing leaving didn’t take government mandates, so will returning it here not require mandates.

 

[Value Collector]

Until you run out of raw material to export, then the problem becomes we really can't compete with Asian sweatshops, so where we finally end up will be quite interesting.

We likely have at least a thousand years of some of our resources, and by then we might be operating 100% closed loop recycling or mining the ocean, or harvesting space rocks who knows.

It doesn’t make sense for this generation to sell itself short to conserve a resource that in 1000 years they might not even need.

 

[Smurf1976]

The world isn’t going to abandon global trade.

It won't abandon it completely but the situation today looks very similar to that of 110 years ago which is the last time globalisation peaked then declined.

Declining doesn't mean going to zero, it just means declining.

The way I see it, stand back far enough and most economics is at least somewhat cyclical. Random examples:

Protectionism > free trade > protectionism > free trade > now looks to be going back to protectionism. All in the past 160 or so years.

Private ownership of utilities > nationalisation mostly around WW1 and WW2 depending on which state > privatisation 1990's - 00's > government now getting back in.

Medium density housing (townhouses) > freestanding suburban houses on small blocks > freestanding houses on large blocks > freestanding houses on small blocks > medium and high density now the major trend.

Tram systems installed > trams taken out to make way for more cars > trams now being put back in many cities.

Lots more things like that where if you stand back there's a long cycle and even in relatively trivial things that can be seen.

Eg for a relatively trivial one: Recorded music as single songs up to 1948 > albums of ~40 minutes duration became the dominant format 1950's - 80's > album length increased to 70 - 75 minutes 1990's - 00's > now we're back to recorded music mostly being consumed as single songs via streaming.

In all cases though it doesn't go to zero. Pick any of the above examples and there was never a time when it went 100% in a particular direction, it's just the ratio that shifts to favour one thing over another.

Assuming that continues, it's a given it'll shift again and for those inclined toward long term investing that does present investment opportunities with some research.

 

[SirRumpole]

just like manufacturing leaving didn’t take government mandates,

Lowering of tariffs by the Hawke/Keating government was a major reason why a lot of Australian manufacturers went offshore.

 

[qldfrog]

Until you run out of raw material to export, then the problem becomes we really can't compete with Asian sweatshops, so where we finally end up will be quite interesting.

Argentina, left wing clique promising your neighbours money and complaining about Chinese imperialism (in 1 generation) and reaching 40% below poverty line.
25y or so ahead
Venezuela did even faster managing to ruin it own golden egg .
That can be done in 10y of NetZero
Nothing new....

 

[Value Collector]

It won't abandon it completely but the situation today looks very similar to that of 110 years ago which is the last time globalisation peaked then declined.

Declining doesn't mean going to zero, it just means declining.

The way I see it, stand back far enough and most economics is at least somewhat cyclical. Random examples:

Protectionism > free trade > protectionism > free trade > now looks to be going back to protectionism. All in the past 160 or so years.

Private ownership of utilities > nationalisation mostly around WW1 and WW2 depending on which state > privatisation 1990's - 00's > government now getting back in.

Medium density housing (townhouses) > freestanding suburban houses on small blocks > freestanding houses on large blocks > freestanding houses on small blocks > medium and high density now the major trend.

Tram systems installed > trams taken out to make way for more cars > trams now being put back in many cities.

Lots more things like that where if you stand back there's a long cycle and even in relatively trivial things that can be seen.

Eg for a relatively trivial one: Recorded music as single songs up to 1948 > albums of ~40 minutes duration became the dominant format 1950's - 80's > album length increased to 70 - 75 minutes 1990's - 00's > now we're back to recorded music mostly being consumed as single songs via streaming.

In all cases though it doesn't go to zero. Pick any of the above examples and there was never a time when it went 100% in a particular direction, it's just the ratio that shifts to favour one thing over another.

Assuming that continues, it's a given it'll shift again and for those inclined toward long term investing that does present investment opportunities with some research.

I wouldn’t say it’s cyclical, I would say it’s 3 steps forward 1 step back, the long term trend towards interconnectedness is here to stay in my opinion, especially for small nations like Australia.

The USA will try a bit of protectionism here and there, realise it’s not ideal and the move forward will continue.

Take your example of music, yeah the exact format changes overtime, but the amount of music consumed on a daily basis has gone through the roof, and it’s more global than ever.

 

[Value Collector]

Lowering of tariffs by the Hawke/Keating government was a major reason why a lot of Australian manufacturers went offshore.

Yeah, which was a good thing, the only things that went offshore were the industries that were being subsidised by tariffs.

If Australian consumers can buy the same product cheaper from Thailand they should not be forced to pay tariffs, and then that frees up the labour and capital to go to an industry that has a real advantage, not an artificial advantage caused by a tariff.

 

[JohnDe]

Until you run out of raw material to export, then the problem becomes we really can't compete with Asian sweatshops, so where we finally end up will be quite interesting.

I don't like the idea of Tariffs when used to artificially protect inefficient businesses, but they are useful when countering overseas companies that are being subsidised by their governments or just dumping excess goods.

Mainland Australia’s last wind tower manufacturer will be forced to mothball its plant after cheap imports using heavy-polluting Chinese steel have destroyed the local industry ​

​

The are many issues here:​

• There is no industry policy.
• Australia produces roughly three-quarters of its steel from blast furnaces, which can’t compete with dumped Chinese steel.
• The other quarter is electric-arc furnaces run on exceedingly expensive power thanks to the gas cartel.

Made in Australia collapses

Mainland Australia’s last wind tower manufacturer will be forced to mothball its plant in a major embarrassment for the Albanese government after cheap imports using heavy-polluting Chinese steel have destroyed the local industry and cast a shadow over Labor’s domestic renewables policy.

Keppel Prince has blasted the federal and Victorian governments after a long-running lack of certainty and failure to deal with heavily subsidised Asian steel imports forced the Portland-based manufacturer to close its wind tower manufacturing facility, once one of the nation’s biggest.

Keppel Prince executive director Stephen Garner singled out Climate Change Minister Chris Bowen for criticism, saying he had been to the plant and was well aware of the challenges facing local producers who are competing with China, where there are generous subsidies for producers that have crippled Australian competitors.

Local Liberal MP Dan Tehan said the government’s Made in Australia policy was “failing before their eyes”.

…“All the people are using the Chinese (towers). They want to import the things because it’s cheaper. But the quality is no good,’’ Mr Garner said.

…He also said the Victorian government, which has embraced renewables, had failed to follow through with contracts in recent years, making it even harder to survive.

At one point, Mr Garner had considered Chinese steel but it was being offered at double the price of that being given to his overseas competitors.

…“For many, many years I feel like I’ve been the pied piper,’’ he said. “I’ve been standing on a soap box preaching this for so long, that China has been subsidised. We know that (in) China the government gives a 12 per cent subsidy for every tower that they export.

The are many issues here:

• There is no industry policy.
• Australia produces roughly three-quarters of its steel from blast furnaces, which can’t compete with dumped Chinese steel.
• The other quarter is electric-arc furnaces run on exceedingly expensive power thanks to the gas cartel.

This is no surprise. The same thing will happen to Albo’s Made in Australia solar panels rubbish.

It will be nothing more than an assembly plant of Chinese manufactures that will go out of business the moment subsidies are dropped owing to much higher labour costs.

The answer is not subsidy or bailout; it is to fix policy and market structure:

• Get an industry policy that includes preferred local supply to the government.
• Fix the gas cartel to lower energy costs.
• Quality control behind the border where it is necessary.
• Slash immigration to lower interest rates and currency.
• Use macroprudential policy to ensure land prices fall.
• Train local labour.

This does not guarantee that wind tower manufacturing will survive, but it does mean Aussie manufacturing will be cost-competitive and stop shrinking.

Keppel Prince executive director Stephen Garner singled out Climate Change Minister Chris Bowen for criticism, saying he had been to the plant and was well aware of the challenges facing local producers who are competing with China, where there are generous subsidies for producers that have crippled Australian competitors. We know that (in) China the government gives a 12 per cent subsidy for every tower that they export.

 

[SirRumpole]

Yeah, which was a good thing, the only things that went offshore were the industries that were being subsidised by tariffs.

As I said, every country subsidises themselves one way or another, whether it's by cheap or slave labour, tariffs , direct subsidies, quotas or meaningless "quality standards" , so we have to get real and decide whether we want industries or just cheap foreign goods that last 6 months after which we have to buy more cheap foreign goods.

Non tariff barriers to free trade.

Non tariff barriers: Beyond Tariffs: The Hidden Obstacles to Free Trade - FasterCapital

Non-Tariff Barriers (NTBs) refer to a broad range of policy measures that are not tariffs but can still have a significant impact on international trade. In today's globalized world, NTBs have become critical obstacles to free trade, affecting both developed and developing countries. While...

fastercapital.com

 

[qldfrog]

As I said, every country subsidises themselves one way or another, whether it's by cheap or slave labour, tariffs , direct subsidies, quotas or meaningless "quality standards" , so we have to get real and decide whether we want industries or just cheap foreign goods that last 6 months after which we have to buy more cheap foreign goods.

Non tariff barriers to free trade.

Non tariff barriers: Beyond Tariffs: The Hidden Obstacles to Free Trade - FasterCapital

Non-Tariff Barriers (NTBs) refer to a broad range of policy measures that are not tariffs but can still have a significant impact on international trade. In today's globalized world, NTBs have become critical obstacles to free trade, affecting both developed and developing countries. While...

fastercapital.com

we also have to get rid of the Australia expensive but good quality vs overseas cheap but trash legend;
I could make a cattle yard in china and sell it at the same price as the aussie made: it will be stronger better quality than the aussie..but the only way I can import and make a lot of money here is selling ultra cheap so buying ultra cheap: and ultra cheap in China is obviously lower quality vs cheap in China;
Every item I bought in China bypassing the cheapest offers had an amazing quality.
I paid a pair of adidas branded sneakers there, wore these everyday for a year and a half, weekly since and i am thinking of maybe changing soon after 6 years
was $40 AUD. so was expensive there, cheap but not cheapest here..and not, it was not german engineers etc..just a good quality chinese producer.same for electronic etc
It is not a discussion about the sex of angels;
There is a misbelief imho that we can survive by producing good quality more expensive product here.
No...
China can produce good stuff for cheaper than us, always, so we need to go back to the actual issue:
government and councils taxing and gorging, lower skilled workforce overpaid..because if paid less they can not survive;
I do not blame them
We need to boost productivity and reduce cost with a lower government impost, fairer taxation and huge cleanup of laws and regulations as well as the matching endless department self creating these conditions.
a trump style cleanup.
Then the problem will be..but what about these redundant guys..
Unless you dream in services is enough for a merry go round economy, we need less but better skilled people, more robots..so yeap, 600000 new migrants a year is dooming this country.
It will not happen nicely, and looking at France, it could take a generation or 2 more before any move, until literally starving..
even starving is not enough See Venezuela...still blaming the rich bastards we can feed 3 meals a day

 

[divs4ever]

I don’t know, we seem to be doing pretty well out of it.

I mean, we have managed to keep the highly profitable industries here, while exporting low profit or loss making industries.

Take the steel industry for example, we are the largest supplier of Iron Ore to the global steel industry, and we make shiploads of profits, taxes and wages on the back of it.

However the steel industry even in China is losing money half the time, would we really want to take Labour and capital away from Iron Ore production and deploy it into steel making? I don’t think so.

There are very real limits to the amount of labour and capital we have available locally, we need to deploy them efficiently, into the parts of industries where they are most productive.

but China would consider steel making an essential industry , useful for making rail-lines , war toys , etc etc

Australia with abundant iron ore and coal ( and manganese and nickel and copper ) doesn't need rail-lines or war toys etc . etc. we can always buy ( our raw resources ) cheaper from elsewhere , ( like out-dated tanks , subs etc etc )

 

[sptrawler]

Yeah, which was a good thing, the only things that went offshore were the industries that were being subsidised by tariffs.

If Australian consumers can buy the same product cheaper from Thailand they should not be forced to pay tariffs, and then that frees up the labour and capital to go to an industry that has a real advantage, not an artificial advantage caused by a tariff.

Two things that come to mind:
One.
In an ideal world what you are saying about freeing up labour sounds wonderful, but where does all this freed up labour and capital go to work? When mining doesn't really employ that many people and the numbers are decreasing constantly due to automation.

The concept you propose can only work if we are increasing our employment opportunities, when at the moment the only increases in employment are either in public sector related jobs, or jobs related to residential construction due to the influx of migrants.

Neither of these fields of employment are increasing our balance of trade, they are being funded by printing money to circulate, which in turn puts pressure on our currency.
Two.
If we can encourage a manufacturer like Samsung, LG, Tesla, Catyl, BYD to build a grid battery manufacturing plant in Australia, why shouldn't we? That is my question.


PS
According to available data, the Australian mining industry employs around 2%of the total Australian workforce, representing a relatively small portion of the overall employment landscape.


Key points about Australian mining employment:

• Percentage of workforce: Approximately 2% of Australian workers are employed in the mining sector.

 

[TimeISmoney]

Two things that come to mind:
One.
In an ideal world what you are saying about freeing up labour sounds wonderful, but where does all this freed up labour and capital go to work? When mining doesn't really employ that many people and the numbers are decreasing constantly due to automation.

The concept you propose can only work if we are increasing our employment opportunities, when at the moment the only increases in employment are either in public sector related jobs, or jobs related to residential construction due to the influx of migrants.

Neither of these fields of employment are increasing our balance of trade, they are being funded by printing money to circulate, which in turn puts pressure on our currency.
Two.
If we can encourage a manufacturer like Samsung, LG, Tesla, Catyl, BYD to build a grid battery manufacturing plant in Australia, why shouldn't we? That is my question.


PS
According to available data, the Australian mining industry employs around 2%of the total Australian workforce, representing a relatively small portion of the overall employment landscape.


Key points about Australian mining employment:

• Percentage of workforce: Approximately 2% of Australian workers are employed in the mining sector.

View attachment 188449

That graph is a bit deceptive, if you canned all the mining activities in WA it would decimate Perth altogether, even in other regional areas that rely on mining like Makay, Townsville, and Rockhampton.

 

[Value Collector]

Two things that come to mind:
One.
In an ideal world what you are saying about freeing up labour sounds wonderful, but where does all this freed up labour and capital go to work? When mining doesn't really employ that many people and the numbers are decreasing constantly due to automation.

The concept you propose can only work if we are increasing our employment opportunities, when at the moment the only increases in employment are either in public sector related jobs, or jobs related to residential construction due to the influx of migrants.

Neither of these fields of employment are increasing our balance of trade, they are being funded by printing money to circulate, which in turn puts pressure on our currency.
Two.
If we can encourage a manufacturer like Samsung, LG, Tesla, Catyl, BYD to build a grid battery manufacturing plant in Australia, why shouldn't we? That is my question.


PS
According to available data, the Australian mining industry employs around 2%of the total Australian workforce, representing a relatively small portion of the overall employment landscape.


Key points about Australian mining employment:

• Percentage of workforce: Approximately 2% of Australian workers are employed in the mining sector.

View attachment 188449

1, The Labour goes to the next best place/industry that pops up. I mean 99% of people used to work on farms, now less than 1% do but we don’t have 99% unemployment, new industries popped up.

New jobs are popping up everywhere, we have more doctors and nurses than ever before, more aged care workers, more teaches, more police, more soldiers, more baristas, more delivery drivers, more miners, everything is growing Etc etc.

2. It depends what you mean by “encourage” if you mean put a tariff on imported batteries that makes them more expressive for us to buy, while diverting aged care workers into battery factories, what is the benefit?

3. Mining creates taxes and dividends that fund things right across the economy, Fortescue just funded my lunch creating employment at a hungry jacks north of Brisbane, and funding some GST at the same time. It pays my council rates and Cole’s shopping etc too.

 

[SirRumpole]

New jobs are popping up everywhere, we have more doctors and nurses than ever before, more aged care workers, more teaches, more police, more soldiers, more baristas, more delivery drivers, more miners, everything is growing Etc etc.

A lot of those are the consequences of an ageing population, and the economy isn't growing as fast as you think, in fact on a per capita basis we are going backwards. And we are one of the most backward countries in terms of economic diversity which mean that if another covid or world war happens we will be severely restricted in things that people want or need to buy.

 

[Value Collector]

A lot of those are the consequences of an ageing population, and the economy isn't growing as fast as you think, in fact on a per capita basis we are going backwards. And we are one of the most backward country in terms of economic diversity which mean that if another covid or world war happens we will be severely restricted in things that people want or need to buy.

Isn’t the fact that people are living longer a good thing? And that we have taxes and dividends from mining coming in to support that?

Mate we have like 26 million people here, we will never be self sufficient unless we regress to the economic equivalent of subsistence farmers.

Would you enjoy knowing that Australia didn’t require imports or exports knowing that we had real productivity at half of what it is now? I for one like our economy.

 

[SirRumpole]

Isn’t the fact that people are living longer a good thing? And that we have taxes and dividends from mining coming in to support that?

Mate we have like 26 million people here, we will never be self sufficient unless we regress to the economic equivalent of subsistence farmers.

Would you enjoy knowing that Australia didn’t require imports or exports knowing that we had real productivity at half of what it is now? I for one like our economy.

Productivity comes from technology, and its better to be able to produce our own technology than to depend on others.

If you don't think self reliance has any value, then sell all your investments and get a nine to five job where you can be sacked any time.