Australian (ASX) Stock Market Forum

Let Oz Car Industry Die

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Eager said:
People DO have the money to buy Australian cars; they just choose not to. It is comical to see a woman trying to put the weekly shopping in the back of a new Hilux, a car more expensive to buy, more expensive to maintain and service, and which uses a more expensive fuel than a bread-and-butter Falcodore that would be eminently more suitable and provide far greater value for money. The local car industry has been talked down too much; the products made here are actually quite good but suffer from the perception that they do not provide value for money. In fact they are very economical to run and maintain for what they are - and for what they are capable of.
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1. Offer a more suitable engine, preferably a diesel. The whole concept of the 4.0 litre engine that Ford use is simply too far behind the times to be credible in 2012. Holden does have a new engine and that's good, but Ford need to get their act together.

2. 5 year / 100,000 km warranty as standard. No excuse for anything less than that.

3. Fix the dud brakes on the Fords. Not sure if it's still an issue now but a few years ago we had a Falcon at work (I drove it 95% of the time and I'm no rev head) which needed the brakes attending to after less than 50,000 km which is truly ridiculous. Never had trouble like that with Japanese cars.

4. Door locks also need fixing. There have been models where if you operate both the interior and exterior door opener at the same time (easily possible if you have children) then it actually breaks the lock mechanism and the door can't be kept closed (car needs towing). That should have been a recall.

5. It took several months to replace the diff in a car that was still under warranty. I'm in Hobart, the factory is in Victoria and this was a warranty job being looked after by the Ford dealer. I'd have thought it would be next day replacement or at most a week.

I'm in favour of retaining the Australian car industry but I won't deny that Ford and Holden both have some issues to sort out with their product and after sales service. Toyota are very much ahead of them.
 
^ 1. Diesels are not always cost effective, for the reasons that i listed in my previous post. But they are available on the Territory and are selling well. Ford will soon release a 4 cyl engine for its Falcon, but again, due to negative press, it is being mentioned in the same vein as Holden's ill-fated 4 c yl Commodore from 30 years ago. In fact the new engine in the Falcon is almost comparable in power to the 6, but admittedly it will lack torque, just like Holden's 3 litre base engine does, so unfortunately it will bring the Falcon back to the pack. :( Happily the 6 will still be available. :)

2. Agree.

3. As in warped rotors? That was a minor inconvenience on previous models, but covered under warranty. They used soft parts to increase brake effectiveness. Trust me, it is not an issue on the current model.

4. No experience with that problem, but I challenge you to try it on other makes as well...

5. Never had an issue with either of my BA, BF or FG.

Toyotas have had several well documented wordwide recalls in the past few years; more than the local manufacturers. They are behind in design aspects too. I remember when the Aurion first came out, it still had inward facing bootlid hinges that crush your luggage instead of struts! No split-fold rear seat either. Plus, you look out of place driving one unless you are wearing a cardigan and fluffy slippers. ;)
 
Eager said:
5. Never had an issue with either of my BA, BF or FG.
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The BA Falcon is notorious for their noisey diff. I have a BA XR6 Turbo utility and except for the diff noise which can only be drowned out by the radio being played very loud, is a great vehicle.
 
Hyundai offer 3 yrs warranty on their cars Benz 12 mths I would argue a Gezt is just as well build as a Benz if not better, which show if the right people are in power we can do it.
a CNC machine / robot Benz use is no better or worse than Hyundai except Hyundai most likely built it.
 
Eager said:
^ 1. Diesels are not always cost effective, for the reasons that i listed in my previous post. But they are available on the Territory and are selling well.
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Indeed. Whether or not they are cost effective, it seems that customers do want them so the manufacturers are silly not to offer this option with other body types. Give the customers a choice of engine and let them decide.

I do want to see the industry survive, but there's no point denying problems where they exist. Fuel efficiency has thus far been one such area.
 
Good riddance to crap cars.

What will they do at Boganpalooza, I mean Bathurst, with Fords made by foreigners!
 
CanOz said:
Manufacturing in Australia is dying a slow death..
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I was very surprised when I had a look at how small it is. Is this right? less than 10 %. And we give these multi nationals millions to make uncompetitive rubbish. Madness.

Man_GDP.gif

McLovin said:
Good riddance to crap cars.

What will they do at Boganpalooza, I mean Bathurst, with Fords made by foreigners!
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What about poor old Adelaide. The clipsal 500 is their biggest social weekend. LOL!
 
Trembling Hand said:
I was very surprised when I had a look at how small it is. Is this right? less than 10 %. And we give these multi nationals millions to make uncompetitive rubbish. Madness.
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Yeah it's right. I think if we're going to be viable in manufacturing then we need to be doing something other than putting leather seats in a taxi cab and trying to flog it as a luxury vehicle. They can do that in Korea for half the price.

We need to move up the value chain. The problem is the guy who has stood on the production line fitting wiper blades to shiny new Fairmonts is going to struggle to do anything else.

CanOz would know better but food production seems to be a logical one, IMO.
 
McLovin said:
Yeah it's right. I think if we're going to be viable in manufacturing then we need to be doing something other than putting leather seats in a taxi cab and trying to flog it as a luxury vehicle. They can do that in Korea for half the price.

We need to move up the value chain. The problem is the guy who has stood on the production line fitting wiper blades to shiny new Fairmonts is going to struggle to do anything else.

CanOz would know better but food production seems to be a logical one, IMO.
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Yeah i think there is a huge opportunity for Australian business's to be flogging high quality whole foods to Chinese. They can't get enough of things like milk powder, and fruit. Its been a big turn around. They're sick of eating their own poisoned food and looking for imports...too bad you couldn't ship over some air!

That's one Australian manufacturing has going for it, QUALITY....

The dollar is obviously not helping much though...for exports.

CanOz
 
CanOz said:
The dollar is obviously not helping much though...for exports.
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To be honest it just depends on the business and how savvy/flexible/dynamic the management are.

I work with exporters who haven't sold anything since we went above parity, and others who have had record months above parity. I also work with importers who are having record months now, and others who will not buy below parity because they think it is too low and cant make their margin (despite longer term anything above parity being very very rare).

It just depends how each company and their management adapts. The proactive ones do well, the reactive ones are the ones who continually moan and whose stories we see
 
From AAP
For those working people as they absorb this news I want to say to them we will make sure you are not left behind."

Ford Australia currently employs more than 3500 people at its manufacturing plants at Broadmeadows and Geelong.

Ms Gillard said the government would support businesses and workers in the automotive supply chain by providing an additional $10 million to the Automotive New Markets Program.

The Victorian government would also make a $2 million contribution to support Victorian component suppliers.

Almost $40 million would be added to structural adjustment programs to support the economic development and diversification of the Geelong and northern Melbourne regions.

The federal government would contribute $30 million and the Victorian government $9 million.
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What is it about the car industry that sees Ford employees receive the above special assistance?
People are losing their jobs in smaller concerns every day, but are not, as far as I'm aware, able to access any similar level of assistance.

What am I missing here?
 
Julia said:
From AAP


What is it about the car industry that sees Ford employees receive the above special assistance?
People are losing their jobs in smaller concerns every day, but are not, as far as I'm aware, able to access any similar level of assistance.

What am I missing here?
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A big employer supposedly has greater benefit to the economy as a whole. The same reason some US banks were saved.
 
Gringotts Bank said:
A big employer supposedly has greater benefit to the economy as a whole. The same reason some US banks were saved.
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Might have been cheaper to just hand out all the industry assistance funds on a per capita basis to each worker who is now eventually and inevitably losing their jobs.

I can't see the point in using taxpayer funds to prop up the manufacturing of something for which there is next to no market.
 
Julia said:
I can't see the point in using taxpayer funds to prop up the manufacturing of something for which there is next to no market.
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Another argument in support of assistance besides the large employer is maintaining the skills in Aus. I'm working in the UK atm and they're seeing the effects now of what happens if you outsource/export skilled labour roles/manufacturing and get rid of apprenticeships. They're currently facing highish unemployment and yet I guarantee any Australian with a trade who grabs a visa would have a job within a week of landing on British soil. In conjunction with construction and mining, manufacturing is where these skills are learnt and practiced.

Once those skills are gone it's very hard to rebuild them within a community, especially if there's nowhere to train on the job.
 
Earlier, Holden boss Mike Devereux says his company would seek more government help to keep the Australian auto industry viable - and that the handouts were a great deal for the nation.
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http://www.adelaidenow.com.au/busin...hop-in-australia/story-fndbbp4c-1226649540331

Holden has obviously decided in their boardrooms to take advantage of this, now telling the government "look what happened to Ford, if you don't give us more money, the same will happen to us!"

So the obvious moral to the story is, start up a huge failure of a business, hire as many people as you can, and you can then ask for government handouts on the basis that if they let your business die, then many people will lose their jobs.
 
It is sad to see the manufacturing base in Australia shrinking so rapidly. One thing that surprises me about the talk from commentators and politicians is that in explaining away the reasons for events like Ford's closure, one thing that is virtually never mentioned is that our labour costs have just become prohibitively high in relation to our competitors in the world is the biggest reason that we are in this situation.

Our PM et al will talk about the high rate of AUD etc but never mention that with Labour policies and the free rein it affords to unions, it is inevitable that Holden and Toyota will also go, ringing the death knell for big manufacture in Oz. A high Aussie Dollar is the commonest factor mentioned to explain away all problems. Auto manufacturing like other businesses, has been dying a slow death for many years before the rise of our Dollar. The Ford CEO mentioned that the cost of manufacturing in Australia is twice that of Europe (yes twice!!) and four times that of Asia. If this is the case, where is the hope for us. No amount of subsidy is going to help the moribund manufacturing industry. Think of oil refineries, steel industry, Aluminium refineries, textiles and garments manufacturing etc, etc.

Unions and Labour pollies talk as if the sole reason for businesses is to provide employment. God forbid if they have the idea of turning a profit as a motive. The real tragedy is that they actually appear to believe in this. They would tax businesses and squeeze them out in every way to increase labour remuneration even if it kills the industry. Talk about killing your golden goose!!!

What we need is a Maggie Thatcher to beat some sense into the unions. Unfortunately, even the Libs don't seem to have any one in the leadership with the gumption to do what is necessary. Perhaps, the rot is too deeply set in our system. The slightest hint of anything that Labour can relate to Work Choices prompts them to shout their throats hoarse about how the sky is going to fall. Tragically, it does seem to have a traction in public opinion and leads to the Coalition politicians scampering to distance themselves from it.

R&D, innovation, services etc is what our country is good at and have advantage over our competitors in the world. Reducing funding from Universities is a great way of killing that Golden Goose too. Looks like Labour, in order to please their Union Masters will do everything to stifle businesses and dumb down the nation.

End of Rant!!!
 
aarbee said:
Think of oil refineries, steel industry, Aluminium refineries, textiles and garments manufacturing etc, etc.
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Oil refineries. We used to have 10 of them at one point. 3 in Victoria, 3 in NSW, 2 in Qld, 1 in SA and 1 in WA.

Thus far all refining capacity in SA has been closed, and only 1 refinery is still operating in NSW but that is to be closed in 2014. There are 2 refineries still operating in Vic, but one of them has been downsized and the other is for either sale or closure by its' owner. So in the not too distant future it seems that we'll have 4 operating refineries at most and the rest of our liquid fuel will be imported.

Steel. There used to be 3 major steel works in Australia. 2 in NSW and 1 in SA. One of the plants in NSW has been flattened some years ago and the other now only still operates 1 furnace. So the only one that could be considered "fully operational" is in SA - but it would be a brave person who bet on the long term future of that. BHP itself got out of the steel business years ago - they saw it coming.

Aluminium - A smelter in NSW closed recently and Rio Tinto is getting out of the industry. It's no secret that Bell Bay Aluminium (Tas) is struggling financially and is basically being run into the ground - it's just not worthwhile investing anything so they're just running until it literally falls apart and then it's over. It's much the same with the other Australian smelters too.

Ferro Alloys - There's only one producer in Australia, that being the Tasmanian Electro-Metallurgical Company (TEMCO). The plant shut down for 3 months a year or so ago, and was only restarted on the basis that the Hydro is supplying them with off-peak electricity to run it (whereas previously it was a 24/7/365 operation).

And on I could go. Manufacturing is pretty much stuffed in Australia these days. Practically every factory that was around in the past is either gone already or seriously struggling these days.

Talk to any of them and it's the same story:

1. Australian wages are too high.
2. The AUD is too high.
3. Electricity has become too expensive in recent times.
4. Gas is becoming expensive.
5. Transport costs are too high and services aren't up to scratch.
6. Modernisation or expansion (to gain economies of scale) faces too much red and green tape.
7. Overseas competitors have advantages in terms of lower rates of taxation and/or indirect government assistance and guaranteed home markets.

That list covers the majority of the problems to my understanding. Unless it falls far lower than anyone is expecting, literally to somewhere around 25 US cents, simply reducing the value of the AUD will not in itself fix the problems.

Australia is no longer competitive at manufacturing of practically anything. The trouble is, we're rapidly going the same way with administration and services as the white collar workers in the cities will soon find out.

Can anyone name a single industry other than iron ore where Australia is truly competitive? We're being priced out of gas and a lot of the smaller mines are struggling so even mining isn't as strong as many think once you take a few big pits in WA out of the picture.:2twocents
 
aarbee said:
It is sad to see the manufacturing base in Australia shrinking so rapidly. One thing that surprises me about the talk from commentators and politicians is that in explaining away the reasons for events like Ford's closure, one thing that is virtually never mentioned is that our labour costs have just become prohibitively high in relation to our competitors in the world is the biggest reason that we are in this situation.
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Strongly agree.
 
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