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The automotive industry in Australia has been in operation for nearly 100 years. However, things are changing. The Shifting gear exhibition at the National Gallery of Victoria marks the end of an era. General Motors, Toyota and Ford Motor Company have all announced that they will close Australian manufacturing plants. The exhibition is a celebration of the inventive genius of past eras but the future of the automobile industry is uncertain.

Despite the imminent end to car production, it is worth acknowledging and celebrating the achievements of the Australian car industry. It’s a remarkable feat to make cars. They are one of our most complex and nuanced products, and have shaped our urban environment as well as our socio-cultural psyche.

Locally-grown, highly skilled workers who create creative content, choreograph complex production systems, manage large infrastructures, direct information flows, and attempt to understand a multifaceted financial system have demonstrated innovation at the highest levels. It is unclear if this innovation is still being directed in the right direction.

Making Industry Do

Our innovation is rooted in the need to do what’s necessary. The Australian market is smaller than the global market. Our manufacturers are part-owners of larger companies. However, domestic vehicle production has had to survive. Our products have been able to sit comfortably alongside international vehicles, which have greater market reach, production volumes, and more resources. Despite our limitations, we have managed to compete on price, quality, and vehicle attributes.

Australian car designers have had the opportunity to compete on the international stage from their first hand experience as automotive designers. However, they did so with less resources, time and money. This has led to iconic cars like the 1934 Ford Coupe Utility, FJ Holden, and Chrysler R/T E49 Charger as shown in Shifting Gear. Local automotive design studios have a large number of highly-trained designers to their credit.

The international increase in the number of automobile manufacturers has led to dedicated degrees in automotive engineering. Australian universities, however, do not have enough students to support specialized automotive design courses. Instead, they offer elective streams in general industrial design degrees. This means that styling skills are often limited in Australia as compared to overseas competitors.

Our designers are now all-rounders. This has worked in our favor. This new workforce brings international perspectives and experience to the table and is highly valued when designing production-ready vehicles.

Transport Landscape Changing Industry

Henry Ford was the first to achieve the dedemocratization of products by standardization, labour division and economies of scale. It is interesting to note that today’s automotive manufacturers claim they are being victim to this economy 100 years later. This may be a reflection of a shift in consumer attitudes and global competitiveness towards vehicle design.

To make matters worse, economies of scale are becoming more attractive. New technologies and cultures like 3D printing, generative programming, and Maker culture combine divisions in labour to achieve the dedemocratization of manufacturing through open, mutable design. Anyone can make unique artifacts and sell them if they have a good idea.

Chris Anderson’s concept of the long tail, which is a collection of millions of small, user-generated creative outputs, is pertinent here. This could be, for example, products purchased directly through artists, designers, and makers via Etsy, rather than large production runs or mass-produced products controlled by large companies. Technology that aims to democratize production such as domestic 3D printers and CNC machines, laser cutters and laser cutters is helping to accelerate this shift. This is allowing for greater diversity and a greater choice for consumers.

Wealth, Knowledge, Skills and Infrastructure

Although a shift in economies of scale from scope will result in a loss of wealth, knowledge, skills, and infrastructure in mass production it also opens up the possibility for new innovation. The car was a vehicle that provided personal freedom and mobility in the Second Industrial Revolution. It was 100 years ago. Changing social paradigms have made individualism more attractive in an increasingly connected society. The knowledge economy and production innovation allow consumers to control the content of the products that they purchase.

This is why we are seeing a new breed of transport providers emerge from outside the industry. Local Motors is one example of such a project. It allows anyone to contribute vehicle designs and 3D print them in microfactories.

Tesla motors, an electric vehicle manufacturer, has recently announced that it will release a battery system to provide home energy. There’s Google Car, which is an autonomous vehicle created by Google and operates in a digitally mediated transportation network. The Future People are an artist couple who create human-powered vehicles in low volumes, as demonstrated at the 2015 Detroit Motor Show.

This is only the beginning of a new transportation landscape that promises to be diverse, innovative and rich. It is possible that vehicle design and manufacturing will change in Australia in the near future. Let’s hope that our Aussie doing less with more approach to vehicle design and manufacturing will allow us to create unique and sustainable solutions.

The Australian auto industry has been in a period of managed decline for the past 30 years. The Button Plan was introduced in 1980. Its goal was to stabilize the industry and prevent the rapid decline that would follow.

Automotive assistance was not designed to manage decline. It was intended to create a smaller sector that could compete with imports and a strong export focus. However, managed decline was an integral part of automotive policies. The removal of protection and continual downsizing the industry gradually reduced future costs of its destruction.

Like a couple trying to keep a marriage intact, neither the government nor the industry could accept. That there was no longer a long-term future. Both sides were reluctant to accept the kind of radical restructuring and interventionism that would have allow. The Australian industry scale up by hooking into regional production structures. Instead, the governments encouraged the consolidation of the existing industry structure in exchange for more assistance. This made production feasible over the short to medium term.

Automotive Future Decline

As the industry declined, so did the number of people who believed in an automotive future. Many Australians believe that the industry can survive if it receives more funding. The industry demanded more support in recent years almost immediately after different governments had made new plans.

The process of managed decline cannot continue for too long. The process of declining eventually makes demise more palatable and less devastating. Although the Abbott government claims it isn’t responsible for the industry’s demise, by refusing engagement with the industry to negotiate new funding arrangements, the Abbott government has decided that managed decline is no more necessary.

The Abbott government believes that the political consequences of shifting from managed decline into rapid demise can be controlled in the short-term. It has gambled that other industries will be able to cover the economic losses and that cars manufacturing does not have any greater strategic or productivity benefits.

Economic liberals have won another victory with the demise of the automobile industry and the continued decline of the manufacturing sector. They have long advocated that governments should encourage rather than hinder the reallocation economic resources from manufacturing to other industries, such as mining and gas, in which Australia has a competitive advantage. It also signifies the defeat of interventionists who claim that Australia requires a strong manufacturing sector to be an integral part of a diverse and wealthy economy.

Practice Managed Decline

The decline of the automobile industry has slowly manage by policymakers since 1980 when Chrysler’s plant was sold to Mitsubishi. The Hawke Labour government’s Button Plan, which sought to reduce the number and number of cars manufactured in Australia to six from thirteen, began this process.

The Howard years saw policy towards the automobile industry shift towards political expediency. While the industry profit performance improve in the early 2000s it hit by a slump as the resource sector boom. Although the Howard government did not believe in industry policy, it didn’t want to be the government responsible for the industry’s final decline.

Rudd’s government changed the name of its support to the industry to co-investment. However, it was unable produce an industry that could sustain itself without significant and continued monetary injections. It announced in 2008 A New Car Plan to Ensure a Greener Future. The initial optimism generated by the potential investment quickly turned to sourness and the industry began to cry out for more assistance. The final closing of Mitsubishi in 2008 was another step in managed decline.

Rhetorical Support To The Industry Decline

Rudd offered rhetorical support to the industry, and Kim Carr, his industry minister, truly believed in its future. However the global financial crisis hampered the development of new forms or assistance that could have helped the industry restructure and continue to thrive. Labor shifted the focus to industry survival and not development.

Reduced the A$1.3 billion Green Car Fund in February 2011 to help with flood reconstruction. Labor made it clear that it was abandoning any hope of a greener future for the industry with this cut. Ford Australia announced in May 2013 that it would cease local vehicle production by October 2016.

The new Abbott government was face with a decision between continuing to provide assistance to Holden and Toyota, and the components sector, or keeping the Rudd government’s deplete assistance program. It was a gamble that the continuation of current production. Schedules would be possible if Holden and Toyota failed to reach out to them to develop a plan. Holden’s December announcement to end production by 2017, and Toyota’s February announcement to do the same, was the result.

What Is The Fallout?

The Australian economy and workers will be affect if a major industry such as the car. Industry lost while mining investment continues its decline. The government will need to help the many workers who are affect. By the demise of this industry and to provide funding to support alternative economic development.

However, the Abbott government might be less likely to win elections. If the industry declares an end of production during the first stages of its term. This could also apply to an election held before 2017’s end of manufacturing. But, if the economy is in recession in 2015 due to declining. Chinese demand and high household debt, the voters may see the decision to accelerate the demise. The industry as a sign of economic indifference or incompetence.

Or, perhaps the population has come to accept that the industry’s demise was inevitable because of the long-running process.

Ford’s Australia Tuesday announcement of 440 job losses is the culmination almost 40 years worth of failures in automotive industry policy. Ford will reduce 15% of its workforce, and produce 29% less as the industry struggles with the double pressures of the strong Australian dollar and falling large-car sales.

It is not surprising, in some ways, that Ford still operates in Australia. Ford 2000, the strategy that was develop in 1996 at Ford’s global headquarters in Dearborn, envisaged several regional production centres. Australia wasn’t originally one of these.

This changed in 1999 when Jac Nasser (a boy from Broadmeadows) became the CEO of Ford Motor Corp. Nasser was previously the Ford Australia and Ford Europe CEO. Although a cost-conscious leader, Nasser still saw the future of Ford Australia’s automotive manufacturing, even if this would require significant government subsidies and the preservation of protective tariffs.

Tariffs. Protection Subsidies. These are the three key words for the Australian car industry. How did we get to this point? What are the potholes in the road ahead?

De-industrialising Australia

The shift away from labour-intensive forms of production in Australian industry has essentially resulted in a phase of de-industrialisation. Deindustrialization was define by Barry Bluestone and Bennett Harrison in 1982 as a widespread, systematic and systematic disinvestment of the nation’s basic productive capability. The way capital in terms of financial resources, real plant and equipment, has been divert from productive investments in basic national industries to unproductive speculation, mergers, acquisitions and foreign investment.

The history of foreign industries in Australia has been shape by one purpose, to avoid the protectionist policies that characterize post-Federation Australia. These policies were abruptly abandon in the 1970s and increase in the 1980s. This coincided with rapid deindustrialization of Australia. It is not a coincidence that there are correlations between the removal of protection and the inability of local industries adapt to and restructure under the highly competitive pressures placed on them by global industries qq online.

The Australian auto industry grew rapidly in the 1950s and 1960s. Foreign subsidiaries Holden Ford, Ford, and Chrysler made large, national investments that were almost solely aim at the Australian market. Exports to New Zealand, Australia and other Commonwealth countries were minimal. Smaller local assemblers include Renault and VW (Heidelberg in Melbourne) as well as British Leyland (Zetland in Sydney).

The majority of political support for protecting the Australian automobile industry has been bipartisan with two notable exceptions. In 1973, Whitlam’s Government announced a 25% reduction in tariffs across the board. Holden announced immediately 5,000 sackings in an attempt to flagrantly political blackmail. Ironically, Bob Hawke, the then-ACTU leader was the one who led the industry-union campaign against federal government cuts. The compromise reached was a 85% local production plan and an agreement that Holden would hire the retrenched.

The Button Plan Australia

In the 1980s, Australia’s auto industry was hit hard by the oil crisis, high import penetration (despite protection) as well as low productivity. Holden closed Pagewood (NSW), Acacia Ridge, (Queensland), and Chrysler sold its equity to Mitsubishi in 1980, including its Tonsley Park (South Australia), plant.

Although the Fraser government increased tariff protect, Philip Lynch, Industry Minister, developed a gradualist approach in 1981 to reducing protection. John Button, Hawke’s new industry minister in 1983, amended these proposals and quickly tracked them down. Button’s reformist approach was corporatist. Button envisaged bureaucratic regulation (establishing Automotive Industry Authority); phased reductions in tariffs (2.5% per year); export credit schemes; minimum model production (40,000 units per model); joint ventures; model-sharing; R&D cost sharing; fewer manufacturing facilities; and fewer domestic producers.

The Button car plan continued to provide subsidies. In the late 1980s, both Falcon and Commodore were funded by the Commonwealth. Ford and Holden then developed new models. Further plant closings were inevitable due to industry rationalization. With Homebush (NSW), closing its doors in 1994, Ford also pulled out of Australian manufacturing in 1992.

Despite these closures Toyota Australia made a significant $AUD500 million investment commitment for 1992. Paul Keating and Bob Johnston negotiated Australia’s first union agreement behind closed doors. Without which Toyota would not have built the plant in Malaysia.

Liberal Party Leadership

John Hewson was elected to the Liberal Party leadership in 1990. This was the moment when the second political disjuncture in car industry policy occurred. Hewson’s Coalition policy in 1990-93 envisaged a zero tariff regime for 2000. Industry leaders were vocally against such proposals.

Hewson’s confrontationist attitude towards the Federated Chamber of Automobile Industries was further damaging to his position. Bob Johnston (Toyota), recalled Hewson walking into an FCAI meeting, and declaring: Make no mistake. When I become prime minister, you’ll get zero tariffs.”

Jac Nasser, Ford’s executive vice president of marketing, shockedly responded: You have to be joking. Are you not interested in a car industry? Hewson responded: If you require tariffs and subsidies in order to survive, then no, I don’t want an automobile industry.

Hewson’s position was a perfect example of the flat earth policy and level playing field approach to industry policies that the Federal Coalition promoted during the 1990-1993 period. FCAI warned about the devastation of the car industry in Hewson’s government. This was an unusual venture into Federal politics by industry leaders and was instrumental in Keating’s narrow victory in 1993.

Hewson believed, incorrectly, that industry leaders were crying out for help and had been hiding behind tariff walls for too long. Two things were wrong with Hewson: First, the protection level had declined significantly since 1973’s Whitlam cuts. The second was that the amount of investment needed to create a car for Australia’s market was not worth the risk associated with a zero-tariff regime. Jac Nasser’s threat that Ford would stop manufacturing in Australia was very real.