Managed Decline To Rapid Demise Car Industry Gamble
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.