QED

Thoughts on Australia’s Own Ex-Car

My first car in Australia was a clapped-out Ford Zephyr which died very quickly and which I had to have towed away for scrap as no dealer would accept it as a trade-in. My second car was an FB Holden Ute which, although tired too, served me well in Sydney once I’d had the rusted floors replaced by a welder, and took me up to Townsville and eventually via Katherine and Broome to Perth, when, to put it mildly, the roads were not so well made as now for much of the journey.

So, my Holden served me well, though I never bought another. What I did buy however was always made in Australia – by Ford, Toyota or Mitsubishi. Now, as we know, they have all gone, even the lingering notional existence of Holden. But that’s fine. Free trade, so-called, means that we must import all of our cars. Far cheaper than making them here and that’s all that counts in this brave new world.

I heard an economist of one of the major consulting firms the other day explaining that the effect of low interest rates in boosting housing prices would make people feel wealthier and more inclined to spend money on durable goods and cars, and thus boost the economy. Which economy, I thought, because none of those durable goods or cars would be made here. Perhaps the economy he was referring to belonged to China or to some other country or countries.

Of course, consumer spending benefits shareholders of Harvey Norman et al and owners of various car dealerships as it does their employees. But the benefits are very limited. By the way, in their naivety, most economists are singularly oblivious to this reality.

They look at the national accounts and believe consumption expenditure to be the major contributor to economic growth. In fact, it is largely offset by imports. Their naivety is the product of being misled for eighty-plus years by Maynard Keynes. The production side of the national accounts is where economists should be looking; not the spending side. As they don’t, they are, for the most part, a waste of space.

I will put it plainly for the edification of economists of Keynesian persuasion (i.e., most of them). Making a car adds to our wealth. Buying a car does not.

Sadly, and inexplicably, in my view, we don’t make cars anymore. Nor do we any longer make electrical goods or not many; nor clothes or, again, not many of them. We have outsourced most of our manufacturing and all of the great variety of skills it entails, and all the small businesses it supports, and all the richness it brings to our national culture. And if you think that is a good thing you are no doubt one of those libertarian types who believe in “free trade” whatever the cost to national life. Cheap stuff is apparently the sine qua non of our existence.

Leaving his foreign correspondent turf, Greg Sheridan recently wrote a fantastic article in The Australian (20 Feb) on the loss of car manufacturing in Australia. If you haven’t read it you should. “This disaster,” he writes, “was brought about by a combination of green costs on industry, ludicrous power prices and grievously misplaced free-market economic nostrums. The net result was a catastrophic loss of capacity, complexity and competence across our economy, a dumbing-down of society, a needless limitation on our potential and a serious dent in our national security.”

On the usual cant of our market being too small, Sheridan argues that “our market is augmented by five million New Zealanders … Thus with a wealthy domestic market of 31 million, and next door to the fastest growing economies in the world in Asia, if we decide not to have a manufacturing industry that is not because of external circumstances, but a conscious choice born of lack of ambition and lack of will.”

The only thing I would add to Sheridan’s account is that the interplay of bloody-minded unions and compliant “empty suits” (and the resultingly flawed enterprise agreements) didn’t help sustain the industry. But that, too, should have presented a challenge to government, not a further excuse for letting the industry die.

Skip across the Pacific and listen to Tucker Carlson on Fox News (21 Feb) talking about the American malaise. He goes beyond Sheridan’s remit but, when you think about it, it is all part of the same tapestry of decadence afflicting the West:

The people in charge inherited an economic superpower with unchallenged military dominance. In a little more than a generation they squandered all of it. In exchange for short-term profits, vacation homes, and cheaper household help, they wrecked what they did not build. They outsourced entire sectors of our economy to China. They imported a serf class to drive down wages and they crippled the middle-class while doing it…They turned the finest universities in the world into a joke. They watched from their little bubbles of affluence as families, faith, and public decency died in this country.

The common thread, whether from the transnationals on the right or Marxist globalists on the left, is disdain for the integrity of the nation state and for what binds it together — sovereign territory, strong borders, a common rule of law, common values and customs, shared history and traditions. Economic diversity and complexity are part of that. A nation does not have to be self-sufficient in the normal course. In fact, it must take advantage of trade. At the same time, it must have an abundance and range of skills and talents and the capacity to fend for itself in extremis. Having no manufacturing capacity is a national death wish.

Of course, international trade is good. It is essential. It makes nations more prosperous. But it is a means not an end. And trade deals should be put into that perspective. The end for any individual nation is to sustain a free, secure and prosperous population made up of many communities each having the opportunity to flourish. Industrial wastelands, occupational uniformity, and dependency on potential enemies for essential supplies is not a good bargain in order to get cheap stuff.

13 comments
  • March

    Where would kids go today if they have an engineering – design bent and wanted to design or make cars or get involved in heavy manufacturing? I guess Europe, Japan, China, SKorea or the US? Good luck with that! Lucky Country is fast running out of luck!

  • Lacebug

    But surely some of the blame must lie at the front door of Holden itself? The fact that it continued to make large sedans that people did not want. The fact its product wasn’t in any sense of the word aspirational? The fact that the product wasn’t exactly known for its reliability?

  • Doubting Thomas

    Bravo, Peter. Much as I have a superabundance of contempt for GMH and its decades of production of third class rubbish sold under false pretences to a gullible Australian public, the loss of its automotive manufacturing capacity is yet another severe blow to Australia’s national defence capability. You will be well aware of the defence implications, and one must wonder how we’ll cope if our sea lanes and ports are ever seriously compromised by an enemy. Few people other than senior military officers and their senior civilian equivalents in government and relevant industries seem to be aware of the government subsidies have long been paid to support industries that can quickly be converted to arms production.
    Where do we go from here?

  • pgang

    It still needs to be competetive and ours was too cronyist.
    But this idea that we were making rubbish cars is just jingoism. The cars we were making were of excellent quality and perfectly suited to local conditions. No leather seats, big deal. The Europeans churn out over engineered, expensive, unreliable bling that is poor fare on our country roads. And the Toyotas made here were among the best.

  • Doubting Thomas

    I generally agree about the European cars, and about Toyotas, a number of which I have owned over the years. Despite this, my all-time favourite car was a Peugeot 403 which, apart from the cheap and nasty plastic interior common to most French cars of the era, was ideal for Australian conditions and pretty much unbreakable. The performance of Peugeots during the early Redex Reliability Trials is legendary.
    But, as I may have mentioned previously, it wasn’t until the Japanese seriously entered the Australian market in the early 1960s that the Australian manufacturers made the first small baby steps towards building a decent car. I was living in PNG in the early 1960s when Toyota introduced its Japanese-built Crown and Corolla models. (I was driving my beloved Peugeot, of course, as did at least a significant minority if not a majority of ex-patriots in Port Moresby, at least. Holdens almost literally fell apart in those conditions within a couple of years, and Falcons were relatively rare.)
    But the standard imported Toyotas were unmatched for quality. Apart from perhaps conceivable optional extras that were yet to be invented, these cars had everything as standard equipment.
    From memory:
    Luxury paint,
    Quality wall-to-wall carpet, including in the boot and a spare wheel cover,
    A very generous tool kit,
    Tinted laminated windscreen and tinted windows all round,
    “Wing” mirrors on both sides,
    Auto-tune station-searching radio with controls in both front and back,
    Electric antenna,
    Power brakes,
    Heater,
    Plush fabric seats and, from the sublime to the ridiculous,
    Ashtrays, with their own individual cigarette lighters in the armrests of all four doors.
    All this for significantly less cost than the contemporary then top-of-the-line Australian-built Toyota Corona that my wife and I bought brand new when we returned to Australia in 1967. It was, even ignoring the almost total lack of the above-listed bells and whistles, was in barely four years of relatively benign usage, a rust-riddled heap of junk.
    During my time in the RAAF, half of my staff course mates paid a visit to GMH in Adelaide in 1979 where they were given a guided tour of the Torana/Sunbird production line. To a man they returned utterly disgusted with the shoddy workmanship on display, particularly in the rust-proofing area, vowing never to purchase a GMH product. By comparison, my group had the almost literal free run of the Simpson-Pope whitegoods factory where the highest standards of workmanship and quality control were not only on display but clearly ingrained in a remarkably friendly and contented workforce.
    Whatever the car industry malaise, it was obviously not universal in the Australian manufacturing sector.

  • padraic

    Agree with everything you said, Peter, as well as with some of the comments. I bought a Honda a couple of years ago and the salesman offered me the same model, but with leather seats. I declined, and stuck with the cloth composite seats, as getting into a car with leather seats after it has been baking for a while in the Australian sun and the driver wearing a pair of shorts is not something I would recommend. Leather seats are good for Northern Hemisphere countries but not here. The reason why Chifley got GM to build Holdens was because of defence considerations. When WW2 with Japan broke out Australia found itself cut off from major industrialised allies and with a pathetic industrial base. Sure, we managed to produce Wirraways but they were no match for Zeros. Industrialised countries mass producing motor vehicles and ferries in peacetime could convert their factories into making war materiel like tanks, troop carriers, warships etc in wartime. Australia did not have that level of capacity and now we have lost it, together with our fuel security, as refining oil has moved to Asia and new sources of oil and gas will not be developed because of our spineless politicians who roll over and wag their tails when confronted by a few non-representative juvenile activist poodles ( who would never vote for them anyway). Once our motor industry was closed down they tried to compensate by having submarines built here in the hope that such activity would provide the technical skills lost in the motor industry closure. Before and immediately after WW2 the car of choice by farmers was the Peugeot which could handle the dirt roads that were predominant at that time. The Peugeot had one problem – that was when you drove with the driver’s window down- mandatory because of the use of hand signals – it created an internal vacuum which sucked up dust from the road through the cracks in the floor. The first Holdens had solved this problem by sealing the gaps in the floor and the farmers switched to the FJs. However, the Holden was less stable on a dirt road because if there were no passengers in the back seat the rear of the car would become unstable, so the farmers used to put a bag or two of wheat in the boot and the problem went away.

  • Doubting Thomas

    Yes, the Peugeot was a seriously dusty car, basically it’s only significant fault.

  • Geoffrey Luck

    “We” didn’t ever decide to build cars here, or to stop, either. We sub-contracted the decisions to Detroit, got what fitted their world-wide plans, and because of tariffs didn’t know any better. This manufacturing has always been derivative. The Wirraway was just a re-worked North American T-6 Harvard.

  • Ian MacDougall

    After $2 billion in Australian taxpayer subsidies, General Motors Holden is quitting Australia. Meanwhile, PM Scummo is carrying on about it like a chump who has been dudded by some fly-by-night.
    But Australia did once have a genuine local car company all of its own, running on capital raised locally. That was Australian Motors, whose product was the Australian Six. They are mainly in museums today. ( https://en.wikipedia.org/wiki/Australian_Six )
    After WW2, when American and British cars had the market to themselves, but cars were in short supply, Australian Motors approached the Federal (Chifley) government for a float of 8 million pounds to set up production of cars. This was refused.
    Instead, GM was shortly after invited to set up in Australia. It agreed to, but refused to list any shares on the Australian market. So it is 100% overseas owned to this day, with all profits going abroad. Oh yes. And as I recall, it required a non-repayable not-inconsiderable start-up float as well.
    Australian Motors could well have become the Volvo of SE Asia, and Australia a major manufacturing hub. Instead, we became a quarry.

  • DG

    Following from Ian MacD. We seem to take every opportunity to destroy any risk of becoming a high-value-add, high tech industrial powerhouse with easy access to the biggest growing market in the world. Our current biggest strategic export seems to be land ownership.

  • Farnswort

    “At the same time, it must have an abundance and range of skills and talents and the capacity to fend for itself in extremis. Having no manufacturing capacity is a national death wish.”

    Interestingly, a recent report warned about Australia’s reliance on imported pharmaceuticals. The report by the Institute for Integrated Economic Research noted that Australia imports over 90 percent of medicines and is at the end of a very long global supply chain, making the country vulnerable to supply chain disruptions. This puts Australians at risk.

  • Farnswort

    The coronavirus outbreak threatens to disrupt global supply chains. Astoundingly, the United States – a once mighty industrial giant – also finds itself dependent on imported medicines.

    Patrick Buchanan:

    “The chickens of globalization are coming home to roost. In recent decades, America’s economic and political elites of both parties surrendered her economic independence for globalism, a new interdependence of nations, where we Americans no longer rely on ourselves alone for the vital necessities of our national life.

    That decision is now being exposed as the folly against which Hamilton and economic nationalists always warned.

    According to The Washington Post, critical ingredients of medicines and drugs, upon which many American lives depend, are made in Chinese factories now in danger of being shut down.

    In the ongoing struggle between nationalism and globalism, the globalists are taking a beating. Like the Chinese and Japanese and Koreans, Americans are not going to be looking to the WHO or U.N. to ensure their health, but to their own nation-states. And if a pandemic threatens, transnationalism’s “open borders” ideology is not a policy that will bring universal acclamation.”

    https://www.theamericanconservative.com/buchanan/the-coronavirus-is-trumps-time-to-lead/

  • Farnswort

    Ian MacDougall: “After WW2, when American and British cars had the market to themselves, but cars were in short supply, Australian Motors approached the Federal (Chifley) government for a float of 8 million pounds to set up production of cars. This was refused.”

    This is a fascinating account. I would be interesting in reading more if you could point me to a source. What an absolute blunder by the Chifley Government!

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