Despite billions of dollars in government subsidies injected into Australian car manufacturing over the past several years, the industry continues to struggle, and its future is looking grim.
In April this year, Holden said it was cutting 500 jobs from its South Australian and Victorian plants. The following month, Ford marked the end of an era when it announced it would be closing its Australian manufacturing plants by October 2016, at the cost of approximately 1200 jobs. Then, on June 18, Holden seemed to confirm the worst fears surrounding the future of the industry, announcing further “labour-related cost reductions” at its plants in Victoria and South Australia.
In such a corrosive environment, is it the responsibility of fleet managers to lend further support to an increasingly uncompetitive industry, despite an imperative to get the best value for ratepayers’ money? Many seem to think so.
“Help a mate with a job,” is how the then-Prime Minister Julia Gillard weighed in on the argument during her
opening speech at the Australian Council of Local Governments Awards dinner, held in Canberra on June 16.
“With so many Australian jobs relying on manufacturing and with car making at manufacturing’s heart, I’ve come tonight to ask you to support your fellow Australians by buying local when you renew your vehicle fleets,” she said
Her comments came less than two weeks after the federal minister for industry and innovation, Greg Combet also criticised state and local governments for not supporting the Australian automotive industry in their fleet procurement decisions.
“In 2011–12, over 70% of all passenger vehicles purchased by the Commonwealth, Victorian and SA Governments were made in Australia,” Combet said after a meeting held with government, industry and union representatives on June 7. “By contrast, Australian-made cars made up just 40% of vehicle purchases for the other states and territories, and only 30% for the local government sector as a whole,” he said.
"If [governments] were to lift their game, the industry would be in better shape.”
Balancing the moral argument
“It's a complicated issue of course,” said Trevor Wicks, Fleet Management Coordinator for Knox City Council in Victoria, commenting on the issue in the previous edition of Fleet e-news.
“The ‘moral argument’ for supporting Aussie products has to be balanced in a dispassionate way against a whole lot of other factors,” in particular economic factors, and the “whole-of-life” cost of the vehicle, he said.
Brian O’Mara, General Manager of Local Government Procurement – the purchasing arm for NSW local government – insists the buy-local argument is two-pronged. While in the current economy, buying Australian-manufactured vehicles is becoming increasingly difficult to justify, he said, Combet makes a valid point that doing so could be for a greater good.
“The purchasing of motor vehicles is one of the most controversial, and most personal, purchasing decisions made within councils – and the private sector, for that matter,” said O'Mara.
Missing the point
However, IPWEA’s fleet expert, Managing Director of Uniqco International Vehicle Management Grant Andrews, said much of the recent commentary surrounding the issue is “missing the point”.
According to Andrews, the 'Button Plan’ introduced during the Hawke-Keating era in the 1980s to improve the automotive industry’s sustainability while phasing out protectionism, positioned Australia as a “significant contributor to the car manufacturing industry worldwide” – as a key exporter of components to vehicle manufacturers, he said.
“Worldwide we are seeing major manufacturers move their assembly plants to China, Indonesia, South Africa and Mexico, so they can employ reasonably priced labour for the labour-intensive part of their manufacturing,” said Andrews. “[But] components such as engines, axles, springs and gearboxes still come from developed countries like Australia, Germany, Japan and the USA.”
“Manufacturing and assembling a whole motor vehicle is very expensive if you do it in low volume numbers,” Andrews added. “My question is, why subsidise an industry with tax payer dollars when we should be promoting exports of our technologically advanced motor vehicle components to manufacturing plants that produce 4000 and more vehicles a day?”
– Gemma Black