End of Holden?

[planetdavo]

If a business can't be compete with local and foreign car makers, unfortunately they should be put to the scrapheap. Their cars are either not good enough quality wise (or even aren't the right kind of car for today), their customer service is too poor, or the prices associated with the cars are too much. This goes for any local manufacturer. Holden, Ford or Toyota.

It was bloody silly for Holden to building a "Pontiac G8" for less than what they were selling the same equiped Commodore domestically. If what they are building domestically costs what it does, yet they are able to product a LHD car complying with US regulations, sending it to the over side of the world and STILL offering it for a lower price, you know someone is pulling a dodgy somewhere in GM. We either should get the same pricing as the Yanks, or people will head elsewhere.

You can talk about "cultural significance", but in reality a business is a business, the entire game is about providing a product for profit. If that isn't the aim of a manufacturer, they go bankrupt. GM went bankrupt, Ford didn't. I see that is a fundament difference between the thinking of the two brands in the 2000s.

Sadly, I feel that the 2008 bailout (this includes GMH too as they got an exorbiant line of credit from government) will be to GM as what the 1980 bailout was to Chysler.

Others have said it earlier.
Your argument is fundamentally flawed in that most countries around the world "protect" their industries through either tariff protection, tax breaks or various other schemes, and in the case of many manufacturing countries, they simply don't have the high standard of living we have in Australia, so produce much cheaper. All that greed many possess for wage increases here comes with a cost attached.
If we don't assist our manufacuring industries to some degree, HUNDREDS of companies will be affected, and a huge number of people will be looking for jobs. Since one can't just pull jobs out of their bum, many are likely to end up on welfare, paid by you and me. Much better to have these industries providing employment, skills training and PAYE tax than have thousands sucking the tax system dry. Tourism, mining, retail and small business can only employ so many...
As for "cheap" US cars, this is a subject done to death. There are vast differences in many areas between the two countries. I feel the best thing to be said on this subject is that people have been getting damn good deals on large cars for several years now in Aus, and most people don't consider them expensive, just less what they are looking for than they used to.

[Martin_D]

Holden and Ford actually need to be protected. We need more than miners in this country.
Too many eggs in one basket living solely on what we dig out of the ground IMO

[serial_fool]

Your argument is fundamentally flawed in that most countries around the world "protect" their industries through either tariff protection, tax breaks or various other schemes, and in the case of many manufacturing countries, they simply don't have the high standard of living we have in Australia, so produce much cheaper. All that greed many possess for wage increases here comes with a cost attached.

No, it isn't the HDI that allows people to produce stuff cheaper, it is their relaxed labour laws and the ease of doing business within those developing nations. If we want an automotive industry in Australia that can compete on a world stage, we must match them. The productive capacity of a western worker must rise in order to compete with workers in 2nd and 3rd world nations, otherwise their wages aren't justified and the company isn't providing the best possible price for their customers.

If you go down the road of producing stuff for the sake of producing stuff you're just going to end up with propping up an industry which is just going to end up shipping overseas regardless. At least with my way Holden and Ford have a fighting chance by competing on a world scale. If they fail, so be it.
To think otherwise is a Keynesian fallacy, as you're just wasting otherwise good resources on an ultimately unfruitful enterprise.
Resources that are better off being used in another manner.

If we don't assist our manufacuring industries to some degree, HUNDREDS of companies will be affected, and a huge number of people will be looking for jobs. Since one can't just pull jobs out of their bum, many are likely to end up on welfare, paid by you and me. Much better to have these industries providing employment, skills training and PAYE tax than have thousands sucking the tax system dry. Tourism, mining, retail and small business can only employ so many...

First off, I don't consider there to be much difference between Holden and Ford getting a cheque from the government and the average dole receipient. If their existence relies upon government redistribution, there is no difference. Taxation of the workers/manufacturers is another Kenyesian fallacy, as your net tax revenue is going to be less than what you're tipping into the kitty to keep the unsustainable business running.

Jobs are created when a business is profitable. In order to do this, businesses need to be competitive in every aspect of their manufacturing. Otherwise, people will head elsewhere, concious of better deals for a lesser price. The business will then see reduced profits, and they know that they must adjust themselves to match the market. If they don't, someone else will come along motivated by profit and WILL provide what the market is looking for, perhaps buying up the inefficient company along the way.

The key is to let the business fail when they do, so other businesses can step up to do a better job.

As for "cheap" US cars, this is a subject done to death. There are vast differences in many areas between the two countries. I feel the best thing to be said on this subject is that people have been getting damn good deals on large cars for several years now in Aus, and most people don't consider them expensive, just less what they are looking for than they used to.

Large cars in Australia are too expensive for what they provide, and too substand of a build quality compared to the European (and quite frankly, the Japanese) makes. I don't mind buying a Holden or Ford, but they should be cheaper than what they are now, and certainly not more expensive than their BMW or Mercedes counterparts in other markets.

Protectionist measures prevent those businesses from competing, thus an unsustainable business model. In the heyday of automotive manufacturing in Australia, one that was largely protected from overseas competition, the only competition was between Ford, Holden and to a limited extent Chrysler. Protectionist measures kept out superior models to local offerings and thus the consumer was faced with inferior products at exorbiant prices.

As a consumer, I don't feel like getting ripped off for the sake of a few jobs. You may, but I don't. Culture means exactly jack squat to me when it comes to the ability of a company to produce a product, and if the product is substandard or not atleast priced accordingly, or even worse they PRESSURE the government to initiate regulations and taxes on overseas competition to their benefit, I'm infuriated.

With a dollar worth more than the USD, we should be getting much cheaper vehicles. The reluctance of the brands in this country to do so shows that the automotive industry in this country is non-responsive to the market and can't take in stimli effectively.

If we want an automotive industry, we should have one that isn't coming back to the government every 5 years looking for a hand out like a junkie on crack. If taxation is too heavy for them, reduce taxation across the board, otherwise they need to adjust their business practices to maximize their profits or *shock horror* produce a better product to justify a higher price.

[planetdavo]

I'll leave it at that. Everyone is entitled to their own opinion on internet forums, and we (and many others) have given ours on the subject.

[Ghia351]

No, it isn't the HDI that allows people to produce stuff cheaper, it is their relaxed labour laws and the ease of doing business within those developing nations. If we want an automotive industry in Australia that can compete on a world stage, we must match them. The productive capacity of a western worker must rise in order to compete with workers in 2nd and 3rd world nations, otherwise their wages aren't justified and the company isn't providing the best possible price for their customers.

If you go down the road of producing stuff for the sake of producing stuff you're just going to end up with propping up an industry which is just going to end up shipping overseas regardless. At least with my way Holden and Ford have a fighting chance by competing on a world scale. If they fail, so be it.
To think otherwise is a Keynesian fallacy, as you're just wasting otherwise good resources on an ultimately unfruitful enterprise.
Resources that are better off being used in another manner.



First off, I don't consider there to be much difference between Holden and Ford getting a cheque from the government and the average dole receipient. If their existence relies upon government redistribution, there is no difference. Taxation of the workers/manufacturers is another Kenyesian fallacy, as your net tax revenue is going to be less than what you're tipping into the kitty to keep the unsustainable business running.

Jobs are created when a business is profitable. In order to do this, businesses need to be competitive in every aspect of their manufacturing. Otherwise, people will head elsewhere, concious of better deals for a lesser price. The business will then see reduced profits, and they know that they must adjust themselves to match the market. If they don't, someone else will come along motivated by profit and WILL provide what the market is looking for, perhaps buying up the inefficient company along the way.

The key is to let the business fail when they do, so other businesses can step up to do a better job.



Large cars in Australia are too expensive for what they provide, and too substand of a build quality compared to the European (and quite frankly, the Japanese) makes. I don't mind buying a Holden or Ford, but they should be cheaper than what they are now, and certainly not more expensive than their BMW or Mercedes counterparts in other markets.

Protectionist measures prevent those businesses from competing, thus an unsustainable business model. In the heyday of automotive manufacturing in Australia, one that was largely protected from overseas competition, the only competition was between Ford, Holden and to a limited extent Chrysler. Protectionist measures kept out superior models to local offerings and thus the consumer was faced with inferior products at exorbiant prices.

As a consumer, I don't feel like getting ripped off for the sake of a few jobs. You may, but I don't. Culture means exactly jack squat to me when it comes to the ability of a company to produce a product, and if the product is substandard or not atleast priced accordingly, or even worse they PRESSURE the government to initiate regulations and taxes on overseas competition to their benefit, I'm infuriated.

With a dollar worth more than the USD, we should be getting much cheaper vehicles. The reluctance of the brands in this country to do so shows that the automotive industry in this country is non-responsive to the market and can't take in stimli effectively.

If we want an automotive industry, we should have one that isn't coming back to the government every 5 years looking for a hand out like a junkie on crack. If taxation is too heavy for them, reduce taxation across the board, otherwise they need to adjust their business practices to maximize their profits or *shock horror* produce a better product to justify a higher price.

So we get a FTA with Thailand and just before it's implimentation the Thai's slap on new "levies" killing Ford Terry exports overnight and yet the "direct japanese competitive model" is classified differently and goes unhindered into Thailand. Labour is about 10% the cost component of building a car, minor compared to the other cost components. I wonder how many here saying, yeah let manufacturing go are employed in any manufacturing industry. Every car building nation subsidises it's manufacturers in some form or other and the Australian governments assistance doesn't even rank in the top 5 amongst other countries.

Per-Country Per-Capita government assistance to the car industry:
Australia $17.80
Canada $96.39,
France $147.38,
Germany $90.37,
Sweden $334
UK $27
US $264.

The mining industry employs a fraction of the people in the manufacturing industry and yet receives several billion dollars in differing forms of assistance and subsidies. Sure mining brings in big income however why should it get any assistance or subsidies at all based on the profits being generated or why can't the same ratio of assistance be given to other sectors?

[serial_fool]

That's all well and good, but it doesn't explain the prices we pay for cars here. Domestic cars are over priced and so are any cars that try to compete with local Ford and Holden offerings.

I don't believe in FTA, because as your example shows, they aren't really for free trade. If two countries want to remove tarrif restrictions between each other economically, they should, but it must be a negotiated agreement where both parties reduce at the same time and there is no funny business. Kind of like what we have with New Zealand.

And again, I agree, subsidies are bad in general. If a sector can't compete, then we need to reduce overall tax rates in order to make them competitive. I have no doubt that the resource industry could be profitable without government assistance.

[planetdavo]

That's all well and good, but it doesn't explain the prices we pay for cars here. Domestic cars are over priced and so are any cars that try to compete with local Ford and Holden offerings.

Local cars have a natural disadvantage in that we tend to have minuscule volumes compared to vastly exported international offerings, meaning we need more return per car to fund future models.
I'm struggling to see what your point really is about pricing. In the above quote you are saying that ALL cars are overpriced. That's a whole other story. In comparison to many other cars available in Australia, our locals are excellent value. What cars cost overseas is of little or no importance, it's what all cars cost in Australia that matters. Large Aussie cars are similar in price to imported mid size models. You gain in size and lose in some other areas. That is a decision for the consumer to make as to what is most important, not us.
The fallout from the collapse of new car manufacturing would be extensive, perhaps far larger than you realise. There is a vast network of related companies out there that exist purely because the new car manufacturers require parts to build a car. Lose the manufacturers and you lose all them too...

[serial_fool]

Local cars have a natural disadvantage in that we tend to have minuscule volumes compared to vastly exported international offerings, meaning we need more return per car to fund future models.

That may be so for the domestic industry, but it still doesn't explain why overseas models are so much compared to our local offerings. It may have been justifiable when the Australian dollar was 2/3rds of what the American dollar, but not now. Prices should be going down as the returns are much greater due to the exchange rate for the foreign car makers.

And you've basically admitted there that GMH was producing Pontiac G8s either for a loss, or at a substanially reduced price. If the G8 can be priced the way it was, why can't the local Commodore be?

The reason of course is that the Commodore and Falcon is a protected species in the Australian market and no other manufactuer's models in the same class are allowed to compete with it price wise (excluding the FWD locally built variants, but that really isn't competition in the same class), thus they are allowed to be so expensive because the market doesn't know any better. Commodore couldn't do this in the US, because better models were available at a more affordable price. Or inferior models at least at a more affordable price in case of the Mustang.

I'm struggling to see what your point really is about pricing. In the above quote you are saying that ALL cars are overpriced. That's a whole other story. In comparison to many other cars available in Australia, our locals are excellent value.

Well I shouldn't say that ALL cars are overpriced, but the ones that are in the same class as the local offerings certainly are, and so are the local offerings compared to the exact same vehicle in other markets like the US and Canada. This is despite the fact that our dollar is higher.

I'm not a fool either. If something is better priced and better equiped elsewhere in the world, I want to be able to get it for a reasonable price. Same with computers, same with TVs, same with cars.

What cars cost overseas is of little or no importance, it's what all cars cost in Australia that matters. Large Aussie cars are similar in price to imported mid size models. You gain in size and lose in some other areas. That is a decision for the consumer to make as to what is most important, not us.

What cars cost overseas is of GRAVE importance. If a car is made overseas in Germany/Japan, and then sold in the US, Canada and Britain for a significantly reduced sum compared to our own equivilent of the model, something is wrong with our system. We're paying more for less.

And those mid size models are cheaper again outside our market.

Ford Taurus, which would be in the same class as our Ford Mondeo.

http://www.ford.com/cars/taurus/pricing/
>$26,350

http://www.caradvice.com.au/121983/2...ices-revealed/
>$30,990

I could do this with pretty much anything to prove that we're getting ripped off compared to our Northern Hemisphere cousins.

The fallout from the collapse of new car manufacturing would be extensive, perhaps far larger than you realise. There is a vast network of related companies out there that exist purely because the new car manufacturers require parts to build a car. Lose the manufacturers and you lose all them too...

I didn't say I'm advocating for local manufacturing to die, but if it isn't competitive enough to produce a model that will rival other brands, or at least price it appropriately, it should be left to die. I'm not going to waste my money on a substandard product for a higher price.

The point of a business is not to create unsustainable jobs as the government might tell you, it is to make a profit. If a business can't make a profit, it needs to downsize to reflect the market reality and change its business model. Or maybe even downsize the car for once.

[Martin_D]

Local cars have a natural disadvantage in that we tend to have minuscule volumes compared to vastly exported international offerings, meaning we need more return per car to fund future models. ...

Local cars are expensive because -
They are built by highly paid factory workers
Who get four weeks off a year with 17% more pay
Have the right to go off and have kids for 9 months paid leave (or whatever it is)
Have pro-rate after 7 years
Have Super paid for them
Cannot be dismissed without a massive settlement in most cases
and - have minimal productivity checking

Compare this with the Asian factory worker where pay rates are slim and productivity focus high and the reason why our Holdens and Fords cost so much becomes quite clear. The Aussie worker is on a great wicket thats for sure - nothing wrong with it at all - just dont expect any of our products to be competitive - even locally let alone internationally. You can have one....or the other. Not both.

[Ghia351]

That's all well and good, but it doesn't explain the prices we pay for cars here. Domestic cars are over priced and so are any cars that try to compete with local Ford and Holden offerings.

I don't believe in FTA, because as your example shows, they aren't really for free trade. If two countries want to remove tarrif restrictions between each other economically, they should, but it must be a negotiated agreement where both parties reduce at the same time and there is no funny business. Kind of like what we have with New Zealand.

And again, I agree, subsidies are bad in general. If a sector can't compete, then we need to reduce overall tax rates in order to make them competitive. I have no doubt that the resource industry could be profitable without government assistance.

But that's not just for cars. Look at Apple's US prices and then locally, or Microsoft, Panasonic, etc....I don't think many things have dropped in price at all with the increase in $Aust apart from tv's. My last new TV was a 32" crt Loewe in 2005 for $2500, cannot believe what monster I can buy for the same money today, lol

[planetdavo]

That may be so for the domestic industry, but it still doesn't explain why overseas models are so much compared to our local offerings. It may have been justifiable when the Australian dollar was 2/3rds of what the American dollar, but not now. Prices should be going down as the returns are much greater due to the exchange rate for the foreign car makers.

And you've basically admitted there that GMH was producing Pontiac G8s either for a loss, or at a substanially reduced price. If the G8 can be priced the way it was, why can't the local Commodore be?

The reason of course is that the Commodore and Falcon is a protected species in the Australian market and no other manufactuer's models in the same class are allowed to compete with it price wise (excluding the FWD locally built variants, but that really isn't competition in the same class), thus they are allowed to be so expensive because the market doesn't know any better. Commodore couldn't do this in the US, because better models were available at a more affordable price. Or inferior models at least at a more affordable price in case of the Mustang.



Well I shouldn't say that ALL cars are overpriced, but the ones that are in the same class as the local offerings certainly are, and so are the local offerings compared to the exact same vehicle in other markets like the US and Canada. This is despite the fact that our dollar is higher.

not a fool either. If something is better priced and better equiped elsewhere in the world, I want to be able to get it for a reasonable price. Same with computers, same with TVs, same with cars.



What cars cost overseas is of GRAVE importance. If a car is made overseas in Germany/Japan, and then sold in the US, Canada and Britain for a significantly reduced sum compared to our own equivilent of the model, something is wrong with our system. We're paying more for less.

And those mid size models are cheaper again outside our market.

You keep getting hung up on the price of cars overseas vs here.
I hate to be the bearer of bad news, but almost EVERYTHING in life is priced at a level the standard of living of that particular country will allow, once you factor in external influences like taxes, duties and so forth.
The US has cheaper cars, but they also have lower wages, cheaper houses, cheaper petrol and many other things in life.
Back in Aus, it can cost $3000 per month to rent a modest house in a mining town, whereas the same place in a non mining town could be $1000 month. It costs 3 times the amount to rent because the people working the mines earn 3 times the pay.
Do you see the link yet??? You can't buy new cars off the internet from America, so, as I said, the price they are over there is of little or no importance. You would perhaps be wise to starting thinking of the price of items as a percentage of weekly pay per country, rather than a dollar figure. It might might make the whole equation easier to understand...

[gmeup]

Every country in the world supports their car industries, I can tell you for a fact US, Asia and Europe governments pump a ton more money into their own car companys than what Aus does. We have done excellent for the amount of funding we get. And people who say commodore and falcon are propped up by all the fleet purchases? well i got news for you. Every country in the world buys their own cars for there government and fleet purchases why wouldnt you its your nations product.

[VYBerlinaV8]

The Aussie worker is on a great wicket thats for sure - nothing wrong with it at all - just dont expect any of our products to be competitive - even locally let alone internationally. You can have one....or the other. Not both.

And this is exactly the point.

[planetdavo]

Local cars are expensive because -
They are built by highly paid factory workers
Who get four weeks off a year with 17% more pay
Have the right to go off and have kids for 9 months paid leave (or whatever it is)
Have pro-rate after 7 years
Have Super paid for them
Cannot be dismissed without a massive settlement in most cases
and - have minimal productivity checking

Compare this with the Asian factory worker where pay rates are slim and productivity focus high and the reason why our Holdens and Fords cost so much becomes quite clear. The Aussie worker is on a great wicket thats for sure - nothing wrong with it at all - just dont expect any of our products to be competitive - even locally let alone internationally. You can have one....or the other. Not both.

You are correct in that the above is PART of the answer. Labour is part of the cost of producing a vehicle, but not all of it.
Anyone familiar with the term "economies of scale" will already know that an overseas manufacturer producing 500,000 of model X for the whole planet per year will pay substantially less (per unit) for what they require off a supplier than a local manufacturer that requires "only" 75,000 or so of said part per year.

[Martin_D]

You are correct in that the above is PART of the answer. Labour is part of the cost of producing a vehicle, but not all of it.
Anyone familiar with the term "economies of scale" will already know that an overseas manufacturer producing 500,000 of model X for the whole planet per year will pay substantially less (per unit) for what they require off a supplier than a local manufacturer that requires "only" 75,000 or so of said part per year.

True Davo, but this doesnt explain how Holden were selling the VE/G8 for around $25K in the USD when the dollar was near parity....