Australia’s Manufacturing Crisis
On May 23, Ford Motor Company announced it was closing its manufacturing plants in Australia. Local manufacture ceases in October 2016. This announcement does not end the availability of Ford vehicles in Australia. But it is an admission that manufacturing costs that were twice as high as Europe, four times as high as Asia, were no longer tolerable. And this, from a company that has received millions of dollars in aid from the federal government.
A month later, General Motors Holden (GMH) upped the ante on Australian auto manufacturing be declaring its costs had to come down. GMH, the Australian “version” of General Motors, also has received millions in aid from the federal government.
Now here’s what so interesting. That is spite of the federal aid, auto manufacturing in Australia is uncompetitive vis-a-vis the rest of the world. There are several reasons for this. One is the population size of the country, just passed the 23 million mark. Another reason is the high cost of labor, thanks to union power and tariff protection.
It just goes to show that government aid cannot, in the long run, overcome market conditions. For decades, Australian workers were “guaranteed” a higher wage level by making it difficult for cheaper foreign goods to be imported and sold. But the barriers did not remain. Eventually, market forces won and slowly Australian manufacturing is in more than a spot of trouble. It is having a fundamental shakeout.
The manufacturing companies that are surviving are those with a view to niche markets, making use of high-tech. There are Australian manufacturers who are not closing their doors, but rather expanding their skills in the world-wide marketplace. Medical equipment is one area where Australian manufacturers are contributing with outstanding success. But the numbers are few.
Australia is a physical island – an island continent. But when it has tried to manage the economy on that basis, the tariff barriers could not withstand the economic benefit Australians would have from getting access to cheaper economic good.
Hopefully, with the demise of auto manufacturing in the country, someone in government might be brave enough to suggest that automobile tariffs can now be removed. And then the cost of motor vehicles could come down, providing one example of an improvement in the cost of living for most Australians.
But unfortunately, there are still too many people who argue that a few should get a benefit at the expense of the many.
Ian Hodge is an accomplished musician and music teacher, an executive manager and a management consultant to business owners.
Dr. Hodge began his working career as a professional musician. His interest in Christian economic theory, however, led to a move into the investment industry, where he made his way to the ranks of executive management. His first position as a CEO outside of his own company was a turnaround situation, and he found this was “his” place in the business world. For the past 16 years has been a business consultant to help turn around struggling businesses. He has clients in USA, Australia, New Zealand, and Canada.
He actively uses his consulting skills to help train church pastors, elders and deacons in leadership and church growth practices.
As a musician, he worked with several singers around Australia and the South Pacific as their accompanist and music director.
A current project is the development of SonCross Academy, an online school that starts with the Bible, providing lessons in music theory and piano, economics, business, history, philosophy and theology for ages 8+. www.soncrossacademy.org.
Ian Hodge received his Ph.D. degree from Whitefield Seminary in “Christian Intellectual Thought – Economics”. He has written over 500 articles on topics such as business management, economics, education, law, finance, health, philosophy, politics, theology, and music as he explores the application of a biblical world view. He runs his own blog at www.biblicallandmarks.com.
He is the author of:
· Why Would Anyone In Their Right Mind Believe the Bible? An introduction to the Christian Faith.
· Baptized Inflation: A Critique of “Christian” Keynesianism.
· Is This The End of Religious Liberty? The Declaration on the Elimination of All Forms of Discrimination and Intolerance Based on Religion or Belief.
· Making Sense of Your Dollars: A Biblical View of Wealth.
· How To Be Diabetes Free . . . For Life. An analysis of the biology of diabetes, and how this disease can be prevented and even halted.
· Ian Hodge’s Read, Write & Play Music, a self-teaching program that instructs young students on how to write (compose) music.
· Powerhouse Piano, online video and live lessons in classical piano.
· Publisher, editor, William the Baptist. A classic in Christian literature, reissued with an introduction by Dr. Hodge.
In his spare time, Ian can be found actively debating atheists on his city streets and elsewhere (anywhere) whenever the opportunity arises.