Did Thailand kill the Aussie Car Industry?

Very soon, all car manufacturing in Australia will stop and a century-old tradition of manufacturing will be consigned to the history books. Australia was to a larger extent building cars slightly unique from other car markets – cars built for the long, hot dusty roads of the outback. The industry and many in the trade unions in the country will be taking a long hard look at what went wrong, but perhaps the main problem is the world’s headlong dash into globalisation.

Ford was the first to go after it shut its Broadmeadows and Geelong factories in October last year, after 91 years of churning out cars with the familiar blue badge on the front. In total, the Big Blue put together some six million vehicles for the Aussie market. GM’s Holden – who began its story in 1936, first as an assembler of parts sent from the UK and USA, but in 1948 started manufacturing local models in Port Elizabeth, just outside of Melbourne – churned out seven million in total. At one time, the Holden Commodore was selling 100,000 units per year but by October 2017, this will be no more when its Adelaide plant closes and Holdens start to supply rebadged Opel’s.

Toyota is also closing and whilst you may not think that this could ever be an Aussie brand, it shipped more cars since 1963 than Holden did in its entire history. The Australian manufacturing plant was the first Toyota factory outside of Japan, which is probably why it fought so hard to keep it open for so long, and even though it became the biggest ever exporter of cars, even Toyota could not get costs in Australia down to the level where its cars where competitively priced.

There have been generations of car workers in Australia and of late, the industry has employed 50,000 workers per year (including the smaller suppliers, that is) but for a number of years it has been the taxpayers who have been footing the bill, with a hefty contribution of USD5 billion dollars over the past ten years for industrial assistance.

With so much assistance, it seems that they should have been able to keep the lights on and the production lines rolling, but with zero import tariffs from most other countries over the past decade, the market became flooded with cheaper foreign alternatives which were often of higher specs; the writing was on the wall and the end was inevitable.

A decade ago, the Holden Commodore was the king of the roost, with sales of 100,000 per year. But for the past five years, compact cars such as the Mazda 3 and Toyota Corolla have topped the charts, while Holden managed sales of less than 40,000 units; there is no car plant in the world that can survive on such low volumes, unless of course your name is Ferrari.

Australia has a total of 64 automotive brands on sale, which is higher than the USA (38) or UK (42); only China beats them. So, the only way to survive is to export but therein lies the next problem – Australia is surrounded by developing countries where wages are lower and factory regulations are lax.

In Thailand, one of the powerhouses of Asian auto-manufacturing, there have been 2 million cars exported to Australia since the relaxation of trade tariffs whilst a paltry 100 have gone in the opposite direction. In the land of smiles (Thailand), the average car worker makes about A$12,500 compared to about A$69,000 in Australia. Politicians and unionists are crying foul as Thailand did keep a hidden ingenious tariff imposed by way of higher registration fees for cars with larger engines.

Spare a thought, though, for the Police forces down under, who are scrambling to find a replacement for the Ford Falcons and Holden Commodores; so the police in Queensland are buying Hyundai’s, news which must have delighted the local criminal fraternity.

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