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End of the road for Australian manufacturing sector

By Rose Filipovic - posted Tuesday, 24 December 2013

Petrol-heads and car enthusiasts died a little inside last week when car manufacturer Holden announced that it would cease all operations in 2017 – the most recent casualty in a long line of manufacturers to shut up shop in Australia and move offshore.

While this decision by Holden's parent company, General Motors, means job losses into the thousands and heralds the end of an era for a cultural icon, it also raises wider questions about the place of the manufacturing sector in the Australian economy.

First, however, I must make a disclaimer. I am one of those heartbroken Holden fans.


My first ever car trip, as a baby on the way home from hospital, was in my father's trusty old Kingswood. And some of my fondest childhood memories are of day trips and road trips in the family's V8 Statesman. In fact, I have repeatedly vetoed my father's efforts to sell it, as it is the car in which I plan to arrive at my wedding day (an event that is still some years away).

But, as much as it pains me to admit it, there is no future for Holden in Australia.

Even if the federal government were to perform a miraculous backflip and provide industry assistance, this reprieve would only prolong recent miseries and delay the inevitable.

The road that Holden has travelled, especially in the past few years,has been littered with potholes and hazards. Rising labour costs, low import tariffs and the high Australian dollar have had two acutely damaging effects.

Firstly, they have made Holden's exports, relative to those of other car manufacturers, exceedingly expensive, and therefore, uncompetitive.

Secondly, they have resulted in an influx of comparatively cheaper, but equally reliable cars from Asia, which have proved to be a more attractive option. In short, Australians simply aren't buying Holdens anymore.


These falling export margins and decreased domestic demand have critically undermined Holden's financial position. While modest profits of $112.4 million and $89.7 million were reported for 2010 and 2011 respectively, for every other year since 2005, Holden has traded at a loss. The latest figures available, from 2012, show an abysmal turnover of -$152.8 million. This is despite the fact that the Australian government has awarded a total of $2.2 billion of taxpayer money in industry assistance over the past 12 years.

Unfortunately, this sorry saga is not an unfamiliar narrative. All Australian manufacturers are facing the same challenges and will soon, if they haven't already, meet a similar fate.

In the food and fruit manufacturing industries, Heinz and Rosella have either relocated operations elsewhere or closed down completely in recent years. SPC Ardmona, the producer of the iconic Goulburn Valley and SPC preserved fruit products, appears to be going the same way. It has recently launched anti-dumping and safeguards proceedings in a last-ditch attempt to keep operating. Both of these proceedings aim to reduce the impact of the influx of cheaper imported products that is currently injuring SPC Ardmona by providing legal grounds for the implementation of higher tariffs. Whilst this would provide a temporary lifeline, it is unlikely that they will guarantee the manufacturer's future viability.

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About the Author

Rose Filipovic is a student at James Cook University’s Faculty of Arts & Social Sciences and was a Global Voices youth delegate to the recent WTO Ministerial Conference.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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