The trouble with our car industry

In vehicle manufacturing we are an almost perfect fit with China and India; we can design and build well-styled, well-made vehicles. They can't, not yet anyway. They have no shortage of investment capital, low labour costs and burgeoning domestic markets. They make good cheap cars, we make good, large rear-wheel drive ones. So the potential is there.

But as we explore a free trade agreement with China, these thoughts are far from our minds. Yes, vehicle exports to China rate a mention, but political structures and our picture of ourselves as a primary producer mean that we see our main task as negotiating access to Asian markets for primary produce.

Better access for our farmers should be a high priority. But we must also build our trade diplomacy around a proposition that countries with different economic structures to our own grasped long ago: that trade within industries is becoming progressively more important than trade between them with each passing year.

When you're hanging on, white knuckled, trying to survive it is not easy to think of the bigger picture - how to build towards a prosperous place in the regional division of automotive labour. Then again, industry executives fighting their way through the hand to mouth existence they are now leading know that we have been here on and off since the 1970s.

They might reflect that while most auto industries in developed countries are going through hard times, Australia's has never cracked $1 billion in profits. It made just over $100 million in 2004. Meanwhile in Canada their profits are down to about $5 billion after a string of years making $10 billion in the late '90s. But they're expected to recover.