The central question of Nevil Shute's “On The Beach:" how does the human mind react to certain death? The Cliff Notes answer: it can't. As clouds of lethal radiation descend on the novel's protagonists, they cannot help but continue their lives as normal, learning shorthand and planting gardens they will never see bloom. Alas, life imitates art. While the Australian car industry swirls (counter-clockwise) down the toilet of unprofitability, a new report confirms that its government patrons cannot commit to either rehabilitating or killing off the once-proud industry. Their predicament offers a number of valuable lessons about the global car industry.
Like its unique marsupial fauna, the Australian car industry has evolved in isolation, creating atavistic vehicles which have long been sheltered from the ravages of mainstream evolution by geographic isolation and protective tariffs. While most global markets have evolved towards small, efficient, front wheel-drive cars based on global platforms, herds of large, rear wheel-drive sedans with V8 power built only for Australia still roam the outback. But as the earth flattens, even the lost continent is feeling the effects of competition. Domestically produced cars have seen their market share drop from 30 percent in 2002 to under 19 percent. The entire sector has shed a quarter of its workforce since 2005. These deeply unsustainable trends point to an obvious and ancient choice: adapt or die.
But for Australia's leaders, this choice is too stark. A recently-released government report claims that Australia can not afford to even try to compete with its Asian neighbors in the small car-oriented, developing world markets (where global automakers are finding profits). "In essence, we need to look at the niche— what is Australia good at?" author Steve Bracks wonders. One needn't strain overly to find snarky answer to Bracks mission-central rhetorical question; the statistics in his own report scream “FAILURE” as loud as they can.
The report outlines a course of action which should seem familiar to Detroit watchers everywhere: keep building the same unwanted cars– just make them a little greener. A half-billion Aussie dollar green-car initiative accompanies the report, in hopes that the government can simply throw money at efficient drivetrains for its large cars. This effort is far too little, far too late in a world where the hybrid market is already reaching maturity based on decades-old investments in green technology. The U.S. spent three times that amount on the Partnership for a New Generation of Vehicles between 1993 and 2001– with only concepts to show for the money.
Even if Australia could build cars that the world wants, the strengthening Australian dollar is erasing any competitive advantage the industry may have had in the export market. Meanwhile, import tariffs, which currently stand at ten percent, are also being eaten away by the rising currency. With tariffs scheduled to drop to five percent in 2010, the government has every opportunity to cut the industry free now, and see how it adapts on its own. But indecision rules the day, as the Labour government considers freezing import tariffs at their current, ineffectual rate.
The irony of all this is that Australia is perfectly poised to simply shed its auto industry. With unemployment statistics holding steady at a remarkable four percent, Australia's economy actually suffers from the happy malady of overemployment. In layman's terms, this means that Australia's 60k auto industry employees could find work elsewhere, in one of the country's many profitable industries. In an era of shockingly high commodity prices, the rich mineral resources of the land of Oz offer far more viable opportunities for Australia's economy than its saurian automakers. But even this startling fact isn't enough to inspire anything resembling bold leadership Down Under.
Australia's situation offers an abundance of lessons for American observers. The first is that the quirks of individual markets are subordinate to the efficiencies of global platforms. Ford's recent announcement that future rear wheel-drive sedan platforms will be developed stateside confirms this trend, and tolls the death knell of Australia as a unique vehicle developer. A corollary lesson to this may be that the era of the large, powerful sedan is nearing its close, coming to an end in the land that gave it shelter.
The ultimate moral to the troubled narrative of Australian car production: if you aren't competitive, you will die. In the absence of real leadership from either the industry (choosing to adapt) or the government (forcing their hand by killing off tariffs), Australia's car industry will continue to wither on the vine. Half measures and failures of nerve do not deter the wheels of change. It's a fact that America's troubled industry players would do well to note.
[NB: This is the first time we (or anyone else I imagine) have ever run a father THEN son series of articles. Congrats to the Niedermeyer DNA.]
Excellent read. Thanks for the great article.
It’s too bad that this is happening to Australia’s car market. I personally love their cars. Something about big RWD torque-monsters just appeals to me for some reason.
However, an undeniable fact of life is (as was noted in the article): adapt or die.
Hopefully they will be able to reach a resolution that won’t create too much fallout.
Kudos on a nice article, Edward.
Mitsubishi of Australia just shut-down their operations last week, which you probably already know.
Toyota builds cars in Oz, as well. As do
GM and Dorf – I mean, Ford. For now.
The old Mitsu plant was the Chrysler operations, which churned out Chrysler Valiants “back in the day”.
The company down under which builds Toyotas used to assemble AMCs!
There will always be niche markets. The high value engineering has value- however, bolting cars together is a commodity business which will go to the cheapest place. Now that capital can move freely, the factories will too. You don’t need to be in an high-cost country to build a billion dollar factory now. You can build fine cars in Mexico or Eastern Europe, or Thailand and still be close to major markets by rail (or ship, in the case of Australia). In a few years, even the parts for these factories will move further to India, China and Vietnam.
Somehow, The Road Warrior with a Toyota Corolla instead of a supercharged Ford V8 does not quite sound the same…..
AKM,
I’m ROFL with that picture in my head.
OTOH, that car had a fake paper mache supercharger and blew up 3/4 of the way through the movie after being passed by a four-wheeled pirate boat on nitrous.
I saw a Mustang GT get it’s a$$ handed to it by a daily driven turbo Civic the other day. You would’ve never guessed it by the way that Mustang was blowing sound out it’s pipes.
The Aussies are a proud people and won’t take lightly to losing their auto industry. They buy imported cars though, but like the fact that local iron roams the outback.
In the end the market will decide, it always does.
Sorry to be a pedant, but the swirling motion need not be counter-clockwise, it could be in either direction. I don’t know why the venturi effect sometimes causes water to swirl one direction or the other, but the old saw about it going clockwise north of the equator, and the other way south of the equator, just isn’t true.
The sad part of this “The World is Flat” is the homogenization of goods in the world. As mentioned, in the isolation of Australia, they were able to build something different and unique. Now they are going to be driving the same Corollas and BMWs as the rest of the planet.
But in the long run, this is bad. It is from these niches where the new ideas from come. For example, try to name how many safety devices the auto companies developed? Almost none. The racers came up with them. A racer came up with the rear view mirror. Racers came up with seat belts.
Dynamic88:
Thanks for the heads-up. Physics are not my forte.
Thanks for the heads-up. Physics are not my forte.
Mine either. I may have been wrong saying it’s the venturi effect. Maybe one of the engineers will explain it for both of us.
# GS650G :
April 4th, 2008 at 3:56 pm
The Aussies are a proud people and won’t take lightly to losing their auto industry. They buy imported cars though, but like the fact that local iron roams the outback.
In the end the market will decide, it always does.
There’s a difference between pride and “lets keep bashing our heads against the wall”. Well they’re going to learn it the hard way. Just like the Big 2.51.
Dynamic 88, is the term you are seaching for, “coriolus effect”?
Andy D :
Dynamic 88, is the term you are seaching for, “coriolus effect”?
Perhaps you mean the Coriolanus effect?
Excellent editorial. Does anyone recommend that movie? I’ve never heard of it.
RayH:
Does anyone recommend that movie? I’ve never heard of it.
Not if you’re prone to depression. Or prone to being prone to depression. Or don’t like really dark, depressing movies.
Me, I loved it.
I had to wiki it… big name cast, curiousity. Apparently, there’s a scene which features cool cars:
The racing sequences were filmed at Riverside Raceway in California. These scenes include an impressive array of late 1950s sports cars, including examples of the Jaguar XK150 and Jaguar D-type, Porsche 356, Mercedes-Benz 300 SL “Gullwing”, AC Ace, and Chevrolet Corvette..
That closed the deal of me spending $3 bucks to rent it.
Not a good movie to watch alone on Friday night with 750mL of Southern Comfort?
I’ll save it for date night, then.
Tonight I’ll learn to master tags with 250mL or so.
Sadly, it looks like there will be more additions to this list on Wikipedia: Extinct Australian Megafauna, featuring the Demon Duck of Doom.
RayH: “Does anyone recommend that movie? I’ve never heard of it.”
It came out in 1959, so may have been before your time. Before Hollywood fell in love with global warming, nuclear holocausts satisfied its taste for apocalyptic themes. (Remember “Dr. Strangelove”?) The story is about Australians waiting to die from nuclear fallout carried by winds from the northern hemisphere which was destroyed in an all out exchange of nuclear weapons. Interestingly in these times of concern about “rogue states” possessing atomic weapons, the book had the war start by an attack on the U.S. by a middle eastern nation. (Egypt, not Iran.)
[NB: This is the first time we (or anyone else I imagine) have ever run a father THEN son series of articles. Congrats to the Niedermeyer DNA.]
This could just as easily be a result of environment rather than DNA–of nurture rather than nature. try to parse that one out!
yankinwaoz
The sad part of this “The World is Flat” is the homogenization of goods in the world. As mentioned, in the isolation of Australia, they were able to build something different and unique. Now they are going to be driving the same Corollas and BMWs as the rest of the planet.
But in the long run, this is bad. It is from these niches where the new ideas from come. For example, try to name how many safety devices the auto companies developed? Almost none. The racers came up with them. A racer came up with the rear view mirror. Racers came up with seat belts.
I so agree about “The World is Flat.” And I would note that the French invented the automobile. In 1769.
Dynamic 88, is the term you are seaching for, “coriolus effect”?
Yeah, I think that’s it. I probably shouldn’t have brought it up, but I’m one of those people who doesn’t take much on faith. I’ve flushed in both hemispheres, so I know from personal observation, it might go either way in either hemisphere. I live in Michigan and my toilet usually flushes CCW.
RF, We’re both wrong. Coriolanus was the title character in a Shakespeare play. The proper spelling is coriolis
they did a remake of the movie not too long ago but i recomend the book over it nev shute is one of my favorites
mitsubishi 380’s were an ok car and by the end they were giving away so many extras they were good value too people just didnt buy them. holden is just staying above water because of its export programme but ford, which doesnt make their cars rhd compatible, is going to shit.
holden only makes one car all the others are forien and ford only makes two so its not like the world is going to be overly effected by any demise, we will just have to drive chargers or 5’s