Another inquiry into the car industry is about to begin and yet again the dominant issue, endemic labour problems, will be ignored. There's a fool's paradise surrounding car industry issues that predetermines further collapse.
Just this month Mitsubishi finally announced its long-expected closure. Another parts supplier closed its doors, continuing the steady closure of parts manufactures over the past five years. More is to come.
Only one of the big three car makers has a solid commitment to operating in Australia. Of the other two, at least one will predictably exit Australia within the foreseeable future. Of the 300 or so part suppliers, most have set up Asian based production facilities to directly compete with their Australian manufacturing plants. But internationally car manufacturing capacity exceeds demand. Many overseas parent companies of Australian manufacturers suffer from life threatening financial crises. Changing consumer demands move faster than domestic manufacturers' capacity to respond. Cheap labour countries build new car plants at astonishing rates, increasing competitive pressure. Continuing lowering of tariff protections exposes the industry to global competition. All of these issues will again be discussed in the new "Bracks" review.
But will the review, like many before, restate these known problems as the reasons for the industry's continuing collapse and create yet again a political marketing document to justify the throwing of more government money at the industry? Probably!
What no one wants to mention openly are the labour issues crippling the industry. Yet privately all concede it's what dominatesbusiness decision-making.
The domestic car industry suffers from permanent and ageing workforces. People in their 50s with 20 and 30 years' employment want one thing, a retirement payout. With this rational motivation, they resist the cultural and technological change that companies need to boost productivity. Companies are willing to invest and innovate but the investments fail because industrial agreements and practices don't change rapidly to accommodate the innovations.
The car unions know the problem but any union official that sought to address the issue would quickly feel membership wrath. Instead, the unions focus industrial negotiations on increasing the cost of redundancies. This delays closures but cements companies' inability to restructure, so closure's a certainty.
There are exceptions where companies and workforces transform situations and manage to stay internationally competitive. But the norm is as described above.
To speak of this and other labour problems is to be accused of "rightwing" ranting. Consequently, car industry managers stay quiet while establishing new overseas plants. Policy bureaucrats know the truth but career demands require silence. Politicians of all shades stay focused on the buzz word of innovation. The pretence ensures industry decline.
This need not be the case as the industry has a potential huge future in volume "niche" products. China is about to kick off as a consumer society. Consider the concept of an Australian car parts industry exporting to China!
Asian car plants frequently experience massively high staff turnover, creating quality control problems. The Chinese cheap laboursource is drying up and wages are escalating. Properly costed, there are frequently only marginal differences between landed imported car components and domestically produced product. There are lots of starry-eyed optimisms related to the benefits of overseas manufacturing that frequently fail the test of reality.
To realise the domestic industry's potential, all business activities must fire at 100 per cent capacity. Labour is the big drag but it can be fixed.
The mining industry learnt the lesson 20 years ago and built the current mining boom off the springboard of quality workforcemanagement. Recently the construction industry has been staggered by the benefits of their own dose of labour renewal.
Australian car manufacturing has the same potential to realise huge, sustaining and life-saving productivity gains.
But it will only occur if fixing workforce issues is seen as nonideological, non-party political and simply, commonsense. There's the real challenge!
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