Magazine of Socialist Action in Australia

Ford closure: The end of car manufacturing in Australia?

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In May, Ford Australia announced it would close its car factories as of October 2016, meaning the axing of 1200 jobs. Whilst it will retain its dealerships, Ford will no longer manufacture cars in Australia.

The Ford closure will no doubt have knock-on effects across the manufacturing industry, with many component suppliers expected to go bust as a result. The future of the only remaining car manufacturers – Holden and Toyota – has also been brought into question.

Ford Australia president and CEO Bob Graziano was clear about the company’s motivation for moving production offshore, stating “Our costs are double that of Europe and nearly four times Ford in Asia.”

The closure is occurring despite the company pocketing around $2.5 billion in government subsidies over the last ten years. Ford has also made it clear that it will keep the $34 million in federal government handouts it was promised last year if it stayed in Australia until 2016.

The future of manufacturing

The closure of Ford, a manufacturer in Australia since 1908, points to both the dire situation facing manufacturing workers and the complete farce that is the government’s policy regarding the industry. In the last five years at least 134,000 jobs have been lost from manufacturing whilst literally billions of dollars have been handed over in government subsidies.

Upon reclaiming the position of Prime Minister last month, Kevin Rudd proclaimed “I never want to be Prime Minister of a country that doesn’t make things anymore. There’s a big future for Australian manufacturing under this Government.” The dilemma facing Rudd is how, in fact, he will be able to achieve anything of the sort.

The closure of Ford is being touted by some as the beginning of the end of car manufacturing in Australia. Nissan closed its doors in 1992, Mitsubishi in 2008, and now Ford in 2016. Just two car manufacturers will remain.

The largest of Australia’s two remaining car manufacturers, General Motors Holden, has itself been shedding hundreds of jobs. This year alone there have been 400 job losses at Holden in Adelaide and 100 more in Melbourne.

A recent report commissioned by the South Australian Government stated that if Holden were to leave Adelaide, the domino effect would see the loss of up to 16,000 jobs in a ‘worse-case-scenario’.

The dilemma facing whoever comes to power after the federal election is that the manufacturing industry continues to demand tax payer subsides yet refuses to rule out further jobs losses. The motivation of the industry bosses is to bleed as much money out of the Federal and State governments as possible. However, even after receiving billions in taxpayer subsidies, they may still decide it is more profitable for them to shed jobs or more manufacturing elsewhere.

The truth is that while car manufacturers took a hit to their profits after the financial crisis, they have also leveraged the situation to their advantage. Aside from the billions in government subsidies car manufactures have used the threat of job losses and off-shoring to force down wages and conditions in advanced countries across the world.

The global race to the bottom

In the US, newly employed General Motors workers now earn just $15 per hour. Wages, overtime, healthcare and pensions have all been cut in the name of ‘competitiveness’ and ‘productivity’. As a result, labour costs have been reduced by a huge 27%, all at the expense of American workers.

American Ford workers have been coaxed into working longer shifts and working weekends on reduced pay. This allowed Ford to boast pre-tax profits of $2.4 billion in just three months this year, making it one of the most profitable businesses in America.

Car manufacturing workers in Spain have been forced to accept a wage freeze, while in Germany, Belgium and the UK car manufacturing plants are closing and being relocated to cheaper labour markets. Meanwhile, General Motors have just opened a new manufacturing plant in Indonesia, employing people on just $7.50 per hour.

This ‘global race to the bottom’ is never ending. When production is based on competition for ever-increasing profits, manufacturers will always be on the search for new, cheaper labour markets and looking for ways to drive down wages and conditions in the name of productivity.

Response from unions

The response to the Ford closure from the main trade union covering car workers in Australia, the Australian Manufacturing Workers Union (AMWU), has been to thank Julia Gillard for the $1 billion jobs scheme she passed through parliament before being ousted.

However, schemes of this nature rarely benefit those most affected by manufacturing job losses and do nothing to address the deeper issues. A similar scheme was put in place following the closure of Mitsubishi in Adelaide in 2008. Almost 1,000 workers lost their jobs and $50 million was promised by the Labor government for retraining and economic development of the region.

Of those who lost their jobs, two-thirds remained unemployed two years on, and of those who managed to find new jobs, the majority were on lower incomes in insecure casual jobs.

The scheme employed after 800 workers were made redundant by BlueScope steel in 2011 has seen similar results. In this case the Labor government promised $30 million to revitalize the Illawarra region. Of the businesses that received grants of up to $1 million through the scheme, only two have employed any ex-BlueScope workers.

Another scheme of this nature will only see more money handed over to the manufacturing bosses while more skilled workers lay idle on the dole.

In regards to the future of manufacturing in Australia the unions have no real solutions. In fact, after meeting with the Prime Minister, the Industry Minister and executives from Ford, Holden and Toyota, Dave Oliver, head of the Australian Council of Trade Unions (ACTU) stated that they were “All on the same page”.

It is clear that this page offers only two alternatives: a further destruction of wages and conditions, or, mass unemployment. Shamefully, the unions accept this.

The leaderships of the ACTU and the AMWU are mistakenly focused on helping the car manufacturers increase their profits at the expense of their own members. This is because they accept the logic of capitalism, just like their colleagues in the Labor government.

Their economic policies of protectionism, like proposals to put tariffs on cars manufactured overseas, do not address the underlying issues that threaten manufacturing jobs.

The global race to the bottom can only be addressed with a rejection of the policies of protectionism, tariffs and subsidies to private companies, and the adoption of a program for the nationalisation of the manufacturing giants under workers and community control.

A publicly owned and controlled manufacturing industry, as part of a democratic socialist plan of production, would employ thousands of people on decent wages and conditions. Only this model can ensure what is produced meets the needs of ordinary people, not the narrow interests of the corporate executives of Ford, Holden and Toyota.

There is a desperate need for the trade union movement to develop pro-worker solutions to the manufacturing crisis rather than tail ending the capitalists and their representatives in the major parties.

By Mel Gregson


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