$35m government plan to boost local auto industry

By David Zalstein | August 08th, 2012

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The Federal, Victorian and South Australian governments have announced a $35 million joint venture to ensure the sustainability of Australia’s automotive manufacturing industry.

The Automotive New Markets Initiative will run over four years to 2015/16 and is part of the Australian Government’s previously announced $5.4 billion New Car plan.

The initiative is made up of three key facets: Firstly, the $30 million Automotive New Markets Program, co‑funded by the Victorian Government, providing financial assistance to automotive firms to diversify their business models by securing new customers and developing new products.

Secondly, the Business Capability Support Program, funding an organisation to assist automotive firms develop new capabilities, improve productivity and build on existing strengths.

And finally, the Automotive Envoys and Automotive Supplier Advocate, promoting the Australian automotive industry in global supply chains and in new emerging industries.

Federal Minister for Industry and Innovation Greg Combet said the initiative demonstrates strong governmental commitment to automotive manufacturing in Australia.

“The Automotive New Markets Initiative will help automotive component manufacturers to improve their competitiveness and break into the global supply chains which are an increasingly important feature of the car-making industry,” Combet said.

Victorian Minister for Manufacturing, Exports and Trade Richard Dalla‑Riva added: ”At a time of significant structural pressures on the car industry, local components suppliers must look to transform themselves into companies that can compete not only in selling parts into local production but also into global auto industry markets and into other sectors like defence, rail, aerospace and mining. We will stand by the industry during this period of transformation.”

South Australian Acting Minister for Manufacturing, Innovation and Trade Jack Snelling said the initiative would not only support the 52,000 Australians directly employed in the industry but also the 200,000 jobs across Australia that rely on it.

Applications for the Automotive New Markets Program and the Business Capability Support Program will remain open until September 6, 2012. A second round of funding for the Automotive New Markets Program is possible for 2013, subject to demand.

The announcement comes in the wake of Victorian parts supplier CMI Industrial closing two plants, leaving 119 workers jobless, and Ford Australia announcing a reduction in vehicle production that will result in the axing of 440 workers.

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Doctor

More taxpayers’ money down the toilet…
- Professor
  
  People like you sir, ought to be deported from Australia.
- F1MotoGP
  
  If only 3000 people loose they job that is $38.2 Mill pa. in unemployment benefit. It is a very good investment of taxpayers money.
  - Legnab
    
    No its just a waste , let those foreign owned co’s tip in some more cash , they are bleeding this govt, which will bow to all union demands .
    - Andrew M
      
      Well if you know how to read, please read into these sort of Gov handouts and you will see part of the deal is also a co investment by the company itself. I think the green car fund was stipulated the company must had to spend $3 for every Gov $1
      I think its money well spent, people seem to forget the scale of the Auto industry.
      
      As F1 said, 3000 people on the Dole adds up to 38mill, 3000 people also pay 18mill in income tax.
      
      The Gov actually makes more money from the Auto industry being here than what it hands out.
      - Doctor
        
        Well if that’s true, tell me why all the socialist countries in Europe are in a debt crisis.
      - Norm
        
        That’s cretinous.
      - Andrew M
        
        Not sure what you are getting at, but the debt crisis has nothing to do with any sort of out of control government spending.
        
        I am also not implying that pumping money into an auto industry will strengthen a country.
        
        All im saying is whatever the Government tips into the Auto industry they get back in some form
    - Fairlane
      
      The Gov needs to devalue the Aus dollar,thus making it cheaper for companys to invest in Australia.
      That way less gov handouts are need and Companys will use there own funds to build factories which will create jobs.
      - peddy.d
        
        good advice mate, have you heard about a country called zimbabwe and a little thing that happend in Germany in the 1920′s called hyperinflation?? Mate money is coming into australia and lots of it, that’s why the dollar’s up. Even if we start printing money and assuming that there is no effect on inflation, every other country in the world will start printing money too so won’t make a difference we’ll be back where we started except with a high chance of entering another recession. These are tense economic times for all nations in the world. That’s why the U.S was angry at China a while ago because they were printing more notes of their Yuan to keep their exports competitive, or as their central banks like to call it ‘quantitative easing’ Government intervention in the foreign exchange market is a BIG no go
      - Andrew M
        
        How would our dollar being lowered push us to recession?
        
        I agree any sudden change would be disasterous, but by the same token we have built up a false worth on our dollar based on mining growth.
        
        The growth figures pushing our dollar are false.
        
        Bottom line is we would have much more stable employment if our dollar was 20cents lower
      - Fairlane
        
        Mate we as a country don’t deserve to have such a high dollar value as we are losing our Manufacturing sector by the day along with those jobs.We have nothing to offer but digging holes in the ground.
        The only reason we have a high dollar is because of the Australian taxpayers willingness to carry debt and not protest.
        Our debt is then traded as bonds,those bonds are a good investment for other countrys to buy because the debt is secure as the aussie taxpayer does not protest when a new tax is put apon them.
        How can our dollar be worth more than the US dollar when there manufacturing industry would be 50X bigger than ours?
        I’ll tell you how because tthe US is in so much debt that there bonds are becoming worthless as the promise of the debt being payed is also becoming worthless.
        The opposition to bailouts is a surefire way to send down the value of a dollar because it shows that the people don’t want to carry anymore debt.
        Look at Japans dollar its been strong for years because of a willingness of the people to carry debt,they have a thing called generational debt were personal debt is passed on to the next generation.
- Lox
  
  This happens all over the world. Not just here. BMW (?) or one of the other major prestige manufacturers is co-government owned and has been supported before.
  - Dak
    
    Not BMW nor any other German car company is government owned nor does the government bail them out.You must be thinking of France & Renault…the French are protectionist & socialist governments just love to spend other peoples money & then claim the credit for it.
PoisonEagle

This is good, means that component manufacturers can seek out
international markets, and not be reliant on local manufacturing. Which
means things like the Ford fiasco of last week won’t happen.

I also think the government needs to adopt a policy whereby they only
purchase Australian made vehicles. We need to petition this, as a way
for them to support our industry without spending additional taxpayers
$. Our cars are fantastic. I had been driving imports for the last few
weeks, outstanding vehicles, but when I got back into an FG Falcon, I
felt more comfortable, enjoyed better visibility and throttle response,
cruisability. What a shame it would be to lose our industry .Anyone
opposed to co-investment should be sterilized.
However, I do think it
needs to be implemented cleverly, to fill market needs and not end up
with cars people don’t want.
http://pulse.yahoo.com/_YQLKLFNYP3UFBFAGOV2LNDSREA Robert Ryan

I am glad people are starting to think of what can be lost. You do not have any input into a car from overseas, but you do it if it is locally manufactured.
Basil Exposition

We dig things up and do very little value add processing. Where we have a comparative advantage, policies could be implemented to grow our downstream value add industries. Supporting the car industry should only be done as we transition to new industries.
Matt

The government could help themselves even further if they used Australian made cars as company vehicles. Instead of buying Hyundais etc etc why can’t they use four cylinder/lpg falcons and commodores and diesel territories.
Guest

The Global auto industry is suffering from overcapacity. In pure economist terms, it is a sunset industry. The future of the auto industry in Australia is also uncertain due to the decline in market demand for locally produced Commodore & Falcon & to a smaller extent, the Aurion. These auto manufacturers are manufacturing solely for a domestic market as the high Aussie dollar & high labour costs make exports uncompetitive. So, why are we still tipping in taxpayers money into an uncompetitive industry manufacturing cars that few people want and will layoff people in the foreseable future? It makes no sense to waste resources on an inevitable outcome.
- Lukaas
  
  - over capacity? please detail your reasons why this is.
  - foreseable future?… what? 5-10 years? So Australia will somehow stay at 20-22 Million people even 100 years from now?
  
  Getting rid of local manufacturers = Australia purely relying on imported goods.
  
  So what exactly will our grand children and their children do for a living? Nurses, accountants, teachers etc?
  
  Lol…. every nation, nation with stable economy NEEDS manufacturing sector.
  
  People saying its a waste of tax payers money are uneducated about economy and should STFU.
  - Guest
    
    It is evident from your statements that you don’t know economics. Also, totally ignorant about global auto industry dynamics in general.
    First “…over capacity” – “volume” new car prices have been stagnant for over a decade. Why? Simply, supply exceeds the demand. Manufacturers can’t priced higher for fear of excess inventory.
    Auto makers sell at a loss but hope to recover through financing and other means. They hobble along because they are “too big to fail” – govt bailout!
    Australia is an unrealistic market because of market protection, direct/indirect tariffs & (ADR) regulations – why we pay high prices for cars & get limited models vs. other markets.
    CA forummers complain high prices vs USA & non-availability of certain desirable models in our market yet unable to comprehend why.
    The USA – a big and open consumer market – prices are cheap & variety of finance options available to the consumer are mind boggling – interest free loans, “no down, drive away immediately” packages, etc.
    Manufacturers fight for every inch cos that’s where the money is. Cars are literally push out the door if they are to survive in this competitive market. Cars sold in US come with very high specifications which put Aussie “poverty spec” versions to shame.
    “…foreseeable future” – no one has a crystal ball! If I can see into the future, I’ll buy selected stocks and bet on every footy games & I’ll be rich.
    How can Australia stay at 20-22 Million population when our govt can’t even make a firm decision on “boat people” – Isn’t this a question you should go & ask your MP?
    “Lol…. every nation, nation with stable economy NEEDS manufacturing sector.” This statement needs a qualifier – “…that produces products that everyone desires.” If that the case, Australia should produce Smartphones & Tablets and not Autos. The writing is on the wall but pity some people are blind!
    “No-brainer” question – what kind of a country that produce or manufacturer products that nobody wants?
    Answer: A communist country! But they all collapsed two decade ago!
    - Doctor
      
      I’m glad that someone understands why socialism doesn’t work.
  - Tommo
    
    That’s right Lukaas, everyone who has a different opinion than you should just shut up…..you are the master & they are just worms….beat them & hurt them bad Lukaas.
Luke Brinsmead

The funding couldn’t come sooner.
- Chris
  
  Britain still builds Honda Civic’s, various Nissan models, (including the
  new electric Leaf very soon), as well as the new Opel Astra…. Lets also not
  forget Mini, Rolls Royce, and of course the powerhouse that is
  Jaguar Land Rover, which last year made 1 billion pounds worth of profit.
  
  If Ford and Holden build cars that people want to buy, then there is no
  problem about with the viability of the industry in Australia. In the short term all
  they have to do is drop a diesel engine in both their large cars, plus a
  more efficient 8 speed gearbox to get emissions below 7L 100 km, and I
  bet a lot of people would flock back to them again. It honestly is a bit of a no-brainer, as people still like large cars for families and better comfort, they just don’t like the high fuel costs!
  - Luke Brinsmead
    
    I agree with you Chris about how England is somewhat on the rebound.
    
    However, Australia doesn’t have enough demand for lower fuel usage large cars, otherwise many other family cars wouldn’t be bought. If you look at the fuel usage of the V6 Kluger it’s 11.6, but when CarAdvice tested it was 14.1. That’s very similar to the Commodore and Falcon.
    
    I think Australia has so much choice coming from overseas that our “little” country is overwhelmed with choice. Gone are the days of limited choice of a handful of different brands and models.
Car Fanatic

If we stopped paying pensions to Poms who gained citizenship then went back to England, we’d save 400 million a year. That should cover the unemployed.
- Jonno
  
  I thought pensions (…as in aged pensions from Centerlink) are paid only to those who reside in Australia. You can be only out of the country for 13 weeks max before the pensions ceased to be paid.
peddy.d

look i know that the whole world has subsidies for their respective nations but could they think of any better names for their 3 initiatives? I can just imagine it being like in that abc show ‘the hollowmen’ public servants sitting around a table all day trying to think of a fancy name so it doesn’t look like they’re wasting taxpayer’s money. Job well done fellas!
Zaccys

It is a waste of tax payers money because we know that the industry is going down hill and money won’t do anything about it. I support local manufacturing but ford made the wrong decision by choosing to develop the 4 cyl falcon instead o the more profitable focus that people would by like people are buying the cruze
- Andrew M
  
  Please explain how the Focus would have more profit when it has more tech and is half the price of the Falcon.
  There is a reason they had to shift it to Thailand, because if it was made here it would start at 25K and noone would buy it.
  
  Cruze can compete a little better because they got a wad of cash to subsidise it, Ford was denied a similar funding deal, thats why they pulled the pin.
  Holden aell similar quantities of Cruze and Commodore, they would still be making more money out of Commodore than Cruze.
  
  If there is a Vehicle Ford could have viably made here it is the Ranger.
  The Ranger is the boat they missed, not the Focus
  - Zaccys
    
    They had money from taxpayers and te government 4 years ago but they used it to develop the territory and 4cyl falcon. Holden had same funding and they chose to develop the cruze which was a great investment unlike ford
    - Andrew M
      
      Holden received a boost from the “green car fund” for the Cruze, it was not the same line of funding.
      Ford were originally planning the Focus on a less promising grant. When the Green car fund started up Ford said, Hey, we want some of that, we will try and make our program comply just like Holden.
      
      Gov said No, and not long after Ford pulled the Focus. Yes they did shift available funding to the Falcon.
      It was right around the same time the Aussie dollar was on a big climb so read between the lines if you like and it appears Ford may have used it as an excuse to abandon the Focus exports due to it being likely to turn into a headache for them.
      
      If Cruze was a great investment, How come Holden cried poor and said the cruze program is at risk when the Government announced it was closing any future funding under the green car program?
      
      Sorry, but not building Focus was a good decision, I reckon it would have lost them money from exports.
      As I said, Ranger though might have been do-able, and imagine the marketing strength they would have been able to have being the only Aussie manufacturered Light truck