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Ford Tough

Australia’s Slow-Motion Car Crash

Australia’s driving future? It’s probably in New Zealand.

Just outside Wellington, New Zealand’s capital, stands Ford’s once-bustling assembly plant. In the mid-1980s it cranked out Ford Britain’s large Zephyr and Zodiac sedans. Later, Ford Falcons were put together in New Zealand by the thousands.

These days the sprawling red-brick Ford plant has been given over to a collection of small markets and a go-kart track.

Head north from the city and you’ll find an unmarked grey building as big as several football fields; it’s been empty and for sale for much of recent history. Up until the early 1990s thousands of people were employed in this hangar of a place, which was constructed in the 1970s by General Motors. The Holden cars made here cornered the New Zealand market, and the plant gave tens of thousands of Pacific Island migrants a working start in New Zealand.

Driving northwest of Wellington, you can’t miss another set of cavernous buildings; covering roughly nine football fields, they were the facility for putting together Chryslers and Mitsubishis. These days the buildings are mostly muted storage bunkers.

All these locations are now silent totems to the New Zealand car industry that once was.

Sure, New Zealand’s was primarily a car-assembly industry, rather than fully fledged manufacturing. The Kiwis bolted major imported components together – engines, transmissions and car bodies – to produce cars for the local market.

<p>Photo by Scott Barbour/Getty Images</p>

Photo by Scott Barbour/Getty Images

Ford Australia president Bob Graziano

But their industry did spawn myriad local auto-component manufacturers, which once thrived making parts for the country’s new Fords, Holdens and Chryslers. There were seat-belt makers, cooling-system factories, exhaust builders and manufacturers of electronics – even large factories that made wheels. They employed designers and skilled tradesmen by the hundreds.

Now they’ve all but gone.

While the demise of Ford Australia this week can be blamed on a high dollar and falling demand for larger cars, New Zealand’s car industry was killed by Rogernomics. That is, it toppled due to the economics practiced by former Labour Finance Minister, Roger Douglas.

Douglas decided long ago – in the mid-1980s – that propping up a car industry with government money better spent elsewhere was a folly. Furthermore he decided New Zealanders should be allowed to import and buy as many cast-off Corollas, Hondas, Subarus and Mitsubishis from Japan as they liked.

The money they saved – in buying used rather than new cars – would be invested in more productive, job-creating activity, Douglas argued.

The evidence of that never materialised, but New Zealanders flocked to buy imported used cars, and continue to do so – around 80,000 a year. Currently, roughly half the three million cars and light commercials on New Zealand roads are used imports.

No wonder, then, that Ford, General Motors and Chrysler swiftly packed up and left New Zealand.

So what’s left? The average Kiwi car is over 15 years old – and therefore significantly outdated in terms of the latest clean-burning emissions and safety technology. By comparison, the average age of Australian vehicles is less than 10 years.

Unsurprisingly, the Australian road-fatality rate of about 7.8 per 100,000 people is well below that of New Zealand, where there are around 10 road deaths for every 100,000 people.

LONG FEARED, IF NOT ANTICIPATED, is Ford Australia’s announcement on Monday that it will shutter its car plants and end antipodean manufacturing 90 years after the first T Model Ford rolled out of its Geelong plant. It is a hammer blow that puts all of the Australian vehicle manufacturing industry into fresh doubt.

Australian vehicle-component manufacturers rely on economies of scale to keep the cost of their products down. With Ford gone, it will be an open question, whether the component makers can hold costs while making and selling less to the remaining car makers.

Ford’s announcement on Thursday comes less than one month after the company’s former global president, the Australian Jac Nasser – now chairman of the world’s biggest miner, BHP Billiton – laid out what he thought would unfold if one of Australia’s big three car makers pulled out:

“As soon as you have a reduction in the scale of domestic manufacturing – let’s assume one of the three decides to exit Australia – then you end up, potentially, with a sub-scale supplier infrastructure. And once that happens, I think, it’s a domino effect.”

The first of Nasser’s dominos has now fallen.

Once Ford has left, Australia’s strict import controls on used vehicles will lose one strong defender. Proponents of allowing the importation of more used cars can also fairly point to the tens of millions of taxpayers’ dollars thrown at Ford over the years, in what can now be seen as a fruitless attempt to get the car maker to stay.

There are multiple reasons behind Ford’s decision to leave, but the high Aussie dollar stands out for having made imported cars cheaper, and also for foiling Ford Australia’s efforts to export its way out of trouble.

Australia is one of only 13 nations with the capacity to conceive, design and build new cars. It has developed an internationally regarded talent pool of automotive designers and engineers, and strong export markets for its locally made car components.

That’s the sharp and clever end of the business.

The one really worth saving.

12 comments on this story
by Peter Maddox

Really! Shutting down an inefficient industry will lead to more road deaths in Australia! And do you see the contradiction between "15 year old" clunkers and 80000 imported cars a year? Sorry, this article is more irritating than convincing. Yes, it's truly dreadful for the people who lose their livelihood through the closure. Most Australians will benefit though, through cheaper cars and more choice.

May 24, 2013 @ 7:31am
by S Kumar

Ford Australia gave the world the Figo. I got an opportunity to drive it, and it's a fantastic car, well suited to a difficult driving environment. Why did Ford Australia not develop smaller cars for the local market, when it was clear that people are moving to mid-sized cars? Look at the Mazda 3. Look at the Toyota Corolla. They should have moved to producing the Focus locally, and further developed it for the Australian market/conditions.

May 24, 2013 @ 10:34am
by Kevin Cobley

The whole world auto industry is in it's death throws. Oil production has peaked and is moving into decline, within 5 years politicians will can the industry. They are going to want to eat in 25 years. The sooner were out of it the better, it's an unsustainable industry, there's nothing worse than trying to sustain the unsustainable.
Same story for airlines and plane makers, also for road and airport building these industries are all toast.

May 25, 2013 @ 1:34am
by Melissa Freeman

"Unsurprisingly, the Australian road-fatality rate of about 7.8 per 100,000 people is well below that of New Zealand, where there are around 10 road deaths for every 100,000 people."

Bernard, I think an extra 2.2 deaths per 100,000 people is not as significant as you make it, and rushing to attribute it to cheaper cars undermines an otherwise interesting article. I see teenagers driving in 20 year old Corollas here, or even older cars, with no ABS or airbags. There is no shortage of cheap cars locally. Imported cars would be newer and safer. There are plenty of other reasons I can imagine why NZers might have a few more accidents than Australians.

May 25, 2013 @ 7:56am
by Bern Lagan

Melissa, yes, agree. Re-miss of me to have implied all of the difference in the trans-Tasman road toll lay with the differences in the age of the fleets. Clearly there will be other factors such as road and driving standards.

Bern

May 25, 2013 @ 3:10pm
by Jason Adams

Melissa, would it have been better for Bernard to say 'New Zealand more than 25% deaths per 100,000 people compared to Australia'?

It would be a factor of issues that contribute to this but having cars that are older would certainly be one of them. Interestingly when I looked up the figures, Bernard was incorrect in his assertion that NZ cars are over 15 years old, they are 13.4 years old on average. And 2012 was unusual in that more new light vehicles entered the fleet than used imports. The last time that
happened was 1996.

http://www.transport.govt.nz/research/Documents/The-NZ-Vehicle-Fleet-2012.pdf

May 26, 2013 @ 6:17pm
by Neil Morrison

If you had any experience in the car Industry[mine is 40yrs] you would have seen this coming 10 yrs ago.Motoring writers have been writing stories about this for the last 10 or 15 yrs. Now everyones an expert,and jumping on the bandwagon with very poorly researched articles, including this one. Also, contributing to NZ's road toll is their poor driving standards.

May 28, 2013 @ 4:52pm
by Graeme Marshall

Your NZ road toll statistics are a little dated. Using StatsNZ population estimates (December year) and Ministry of Transport road death statistics, the rates per 100,000 for the last five years (2008 - 2012) have been 8.5, 8.8, 8.5, 6.4 and 6.9 respectively. Local authorities are somewhat surprised - albeit pleased - at the steady rate of reduction. Our driving must have improved since the awful year 0f 1973 when we hit 27.9!

June 10, 2013 @ 11:46am
by ezan

Experience drivers less risk of accident compare with the new comer license holder when their attitude of driving difficult to change.
http://34e73fum4dfedu63za4l6khg4j.hop.clickbank.net/?tid=AUTO2

June 19, 2013 @ 2:33am
Show previous 9 comments
by James Trevelyan

Thankfully a story beyond asylum seekers and drug companies. Sadly, with this newspaper's resources diverted elsewhere, the standard of research and understanding in this article is on par with the Courier Mail and The West Australian. The Global Mail started out in fine form, providing variety and stories that were well-researched, expanding our horizons beyond the narrow agenda of the mainstream press. Now, your faceless editor seems to have narrowed the focus, to the point where I am now feel the need to find something else to read on a regular basis.

Just for the record, since it is now cheaper and easier to organise a global distributed manufacturing enterprise than trying to do everything in one location, the changes we are seeing in the car industry are inevitable improvements. As a result, cars, relative to other commodities, are now much cheaper to own than in the past. We can afford better quality safer cars. Global manufacturing brings opportunities to our shores, provided we can foresee the inevitable cyclic decline in mineral prices, and position ourselves to supply products that meet the needs of large numbers of people. For that we need to focus on educating young people to spot opportunities beyond the glamour of the slowly declining boom from building (not operating) new mines and ports. Your newspaper could do more to help, and encourage a wider readership at the same time.

June 22, 2013 @ 11:40am
by creeker

I would respond by pointing out that we should be looking to the future not the past. The future is in alternate energy. Germany woke up to that while we were playing Bingo. In 2012 25% of their power came from alternate energy. That industry alone created 370,000 jobs. Read that figure again, 370,000 jobs. If the rest of the world want to build the cars let them get on with it. With our geographical position, we are fools not to be pushing CSP (Consentrated Solar Power) The Chinese born Australian who wanted government assistance to build a PV panel factory was given the flick by John Howard so he went to China and is now running the largest PV panel building factory in the world. We are not only slow, we are stupid ! We even have some fools suggesting we go nuclear! Given the history of nuclear in every country so far it would only confirm us as a bunch of hicks. We have a wonderful country run by unqualified idiots as the last election proved. Abbott in mired in the past with no vision for the future. Get rid of him!

December 14, 2013 @ 4:51pm
by spdrdr

Zodiacs and Zephyrs in the mid 1980's?

In the immortal words of Ted Bullpit - "You're dreaming!"

Google it.

January 30, 2014 @ 5:59pm
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