Topics: Australian automotive industry
Greg Hunt joins me from Chicago this evening, and Greg, I really appreciate your time.
This is important stuff you’re doing, but what sort of a hearing do you get from some of the biggest carmakers in the world?
Look, we had a tremendous response. I’ve got to say that it has been a difficult time for the auto industry in Australia.
We know that the manufacturing decisions were made some three and four years ago, but what really heartened me and surprised me was the absolute extent to which they had a long-term, ongoing commitment to Australia being a global design centre.
Now, this was both for GM or Holden and for Ford, and what’s interesting is they think that Australia’s designers, they think Australia’s automotive engineers are at the top of the world.
Now, I’m not just saying this. Both in Ford and in GM, some of their most senior people, indeed, their global head of design to GM, only the seventh ever, is an Australian.
The Asia Pacific head for Ford is an Australian, and so they’re walking the talk, and they think that they want Australia to be a long-term centre of design and a long-term centre of engineering.
So that means we’re really good at it. They want us to keep doing it. They want to be here.
Okay. So that means that there are highly skilled jobs in design that will be retained in Australia. It’s obviously going to be pretty tough for the parts industry.
I also note that say, for example, the latest Deloitte Global Manufacturing Competitive Index now puts Australia as a rank of 21st out of 40 different countries.
And clearly, the very much lower Australian dollar makes it much easier to be competitive if you’re a local manufacturer, but it wasn’t so easy when the dollar was up around parity.
Is it one of these points where eventually our competitiveness comes back, or is it a situation that we’ve got to do more and better in areas such as wages, such as industrial relations, to make certain that we are more competitive on a global basis?
We’ve got to keep fighting to be competitive. When you see the design work that’s going on at Ford, at General Motors, I’ve also been to GE.
You can see the great global challenge. At the same time, you have Australian component makers like Carbon Revolution that makes carbon fibre wheels in Geelong.
They are being used to supply the absolute top of the line Ford Mustang and to supply Ford’s leading car, which is now the GT.
You know, this is a car that retails for hundreds of thousands of dollars. It’s a global super sports car.
It’s bought by sheiks and it’s bought by movie stars, and they use an Australian wheel, and that’s a carbon fibre wheel made by Carbon Revolution.
You find that in Adelaide, SMR Automotive makes shatterproof thin fibre plastic mirrors. And you think plastic mirrors?
And in reality, they are thin coats, multiple layers, incredibly shatterproof. So the same quality as high-class glass, but far more resilient, far lighter, and far cheaper, and so they’ve sold $160 million worth of rear vision mirrors.
So there are real Australian component makers, and we’re out there fighting for them today to get them into the global supply chain, and they’re wanted.
Not all of them will make it, but a heck of a lot of them will, and the research, the design, the engineering, they are our global strengths.
And the great global companies are looking at us and saying no, we weren’t able to manufacture competitively in Australia, but we are able to design competitively, and we are able to get the best quality.
In fact, we want more Australian graduates coming out of, whether it’s UNSW or RMIT in Melbourne, they’re really hungry for them to have them right in at the heart of their global design network.
And so we don’t just design cars for Australia, we’re part of the design process for China, for India, for leading brands in the United States. It’s very interesting.
I know that we have a very open economy, and therefore as a result, there’s a free-flow of trade and capital in and out.
We’re one of the most open economies in the world, you could argue.
But one issue that really strikes me and Joshua Dowling, the motoring editor of News Corporation always highlights this to me that Australia has more than 60 car brands in this country that we can choose from, whereas the United States, even the United States, has around 50.
The UK has only 40 brands to choose from.
The question is whether we have become too open as a society, whether we allow too many imports in, and as a result, there’s almost too much choice, and this chokes off local manufacturing not just in car manufacturing, but a range of other areas as well.
Is there a case at which we suddenly, it’s great for consumers, because prices are low, everything is terrific, but I just wonder for industry, for skills, as to whether at some stage, you sit there and say well, our barriers are just way too low and we are simply swamped with vehicles or with product from all other parts of the world?
Well, what the choice means now is lower prices. There will be more and more competition.
It’s true, Australia is pretty close to the most open car market in the world, and there’s no doubt that with 60 different options for consumers, and with the largest selling brand or model being 40,000 in Australia, they just weren’t able to compete and manufacture at scale.
That’s the reality that we face. Now having said that, we have to choose the things that we’re really good at and go at them with absolute ferocity.
The design, the component manufacturing where we’re world class, such as SMR Automotive in South Australia, Carbon Revolution in Melbourne.
One of the world’s best at cutting and grinding toolmakers, so the people who make the tools that make the tools, is ANCA.
We visited them in Michigan today, so just near Detroit, within the state of Michigan, and they’re world class.
So the answer is we have to set the standard if we want to be a global player of being world-class, and if we are world-class competitive, our firms will do brilliantly.
If we aren’t, then we’ll be exposed to competition. That’s the honest truth of it, and we can’t subsidise our way out of it. We can’t hide. We’ve got to continue the reforms.
This is why lower business tax rates, why a balanced budget, why having open markets, these are all advantages for Australia, but unless we do those things, we put our own firms at a disadvantage.
So that’s the big economic agenda which, at the end of the day, is about giving people job opportunities.
I tell you what, always great to have you on the program.
Our Industry Minister Greg Hunt, having visited the major car companies Ford and General Motors in the United States in Detroit, now in Chicago this evening, and with me here on Money News. And Greg, we really appreciate your time.