E&OE…
Topics: Meeting with major automotive companies in US and Japan
JON FAINE:
Greg Hunt, good morning to you.
GREG HUNT:
Good morning Jon.
JON FAINE:
I’ll get your tip for the Cup in a moment; even though you’re not here I’m sure you’re following that most important of events.
GREG HUNT:
I am.
JON FAINE:
But what emerged from your meetings, who did you meet with and what did they say to you about Victorian manufacturing?
GREG HUNT:
So I met with senior executives from both Ford and GM, GM being the parent company of Holden.
And what they said was that there is a very bright future for Australian manufacturing in the form of design and engineering of their global car fleets.
Basically they think Australian engineers and designers are the best in the world, indeed each of the companies has senior Australians at the absolute highest levels, and Ford is looking at maintaining a workforce of 1100 in their design and engineering studios and all up a workforce of over 1600 in Melbourne.
GM is looking at a long term presence and commitment in the design and engineering space.
They talked about their Australian designers and engineers being absolute best in the world and in fact both companies want to encourage more Australian graduates to be part of their global design teams.
So whilst manufacturing is a very difficult story, and they talked about the size of the Australian market and the costs of labour in Australia, they then said the design, engineering and research and development opportunities in Australia are world class and something that they’re looking to keep on a permanent ongoing basis.
JON FAINE:
Except that’s a tiny number of jobs. Did they say anything about manufacturing components, particularly for export, particularly for some of the global platforms, with Toyota and Holden have been doing this for a very long time but Ford not so much.
GREG HUNT:
Yes absolutely. So we have also a first class, indeed world class component manufacturing business.
What’s the future for them? It’s about being part of global supply chains. So firms such as Carbon Revolution which makes arguably the world’s best carbon wheels based at Deakin University in Geelong.
We saw their wheels at both at GM and at Ford. SMR, which is a South Australian firm, it makes lightweight plastic, multi-layered thin plastic rear vision mirrors which has sold over $160 million of product, they’re part of the global scheme.
ANCA, which is a Bayswater based business that makes the machines that make the machines is again in Michigan, it’s got a global presence, another Australian success story.
The agreement with Ford was to strike a three-way partnership between the Federal Government, Ford and the Australian component makers to work together to have an ongoing process where we will assist Ford and the component makers to look at global opportunities.
So this is a new partnership which we struck late last week and it’s about providing an ongoing framework for Australian component makers to have access to Ford’s global supply chain.
JON FAINE:
Sorry, what’s the agreement actually involve? A framework is not something that creates jobs, so how does that translate to output?
GREG HUNT:
This is about the Government and Ford and the component makers working on a plan for Australian component makers to be part of Ford’s global supply chain.
There are already 19 Australian component makers who are part of that global supply chain, and what we want to do is two things, embed and strengthen the role of existing component makers and then to look for opportunities for other component makers.
So it’s pretty significant that there are a lot of Australians right at the top of both the global headquarters for Ford and for GM.
They look at our component makers. They look at our engineers and designers and they say we do have a significant car industry.
They want to keep the design and engineering components going and they also want to keep the component manufacturers as part of it. So it was, I went hopeful, but I came away optimistic that we have a significant ongoing future.
JON FAINE:
What's the exchange rate at the moment, Greg Hunt? Australia to US dollar?
GREG HUNT:
The exchange rate's in the mid to high 70s. It oscillates around, so …
JON FAINE:
And you know why I'm asking you that question, the Australian manufacturing of cars was completely sustainable at that level when the dollar spiked because of the mining boom, and for about six months to nine months was up above parity.
That killed the industry. Did anyone in Detroit or Chicago, has anyone said gee it's a pity you guys jumped so rapidly that Joe Hockey dared General Motors and Ford are you staying or are you going when the dollar was above parity instead of just sitting it out and waiting?
GREG HUNT:
No, nobody said anything as silly as that. It's not true.
JON FAINE:
No, they're too polite really, aren't they?
GREG HUNT:
No, no, we had a very open and honest discussion about why all of the car makers have made the decision not to assemble in Australia, and basically they said it was a combination of market size and labour costs.
These were the two long term elements, and they said that …
JON FAINE:
The industry was completely sustainable at the levels, the exchange rates that are in fact the level where it's at now.
GREG HUNT:
Well, with great respect, having just met with the global leadership, their view was completely the opposite to the one that you put.
Their view, and this was all four car manufacturers, two of which made their decision many years ago and two of which made their decision just over three years ago, and that was market size and secondly labour costs and the overall competitiveness of Australian manufacturing in this particular space.
Having said that, the world class competitiveness of our engineering and our design is something we're deeply proud of, which they want more of and for which they were actively seeking Australian graduates to be part of their global business.
So Australians are helping design cars from all four all around the world, for the Indian market, for the Chinese market, for the US market, and …
JON FAINE:
We already were, we were doing that for years. How much money are you putting into this new partnership framework, call it what you will?
GREG HUNT:
This wasn't about money, none was offered and none was sought.
What this was about was making sure that we are engaging at the highest levels to give opportunities to Australian firms and to look at the 1100 jobs that we have at the moment within the Ford Victorian operations at just in design and engineering, the 300 within the overall GM operation, and then to look not just at keeping them but potentially to expand them.
One of the service was talking about …
JON FAINE:
So you've not put any money in at all and there's nothing new emerging from this and what you've come up with is an agreement to talk in future about maybe something happening if necessary or if appropriate somewhere in the future, who knows.
GREG HUNT:
No, look with respect, they weren't interested in money, they were interested in Australian talent, and I think it's very important not to undersell that.
What they were interested in is making sure that we have more support to bring Australian graduates through in engineering.
Now it happens that we are looking at exactly that sort of initiative through what's called the R&D tax incentive to assist in bringing more science and engineering graduates through across the Australian spectrum, and that was what really excited them.
They want access to Australian talent because they say that for a combination of reasons, our young graduates and our experienced workers are just more creative than almost anybody else in the world.
And in a world of global manufacturing and supply chains, both of the leaderships in Ford and in GM raised exactly this skill set, and that's what they want from Australia, the intellectual capital, the skills, the long term future, and I would say we're a lot more advanced now than we were a week ago. It was a very productive set of outcomes.
JON FAINE:
Even though you're in Tokyo, have you got a tip for the Cup?
GREG HUNT:
I do, Oceanographer.
JON FAINE:
Ah, Robert Doyle's already taken that I'm afraid, you'll have to have another.
GREG HUNT:
No, I'm sticking with Oceanographer. I suspect that every horse can have more than one punter backing them.
I've got two kids that love the water, I want to see a national centre for coast and climate on the Mornington Peninsula, and I think the prospects are pretty good for a horse that when last I was looking was around seven or eight to one depending on where you're punting.
JON FAINE:
Alright, I'll give you a second choice as well?
GREG HUNT:
Rose of Virginia.
JON FAINE:
Rose of Virginia, I'm trying to find that on my sweep. Alright, we'll give you that one as a second choice. Thank you very much for your time this morning.
GREG HUNT:
Alright, all the best.
JON FAINE:
Look forward to seeing you back here in the studio sometime soon.
Greg Hunt, Minister for Industry, Innovation and Science in the Turnbull Coalition Government, just landed in Tokyo, meeting with Toyota tomorrow, already had meetings with General Motors and Ford in the USA.
ENDS