A very concerning piece in The Age: Holden ‘could be sold’ as GM teeters. It’s not concerning that Holden could be sold, or that GM could fall into banruptcy immediately, or even that Opel is having troubles getting the support of the German Government.
What is concerning is this line from IBIS World industry analyst Sarah-Jane Derby:
“We don’t think Holden will go broke because Holden is an Australian icon… We don’t think the Australian public will let it go broke.”
This is the sort of concerning talk that gets the likes of Kevin Rudd into a tizz – deciding to spend billions of dollars for no real benefit. Now, I’m not sure whether Sarah-Jane Derby is saying “We don’t think the Australian public will let it go broke” is a call to action for Government, or whether it is said with a hint of despair, as if to say: “Because of some stupid Government intervention,a sh*tload of taxpayers dollars will go into propping up this corporate lemon”.
I hope it’s the latter. If Holden goes broke, it’s only because they’ve been completely incapable of understanding the needs and wants of the majority of Australian car buyers, that they’ve failed miserably to build cars that Australians and others around the world might wish to buy. It means they’ve been too arrogant, too comfortable, they’ve been protected from real innovation and competition by the BILLIONS of dollars of support from taxpayers and unfair tariffs on imported cars.
How’s this for a concept – people buy things that they like. If people like a company’s products, they’ll buy more, and the company does well. If the company makes fewer and fewer interesting or relevant products, and people prefer to buy products from their competitors, then the company should do one of two things: start making better products, or shut up shop. Holden (and they’re not alone in this) have decided upon a third path – lobby Governments over years and years to spend BILLIONS of taxpayer dollars on them – in an effort to keep them afloat for all sorts of false reasons like “we’re an Australian icon”, or “jobs” or “innovation” or “Australian Made” or “to assist them to compete against low-labour countries”. All emotive reasons, all rubbish, all costing us money and reducing choice for Australian car buyers.
I’ll end with this humorous but sad story. I had a friend who worked for a major automotive manufacturer. My friend once joked with the company’s Head of External Affairs:
“We’ve got 5,000 people in various sites, slaving away making cars very few people want to buy, and they are basically going broke. But you and your three colleagues take a few Labor politicians to dinner and they give you more than $300m per year. Why not sack everyone else and just keep your office running?”
[UPDATE 3 JUNE] My friend Tim Wilson has been quoted in The Australian on this very issue. Said Tim:
“The auto industry enjoys a 10per cent tariff and subsidies worth nearly $100,000 per worker over the life of the Government’s current car industry plan. It is no surprise Holden is staying afloat.”
He said the Rudd Government was pouring money into a budget black hole.
“The cost of perpetuating Holden in Australia will be borne eventually by workers who are being kept in jobs propped up by government subsidies.”
FREEDOM: Economics, Politics and Business
automotive, GM, government subsidies, holden, protectionism, tariffs
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