The ‘lucky country’ we might be; the ‘smart country’ we are not

Australian manufacturing companies – a case of going, going, gone.

The ‘lucky country’ we might be; the ‘smart country’ we are not

My working life in Australia began in Adelaide on 14 November 1947 and ended with my – Nellie Melba-like – final retirement 64 years later on 1 April 2011. (Very appropriate date.)

The first 36 years were spent (or wasted?) working for three separate Australian-owned manufacturing companies. 

The first was a pharmaceutical and drug company. The second manufactured electric power tools and accessories. The third, the biggest, manufactured refrigerator compressors and a wide range of whitegoods – domestic electrical home appliances, refrigerators, freezers, washing machines and room air conditioners.

All three companies have now gone out of business and the products they made are no longer manufactured in Australia but imported from overseas.

During that same period, Australia saw and celebrated the establishment of car manufacturing in Australia. It, too, has now gone.

What is, perhaps, even more tragic and economically depressing, is the number of other, value-adding industries that have followed vehicle, power tool and appliance manufacturing into oblivion in Australia.

Once upon a time we ‘added value’ to our exports by producing iron ore pellets, pig iron and steel. Now we just dig up the ore and ship it out.

We export huge numbers of live sheep and cattle, despite the fact that chilled or frozen meat is worth three or four times as much as ‘live’ stock and onshore meat processing would add hundreds of jobs in numerous by-product industries. We do not even own shares in the shipping companies that carry our jobs and national income away.

The ‘lucky country’ we might be; the ‘smart country’ we are not.

Do you concur with Peter’s views that Australia has made poor decisions in allowing so much manufacturing to be done overseas? Are we now paying for those decisions in being so reliant on overseas countries for essential goods?

Do you have a story or an observation for Peter? Send it to sunday@yourlifechoices.com.au and put ‘Sunday’ in the subject line.

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    COMMENTS

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    Farside
    13th Sep 2020
    3:32am
    I agree with the author. Our policy makers have consistently made poor decisions based on short term economic and political expediency and a lack of long term national vision. This has dumbed down the workforce, reduced industrial resilience and created risks with international supply chains as evidenced during the pandemic. The absurdity that we continue to send natural resources overseas as bulk commodities rather than value add beggars belief whether it is chilled beef or steel. Plans to import expensive gas from overseas while Australia is the world's largest exporter confirms the stupidity at work.

    These decision cannot be blamed on price of labour when it is insignificant in capital intensive activities. High labour cost countries like Australia and Germany can be competitive with modern manufacturing, which because of high levels of automation or technology assistance is capital rather than labour intensive. Distance from international markets remains a challenge however shipping charges can be offset by shipping value added materials and components.
    Franky
    13th Sep 2020
    8:23am
    I broadly agree, shortsighted politics is an impediment to good governance as is the influence of the big corporations lobby. Our two party system means that both get funded by big business so their agenda is never in doubt. Politicians change yet policies remain the same. And money rules politics. In China its the other way round, maybe we could learn something there.
    Tanker
    13th Sep 2020
    10:01am
    Good points from both Farside and Franky.
    I had a somewhat torrid discussion some years ago with an economist, a family member, who insisted that we had to get rid of manufacturing as our future lay with mining, agriculture and education.
    All three are, in my opinion, tenuous industries to pin our entire economy on. Yes we can educate students from poorer, mainly Asian, countries but Asian people are very smart and the day will come when they will be educating their own.
    Agriculture could also be tenuous due to changing climate which can create havoc with the conditions for that industry. The Sahara was once verdant savannah but sure isn't now.
    Mining is still booming but there are other countries who can supply those products even if the quality isn't as good. Coal for power generation, steaming coal, is well on the way out despite desperate attempts by some to still sing it's praises. We have also seen how politics can interfere with world trade, not that that is something new.
    Our political system could well be described as being corrupt because of the reliance of political parties on attracting funds for elections. He who pays the piper calls the tune still applies.
    The lack of manufacturing industry has been highlighted with our reliance during this pandemic on vital supplies having to come from overseas.
    To expect our politicians to be able to rise to meet the nations real needs is, I hate to say pie in the sky, as they will, as they continually prove, rise to meet their own needs which is re-election.
    ozirules
    13th Sep 2020
    11:42am
    All good points. What really pisses me off is that our government is contracting overseas manufacturers to supply our defence needs. Military uniforms from China, Howitzers from South Korea, Subs from Germany etc. etc. Even if the cost would be higher producing this stuff in Australia it is jobs lost needlessly and the cost of welfare for the unemployed rises so where is the actual saving. Various governments have been chipping away at our manufacturing and supply independence for decades. Our decision makers are also babes in the wood when it comes to negotiating foreign contracts going back as far as I can remember with the F1 11 debacle. It's easy to blame ordinary Australians for buying cheap TVs but that is the result of foreign trade agreements. How can a tin of imported Italian tomatoes for instance cost twice the price of the Australian equivalent. How can Australian producers survive when the market is tipped in the favour of importers.
    Incognito
    13th Sep 2020
    8:52pm
    AGL is planning an import terminal in Westernport Bay which has a ramsar wetland to import gas from overseas which is supposedly cheaper than carting it from gas areas in Australia, then they will refine it and sell it off to Australians at a higher rate while the Australian gas gets exported overseas. How does that make sense?
    Trouble is both sides of politics will support this, only the people who live in the area and environmental groups are currently fighting this destruction of a unique and beautful bay that has visiting whales. And gas users are mostly unaware of this happening,not like it is on the nightly news or social feeds.
    Franky
    13th Sep 2020
    8:15am
    There are two sides to this, as always. Globalisation means that every country focuses on its strength and builds on it. For Australia it has meant cheaper and better quality manufactured goods being imported whilst we export our mining products and services. Education and tourism are also important today, as are our perceived clean agricultural products. Thanks to offshore manufacturing our inflation has been low whilst economically we are still well off and employment numbers are healthy. Overseas manufacturing has enabled those nations to rise out of poverty and they have become a big market for our exports. The world being economically entangled has also meant peace and stability. So far all win / win.
    The downsides of globalisation has been the environment with the costs becoming increasingly evident. When multinational corporations control governments as is the case in the western world today their exclusive focus on profit will make any meaningful change almost impossible. The planet suffers and disengagement from the world is short sighted and risks another big war. We need to engage and accept that our economic model is flawed. I fear though that won't happen until crises and destruction have brought the world to its knees and we can start again.
    Dancer
    13th Sep 2020
    2:51pm
    The downside of Australia relying so much on goods produced overseas is that we are no longer self-sufficient when we need to be - like now when a pandemic affects importation of essential (and non-essential) items, and political tensions come between us and our major trading partner(s).
    Australia definitely has had a wake-up call and we need to heed the warning and bring our manufacturing back to Australian soil.
    floss
    13th Sep 2020
    9:36am
    P lease do not wait on the Libs to fix this problem it just will not happen.
    Mariner
    13th Sep 2020
    10:24am
    floss - why do you have to bring up Libs and Labs at every opportunity? During many Lib or Lab Govts we had the same problems. We just might have to bite the bullet and pay more for our consumables and stop people buying the cheap stuff over the net from overseas. People would not like that and so we are stuck with our current situation.
    Buggsie
    13th Sep 2020
    9:51am
    The other side to this issue is the permanent damage to our environment. Have a look around Singleton NSW and see the destruction of once productive farmland - this will never recover in our lifetime, or or children's or grandchildren. Look at WA. It is slowly but surely being turned into a gravel pit, totally useless for now and the forseeable future. Of course the current federal govt will never address these problems - where does their funding and future highly paid jobs in retirement come from? The ultimate absurdity must be the sale of Darwin Harbour to the Chinese government -not so you say? Surely to a private Chinese company? Think again - who actually controls what private Chinese companies say and do? Of course we need to bring back companies that actually make things - we need to value add before we export our precious and limited resources. We should also alter our import policy to buy products from countries that respect our values and interest, not arbitrarily jail our citizens without charge or hope for any form of justice.
    Mariner
    13th Sep 2020
    10:17am
    Now would you be prepared to pay 2 weekly paychecks for an ordinary color TV set? That is what I did in later 70s. The Sanyo TV was manufactured in northern Victoria, push button just before remotes came in. Everything we used to buy here was put together here even if components like transistors were made overseas. Australian wages, taxes and consumers. We were seduced by cheap and cheaper imports made by people working for a bowl of rice a day and we did not put tariffs on the imports. I am not surprised at the result today.
    Meat exports should be frozen product only, no live exports. Our animals should not be massacred in the Arab or Jewish fashion. And if we cannot sell our quality beef this way we should produce less thereof. As long as we do not intend to live like Asians and act like them we might be better off with trading with Europe and the U.S.
    Trimcat
    13th Sep 2020
    10:41am
    That’s if the poor animals even make it there alive, after months at sea in sweltering heat, crammed together among their dead and dying companions, or drowned in a storm just recently. Once they get to their destination, not even slaughtered according to their own rules, but subjected to the worst, fearful and brutal deaths.
    Incognito
    13th Sep 2020
    8:57pm
    I agree that live export must be stopped, but the dollar is more important for these non caring people, and Senator Littleproud has let the animals down while looking after big business.
    verenice coffee
    13th Sep 2020
    10:39am
    ye3s blame it on the pollies but if you think about it we all brought the cheapest product we kept pushing for more wages so we purchased items from Japan China India and buried our manufacturing industries same with live exports wages driving processed charges so live even taking up more roommncheaper
    4b2
    13th Sep 2020
    10:48am
    Peter forgot to mention Qantas and their apprentice school and maintenance work force. All very highly trained in their various trades. All gone now. The Australian economy is now working for the minority called owners and shareholders. The workers are treated like disposable resources. In the times Peter was talking about 40's, 50's, & 60's a man could earn enough to buy a house and maintain his family fairly comfortably. Cant do that now. It's time for a major change in the IR policies and workers entitlements.
    GrayComputing
    13th Sep 2020
    11:04am
    Australia has been gutted and our Common-wealth gone to the super rich
    Our CSIRO build the world 3rd electronic computer we could have been IBM and Microsoft.
    But with lawyers, farmers and miners running this country who have no understanding of an industrial world let alone electronics and computer technologies and how and what they are made of.
    Combined with governments unjustified faith in the pseudo voodoo science of global economics we demolished our entire industrial base.
    And now we are up the proverbial creek without a paddle.
    No worried mate she'll be right!
    baza18
    13th Sep 2020
    11:51am
    Floss, your great Labor Govt namely Gough Whitlam were the ones who signed the Lima Agreement to send 30% of our manufacturing off shore but it blew out to 98% because of greed, the Hawke & Leating finished the job by lowering tariffs but both side of Govt continued with these policies As Franky says it was meant to pull poorer countries out of poverty which it has but it has done it's job, look at China & South Korea but now we are so reliant on the products we are are in trouble as our own manufacturing & technology are gone.If you haven't heard of The Lima Agreement, look it up
    Horace Cope
    13th Sep 2020
    2:19pm
    Australia imposed tariffs about 200 years ago to protect industries and create employment. In 1973 all tariffs (except those on excisable items) were lowered by 25 per cent by the Whitlam Labor government. This was the first across-the-board tariff cut ever done in Australia, although the policy motive was to reduce the rate of inflation, not to improve the efficiency of production. A new strategy of gradual phased reductions in tariff rates was introduced by the Hawke Labor Government in the 1988 Economic Statement to the House of Representatives. They were supplemented by major reductions in the tariffs protecting passenger motor vehicles and the textiles, clothing and footwear (TCF) industries, the two industries retaining the highest levels of protection, which had been excluded from the phased reductions because they were subject to special industry plans.

    There are other factors causing manufacturing to move overseas and the cost of manufacturing cannot be overlooked. I note that the often used phrase, "people working for a bowl of rice a day" has popped up and this statement is incorrect. I recall being in Bangkok around the time that a multinational manufacturing company had closed due to pressure from western do-gooders who wanted to boycott the company for using "slave labour". The company in question had people lined up around the block each day seeking employment as they were paying about 3 times the local wage and were considered by Thais as being a prestige employer. Sure the pay when compared to western standards was low but was still high according to local standards and the do-gooders had just made people unemployed for no valid reason. Whilst our standard of living is high and is therefore being supported by a commensurate wage, we will always find it difficult to compete with overseas countries with a low standard of living and a lower wage structure.
    Oxleigh
    13th Sep 2020
    5:54pm
    When you are a TAFE teacher and told that there are no failures, that everyone must pass, thee is a long term problem with that and we are seeing this all over the country.
    Its the same with UNI.
    If we had a student that we knew would pass easily and got 100 percent we had to find a dirty mark or folded corner on the paper to give less than 100.
    If we had a student that we knew we could not pass we had to give multiple choice, if that did not work we had to give open book questions.
    No body failed. Cutting Tafe and dumbing down the population is a worrying agenda.
    In the engineering jobs it was just as hard.
    We let China undercut all manufacturing costs to get our manufacturing jobs, when there was no competition in Australia the blackmailed us until we paid their exorbitant prices.
    I had a job that required some tooling to be made, the Australian companies approached could not do the job because their expertise was lost to overseas because of undercutting by China. This is the same as dumping and subsidising the same thing that China is accusing wrongly of with wine and barley.
    When we had to get the tooling made in china they said to us the tooling was free if we bought a certain number of product.
    About 12 months into the contract the price went up and they said the tooling was worn out so we would have to pay a few million dollars to replace it.
    If our government did their homework years ago we wouldn't be in this predicament of having no manufacturing,
    They were warned, but the big dollar and the need to privatise everything and not have responsibility for the growth of industry lies squarely on politicians. Big international corporate interests regarding finance and big money comes before the population.
    Mariner
    13th Sep 2020
    6:57pm
    Thanks for saying what had to be stated, hope people are reading it and understanding it.
    Incognito
    13th Sep 2020
    9:14pm
    Yes I read it, and I feel that Australians have been let down with privatization, so many promises by Governments (both sides) telling us things will get better, but as we have seen recently with aged care, it only gets worse when put in private hands. The whole education system and job provider system is all wrong too. Money rules it all. People need to stop blaming then unemployed for being unemployed, many have high education and expertise and cannot find work. Even my neighbour works remotely for an American company. Where are the richest people in the world residing? Follow the money trail.
    Incognito
    13th Sep 2020
    7:14pm
    Everyone is at fault because they want cheap goods.
    Horace Cope
    13th Sep 2020
    7:19pm
    I agree, Incognito, and you can ignore any polls that suggest otherwise. If anyone is asked about buying Australian they will invariably answer that of course they would and they actively seek out Australian products but when push comes to shove the cost of an item will dictate the purchase.
    Incognito
    13th Sep 2020
    9:16pm
    So true Horace, intention is always there to buy Australian but people are not prepared to pay sometimes only a little extra for Australian made. Check out the Australalian made website: https://www.australianmade.com.au
    Ronin
    15th Sep 2020
    11:56am
    The economic theory of comparative advantage doesn't address the social implications of manufacturing products in the most (cost)effective countries. It also ignores political implications. A third issue, not generally discussed as not PC, is that a proportion of a country's population may only be suited to low skill roles. If those roles are outsourced what do those people do?
    Farside
    15th Sep 2020
    5:48pm
    ouch! Are you saying the proportion of a country's population only be suited to low skill roles might join the overqualified STEM graduates on Jobseeker and compete for the scarce unskilled and semi-skilled jobs that have not be offshored?


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