CEO of Premcar, Bernie Quinn, reflects on Australia’s automotive legacy and explains why reclaiming our manufacturing mindset is key to a stronger industrial future. Premcar Comment.
One problem underpins the idea of manufacturing in Australia. It’s got nothing to do with factories, assembly lines or automation. It’s about us.
Too often, I’ve heard how it’s no longer possible to manufacture things here in Australia. In fact, ‘we shouldn’t bother trying’. After all, our biggest trading partners can do it cheaper and faster. But for the many people [like me] who oppose this view, the reply is simple: We should manufacture in Australia, and manufacture as much as possible.
The truth is, Australia makes plenty of things. Manufacturers’ Monthly brims with the great work of many Aussie businesses and trailblazers. But after more than 30 years in Australia’s new-car engineering and manufacturing sector, my biggest observation has been this: Compared to earlier times like the 1970s and ‘80s, manufacturing, particularly in the automotive sector, is currently in a depleted state.
This might sound obvious, but hear me out.
Back then, protectionist barriers in local car making helped keep Made in Australia widespread. But it had one major side-effect, and that was to stifle innovation. Local cars typically employed ancient technologies. For example, GM-Holden used its overhead-valve six-cylinder ‘Red Motor’ from 1963 until the first Commodore in the 1980s. Ford Australia’s rival ‘Big Six’ chugged out of Geelong in 1960 and finally retired three decades later. Japan’s Toyota, however, developed multiple versions of its M-series six-cylinder during this time, keeping it ahead. By the start of the ‘80s, the Commodore still wheezed through a single carburettor; Toyota had fuel injection, turbocharging and a twin-cam design.
Fast-forward to the 1990s and 2000s and places like South-East Asia and China intensified their car making efforts. Around 2009, the Australian dollar unexpectedly hit parity with the US currency and the scene was set to declare local new-car manufacturing too costly and uncompetitive. By 2017, our country’s last mass-produced, primary-manufactured new car had rolled out.
But before it did, here’s a snapshot of our carmaking fitness at the time.
In 2015, the American Ford Taurus sedan was priced at USD $35,875 [around AUD $48,000 at that time]. The Australian Ford Falcon XR6 sedan was AUD $37,790 – and a better car. The US-market Ford Explorer SUV was around USD $33,000 (around AUD $44,000) and the Australian Ford Territory AUD $36,990. Compared to the USA, Ford Australia was making better cars with lower prices. We were more than competitive.
Unfortunately, by that time in 2015, Aussie car manufacturers believed it was too late to save the industry.
The exchange rate back then put the Australian dollar at around 75 US cents. But in 2009/10, when crucial decisions about the next generation of products were being made, that figure was about $1.05 – $1.10. It helped simplify the decisions to close local car making, but it’s worth remembering that the extraordinary exchange rate period was short-lived. A spike in local commodity exports and a temporary change to US Monetary Policy drove it. After that, it fell back to earth. Today, it’s around 60 US cents.
Based on current rates we should still be making cars here, particularly the cars Aussies rely on for work and family life.
Product-wise, Australia could certainly have made today’s cars. Holden and the CSIRO unveiled a petrol-electric hybrid Commodore in 2000. We developed an electric Ford Territory SUV in 2010. Toyota could have made hybrid, fuel-cell or electric cars at its Altona plant.
However, 2017 wasn’t the end of Australia’s car industry. We were the company previously behind Ford Australia’s FPV (Ford Performance Vehicles) brand and we now work with a multitude of global carmakers. We engineer, develop and secondary manufacture a lot of popular new cars. You’re probably driving one of them.
It’s not only us who’s busy. Walkinshaw is turning large American pick-ups from left to right-hand drive.
Ford Australia’s engineering achievements continue to impress. Its ‘T6.2’ vehicle platform, which underpins the Ford Ranger, Everest and Bronco, is known globally as one of the best SUV/ute platforms ever made.
And keep this in mind – any new-car engineering program must be driven by engineers who have a manufacturing mindset. You can develop the world’s best anything in new-car product engineering, but it has to be industrialised. It’s why our development engineers work so closely with our manufacturing engineers when we develop and secondary-manufacture value-added new cars.
All of this highlights that our car industry’s long-standing know-how is still here, and Dr Jens Goennemann, the head of Australia’s Advanced Manufacturing Growth Centre, said this is how we should apply it: To the development and manufacture of high-technology, high-value products – like a car for Australians and the world, for example.
He is spot-on. Just as sales of electric vehicles (EVs) began to take off, he reminded everyone that Australia delivers half of the world’s critical minerals to make EV batteries, but cashes in only 0.5 percent of it, simply because we don’t add value to those minerals before they leave the country.
He also said manufacturing is “a capability, not a sector”, and this is exactly how we should understand it. After all, you can’t create a manufacturing sector unless you know how to manufacture things.
And this is where Australia has a number of advantages. Manufacturing skills are transferable. In my world, car making programs translate neatly into defence equipment projects. It’s why Premcar also does defence programs. These are valuable because they contribute to Australia’s vital sovereign capabilities.
Car making is also a social contributor. It’s so complex, some countries have whole regions partly dedicated to the entire knowledge chain of designing, engineering and making new cars. Germany’s state of Baden-Württemberg, the home of Stuttgart, is a great example.
It’s not just about jobs. Universities and technical colleges develop curricula that create new generations of skilled people to sustain and grow these industries. Car making’s complex industrial challenges create highly capable people, who in turn drive advanced societies. And this brings me back to the problem of ‘us’, and the idea of manufacturing in Australia.
It really is about us. It’s not about the other countries who are ‘cheaper’, ‘have scale’ and ‘can do it better’. Not long ago, many of these successful manufacturing nations weren’t necessarily ‘cheaper’, ‘had scale’, or were making complex products such as new cars.
But their governments took a disciplined long-range view and attracted the right investments from the right major companies.
Even Apple’s Tim Cook said China stopped being a low labour cost country many years ago. He said the reason he manufactures there is because of their quantity of skills, adding “their vocational expertise is very deep”.
Most importantly – and this is my main point – countries like China developed a manufacturing culture, a widespread belief that they could make anything. And they did it despite the obstacles they faced, which included not even knowing how to make the products for the market sectors they now dominate.
Today, they’re banking the financial and social benefits of those disciplined actions – and using their self-made manufacturing cultures to build even further.
I grew up dreaming about creating cars. Companies like Toyota and Ford made this possible in Australia. Today, one of our programs is developing and secondary-manufacturing new cars for Nissan at one of our Melbourne plants. I hope today’s passionate car-loving kids get the chance to walk in my shoes one day. We’re certainly trying to make this happen.
For Australia, it’s not too late. Our country still has so many critical manufacturing capabilities, the kind that value-add to create the products people [including Australians] want to buy.
But a big question remains: Are we capable of convincing ourselves we can create our own manufacturing culture? It’s a question every advanced manufacturing economy has to ask at some stage, and they all prove there’s only one answer.
