Autodom doesn’t equal doom

As a magazine covering Australian manufacturing, we note the occasional opinion piece predicting the industry’s demise.

“‘Manufacturing is dead’? Really? Again?” we read, before going back to whatever it is we were doing.

This morning Alan Kohler, that doyen of financial journos, was at it, extrapolating the difficulties faced by Autodom (and if voluntary administration isn’t a difficulty, then the word no longer has any meaning) to represent manufacturing in general. Yes, because the car parts maker – like the rest of our auto industry, is in trouble – then this is “a clear sign of manufacturing doom.”

We have a great deal of respect for Mr Kohler and his accomplishments as an analyst and contributor to what seems to be every single bit of media that covers business (really, the man is nothing if not prolific). But, as people whose jobs it is to make sense of manufacturing news stories, we have to take issue with his claims. 

Kohler notes the 2007 split of AiLimited  to Autodom – the car parts maker that will today hopefully be bailed out by Ford and Holden – and Forge Group, a mining engineering and construction business.

Forge, Kohler points out, has done a hell of a lot better on the stock exchange than has Autodom. We can’t quibble on that note. In five-ish years, Forge’s share price has given 100 per cent per annum returns. Meanwhile, Autodom’s stocks have moved in value down from $2.34 to somewhere around a cup of warm saliva each. Trading is currently suspended.

We can’t contest the above figures, or Kohler’s pointing out that the Aussie manufacturing industry has been doing it tough due to the high dollar. We just can’t.

But for the manufacturing industry to be in a state of “steady, catastrophic decline?” We just can’t let predictions of “doom” and “catastrophic decline” go unchallenged, based on the auto industry’s obvious difficulties.

Sure, we could throw around the figure of 100,000 or so jobs lost in the industry since the GFC. Or the need for auto subsidies (and the great lengths the government has gone to to hide the details of lobbying due to the embarrassment it might cause) to keep that manufacturing segment alive.

But we could also point out the million or so folks that remain employed in manufacturing. Or the absolutely huge opportunities the food and beverage (which employs 300,000-plus workers, if Australian Food And Grocery Council figures are anything to go by) component of our industry will have in the Asian Century. We could rattle off until we’re blue in the face all the successes our winemakers, dairy producers and other food manufacturers are having in China with the growing middle class’s demands for the things that we do so well.

Or we could point to our strengths and opportunities in high tech manufacturing and what little companies like Ferra Engineering and Textor are doing to innovate and the commercial successes they’re having. Or pharmaceuticals, perhaps? Or we could point out Blackmores’ profits and the near-doubling of its share price over the last five years.

It’s inarguable that a lot of manufacturing is facing difficulties. It’s a big industry, with huge value in terms of what it contributes to our GDP, our employment, and its overrepresentation in the total R and D spend in this country. Of course some parts are doing it a bit rough. We’re not for a second going to contest that. We notice these things, and we’re paid (not as much as Mr Kohler, mind) to do so.

But doom, sir? It’s a nasty word to throw around, and you should’ve picked a better one.


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