Australian manufacturing boomed, then busted in the 1980s

A decade of contrasts, the 1980s saw the restructuring of Australia's manufacturing industry and the birth of the Button car plan. Hartley Henderson writes.

THE 1980s in Australia was a decade of contrasts: economic boom and bust; famine and consumerism; heavy metal and pop; and the mullet and the flattop. Unfortunately, double-denim still happened.

While Australians were coming to terms with increasing immigration and multiculturalism, the manufacturing industry was moving off-shore to China and South East Asia where it could manufacture seemingly the same goods for less money. The Government soon realised that Australian manufacturing was in urgent need of restructuring in order to be internationally-competitive. 

High unemployment in the early part of the decade was followed by an economic boom with large business profits and rapidly-escalating inflation. Then came the October 1987 stock market crash, followed by deep economic recession.

Key Government initiatives impacting manufacturing during the period included the Hawke Government’s 1983 decision to float the Australian dollar and introduce financial deregulation, as well as the reduction of tariff barriers, and a restructuring of the industry, which included the Button car plan.

The reduction in tariff barriers and the removal of fixed interest rates meant that Australian businesses were placed in direct competition with overseas businesses, and there was growing recognition of the need to promote innovation, modernisation and efficiency in order to compete. Companies increasingly saw the need to ensure that they performed at world’s best practice in order to take advantage of global opportunities, or indeed to remain viable following the lifting of protection.

In a 1999 paper prepared for the Australian Parliamentary Library titled Australian Manufacturing: A Brief History of Industry Policy and Trade Liberalisation, Michael Emery points out that floating the Australian dollar allowed trade liberalisation to be pursued more as a microeconomic (efficiency) objective rather than as a macroeconomic objective as had been the case with the earlier 25% tariff cut.

"The new approach to industry policy was based on the implementation of a series of industry restructuring plans for the main industries facing difficulties with foreign competition, namely the Passenger Motor Vehicle (PMV), Textiles Clothing and Footwear (TCF), heavy engineering, steel and shipbuilding industries," Emery stated.

The Motor Industry Development Plan (also known as the Button car plan, after the then Minister for Commerce, Trade and Industry, John Button) was introduced in the mid-1980s at a time when the motor industry was heavily-protected by import tariffs. 

The aim was to improve the efficiency of the motor vehicle industry through consolidation of resources, which in turn would enable tariffs to be reduced and establish a platform for competitive exports. Consolidation of resources involved reducing the existing different models by various manufacturers to eight, and included the introduction of badge-engineered vehicles whereby, for example, Holden Commodores were also marketed as Toyota Lexen’s.

Emery says the late 1980s saw a shift from industry-by-industry reviews – and downward adjustments to tariff assistance for those industries – to a general program to phase down most tariffs. In 1988, the government introduced an across-the-board program to phase down all tariffs (except for PMV and TFC which had their own tariff reduction programs) to 10% or 15% by 1992.

Technological advances

Many Australian manufacturing companies were now recognising the need to adapt to changing market conditions and to improve the productivity of production processes. Peter Horman, who was the founding managing director of the Sick Industrial Sensor Company for Australia and New Zealand from 1982 to 2007, says that this involved refitting existing machinery to perform faster and without defects and downtime. 

"Sensors played an important role in the automation of these processes and the reduction in manual operation methods," he told Manufacturers’ Monthly.

"From 1980 all photoelectric sensors were operating with visible incandescent light optics. The output functions of these sensors were basically relay switching, with some analogue output logic devices. The industrial controllers were mainly switching devices with high current switching relays, and the fields of application were mainly in the product handling, packing machines and textile machine areas. 

"Safety light curtains for the protection of operators of power presses were also using incandescent optics with a rotating mirror wheel to parabolic mirror giving a parallel light beam curtain to cover the protected area. Safety regulations were being extended to protect operators in machine environments.

"Bar code readers with incandescent optics at this time were used for reading pharmacy codes for packaging verification, and the research and development of laser bar code readers gave industry further options for productivity solutions,"

Horman recalls that during the 1980s, modulated infrared light sources were developed, allowing many more application challenges to be solved with sensors, which had become smaller and more robust to deal with industrial environments.

"The outputs became solid-state and the switching speeds much faster. Invisible infrared beams were the normal light source then in many sensor types, and polarised light beams gave more fail-safe operations. Sensors able to detect objects without the use of reflectors or transmitted one-way beams allowed further applications for customers," he explained.

"During this period the concept was being developed for using scanning light beams to cover large areas of application, and area sensors and surface inspection devices were in development and produced for some applications. In addition, solid state electronic controllers were being further developed for machine/sensor control and these became used throughout industry for automation requirements.

"Photoelectrics for smoke and dust detection monitors were being used to monitor and control emissions from power plants and factories. But the need for more complex devices was also recognised, so technological development took place to enable other gases to be detected. At the same time environmental regulations were being introduced to control industrial plant emissions." 

Working conditions

The February 1981 issue of Manufacturers’ Monthly carried an editorial about how the dismantling of the wage indexation system was being replaced by collective bargaining.

"The early introduction of the 35-hour working week now appears not only likely, but inevitable. Disparate sections of the union movement will be able during this post-indexation period to pressure individual employers for a shorter working week with far more self assurance than they could previously muster," the editorial stated.

Some concerns were raised by the Confederation of Australian Industry that the general introduction of a 35-hour week would add $10,000 million to the annual wages bill and result in a rise in inflation and unemployment. The Australian Manufacturing Workers Union’s current (AMWU) industry and economic advisor, Nixon Apple, who was with the AMWU in the 1980s and 1990s, points out that the 38-hour week is now standard in Australia and virtually all OECD countries.

"It was agreed to by the unions and employers in Australia in 1981-82 in the metals industry before the global recession hit in the early 1980s," Apple told Manufacturers’ Monthly.

"The early 1980s and 1990s were characterised by boom/bust cycles, and on average in each recession some 120,000 manufacturing workers lost their jobs. There was a general recognition in the early 1980s of the need to rebuild the economic fundamentals of Australian manufacturing industry. Even though the Australian dollar was low, there was an urgent need to combine the Government decision to pursue tariff reductions with positive industry and trade development policies to develop stronger global manufacturing capability in Australia as the country could no longer live off mineral resources and the sheep’s back.

"Government, industry and the unions worked together to establish a diverse industry base with a new emphasis on manufacturing and services exports. In particular, Government ministers Button and Dawkins were heavily-involved in developing industry restructuring plans and training initiatives. The development of what Button called a productive culture was strongly championed by some outstanding industry leaders such as Paul Trainor and Robert Johnson.

"In the late 1980s and 1990s the Metal Trades Federation of Unions (MTFU) and the Metal Trades Industry Association (MTIA) worked together rolling-out a new award and training system with competency standards for skills development and workforce development capabilities. This was aimed at improving productive performance at the firm and industry levels, developing best practice in manufacturing, and providing manufacturing workers with a career path."

Era of accord

Bob Herbert, who was Victorian director of the MTIA in the 1980s when Victoria was very much regarded as The Manufacturing State, said it was an era of accord that was in play and MTIA supported that process. 

"The early 1980s was a time of immense challenge with a spate of factory closures, and manufacturing’s contribution to GDP shrank significantly. However, in terms of employment, manufacturing was second only to the retail sector," Herbert told Manufacturers’ Monthly.

"MTIA had made a major shift in approach to support a global engagement, but argued that the initiatives of the Hawke/Keating government should be more interventionist to support manufacturing. It was a time when manufacturing had much to absorb, including financial deregulation, tariff reductions, and consequent industry rationalisation. 

"One positive initiative was establishment of the Industrial Supply Network, that later became the Industry Capability Network. Today, the organisation has a presence in all states and has generated some $15 billion in orders for Australian firms which otherwise would have gone off-shore.

"Restructuring meant that industry progressively became more competitive and was better able to engage in the international marketplace, as well as stimulate import replacement at home. The Button plan for the automotive industry was particularly important for Australia because of its position as a critical provider of technology and skilled jobs." 

Image: Holden’s 1981 VH Commodore was one of the first cars to incorporate an engine from the company’s new (now closed) production facility at Fishermens Bend, Victoria. In the assembly plant, Holden was still using single panel presses from the 1960s. In the late 1980s, the manufacturer upgraded to transfer presses, simplifying the process.

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