Manufacturing in the 1970s: recession and recovery

RECESSION, war, civil rights and feminism set the scene for Australian society in the 1970s, and the manufacturing industry was forced to abandon the ‘she’ll be right, mate’ attitude it had enjoyed during the previous prosperous decade. 

But although the sector struggled to compete with cheap imports, during a petrol shortage, when the ‘tree-hugger’ environmentalist movement was rallying against the dirty habits of industry, the 1970s signified the beginning of environmental consciousness in manufacturers which has now evolved into the ‘green’ movement that is so ubiquitous today. 

The trend for star-rated equipment, carbon reduction schemes and energy management systems can all be traced back to a new social consciousness about the world as a single organism that needed to be preserved, as a result of new images of the Earth from afar taken during the first Moon walk in 1969. 

In Australia, the manufacturing sector experienced substantial decline in employment levels between 1973 and 1980, down by 80,000. Manufacturing’s share of employment fell from 25% in 1970 to 18% in 1985; as well, its proportion of total GDP fell from a high of 29% in 1960 to 18% in 1985. 

Throughout this period, Australia’s international competitiveness was affected by both external and domestic issues. Increasing competition from newly-industrialised Asian nations and fluctuating exchange rates, together with domestic workforce developments, led to dramatic change in the Australian workforce and production across all sectors – manufacturing in particular.

The campaign by trade unions for equal pay and sharp rises in all real wage costs caused a squeeze from rapidly-escalating costs and intensified import competition. Tariff cuts in particular compounded the problem and, accordingly, import quotas were imposed on those goods most affected by competitive external producers. The clothing industry, for example, was in sharp decline after its peak in 1971, and this industry, along with the textiles, footwear and whitegoods industries, was the subject of quantitative import restrictions.

On the export front, firms turned to export, and the share of manufacturing production that was exported in the 1970s had increased gradually to 15% by the early decade and then experienced a plateau until the mid-1980s. 

It’s clear the 1970s was a difficult period for many in heavy industry, with BHP closing its Whyalla (South Australia) shipbuilding works in 1978, forced out of business, it was argued, by foreign competition. 

However, the 1970s saw a huge uptake by manufacturers of computer technologies to lift production efficiencies. CNC machines were starting to be in common use in machine shops in the 1970s, with manufacturers faced with shortages of skilled machinists. 

The introduction of CAD/CAM allowed further increases in design ability and less time needed and with more accuracy. Manufacturers claimed CAD/CAM was the most useful, most used and most beneficial application of computer technology.

But the greatest level of progress of computer application was in the areas of process control and, by the late 1970s, this technology was appearing everywhere. Computer-controlled processing had its greatest impact in the primary metals processing trades, and in processes where heat, speed, and dimensional control is critical. The computer was also now in the office of the 1970s, first in accounts and payroll.

The biggest change came with MRP (Materials Requirement Planning) programs. They appeared in the early 1970s and promised a production planning paradise for inventory managers and production planners. Production engineers would supply all the data for the BOM (Bill of Materials), the heart of MRP, which then worked-out when stocks of these items needed to be replenished. It automatically reordered quantities to be made and gave the dates they should be made. MRP appeared to be a boon for manufacturing, eliminating the hundred of stock cards, together with their tedious error prone updating.

However, MRP had capacity problems arising from dumping of orders to be made into weekly buckets, irrespective of the capacity of a work centre. This capacity recognition weakness was named the ‘fatal flaw’ of MRP1. As well, the original MRP programs were restricted by the amount of memory available. Although the MRP systems took away the drudgery of inventory management, it diverted attention from the underlying problems of manufacturing management, stock control, and WIP control.

But with the arrival of MRP something else disappeared from the production office, beside the stock card – the simple but very effective Gnatt chart. This was a huge board that showed all the work centres and the orders due on them for the current and forward periods. Planners had this easy-to-understand board in front of them on a wall, which was accessible to all who walked into the production office.

This effective planning tool became part of history and was dumped as soon as an MRP system was installed. Thereafter, planning information, instead of being accessible to all through the Gnatt board, was now limited to just a few approved MRP operators.

We said in 1971

Exports, tariffs, pollution, trade unions and industrial relations were the main themes of Manufacturers’ Monthly’s May issue in 1971. 

Editor of the day, John Keenan, used his editorial piece to blast the treasurer of the day, Billy Snedden, for having special tax concessions for the rural sector – which were apparently being exploited – while ignoring the important mining and manufacturing sectors.

Describing the department as "Canberra manipulators", he said export industries should be encouraged in the same fashion as the rural sector so that valuable foreign exchange could be earned. He went on to argue, "It is obvious that in the years to come these sectors [mining and manufacturing] are where our export future lies." How profound.

Trade unions, with a youthful-looking Bob Hawke in charge of the Australian Council of Trade Unions (ACTU), were also making the headlines in the 1971 issue, with one headline reading, ‘Labour watches Hawke to see how far he will fly’. As Hawke spread his wings (pun intended), many people, including some union leaders, were critical about his role in forcing a showdown on a big issue of the time; price maintenance, and the need to legislate against it.

Hawke must have impressed some, as the author of the article called him an industrial Robin Hood. "We are strong enough to take what we want. If you don’t take it our way you can take the consequences," Hawke said at time.

With beaches in Sydney closed by pollution from sewage and air pollution measured against tall buildings such as Sydney’s Australia Square Tower, manufacturing was being challenged to lift its game. The 1970s article suggests manufacturers be charged for the amount of pollution they create in the water, air, soil, and the environment.

"For example," the article said, "industries that used water heavily, but return the water in a clean state would not be charged, while small charges would be applied to companies who pollute slightly, rising as the degree of contamination rose." However the author argues this would be too complicated and too difficult to regulate and police. Today’s carbon tax conversation comes to mind.

It was a similar story with calls for recycling of end waste and used materials. The author argues that "it is cheaper to produce goods freshly made from new materials than it is from re-cycled waste materials".

"Until we can devise a system of either taxing new materials or reducing the cost of re-using old materials, it is rather uneconomic solution." The environmentalists would have had a fit.

Car industry

Following the oil crises of the 1970s, car companies in Australia looked to start manufacturing smaller, more economical cars. However, this was the decade BMC, now British Leyland Motor Corp, decided to introduce the near legendary Australian big car: the Leyland P76. A couple of years later though, following the worldwide collapse of British Leyland and its associates, the Victoria Park/Zetland factory in Sydney was closed by 1975. 

During the 1970s, Chrysler began working closely with Mitsubishi Motors Corp with the result that Chrysler Australia began building Mitsubishi-designed, Chrysler-branded vehicles such as the Chrysler Valiant Galant and the Chrysler Sigma.

For Ford Australia it was business as usual with the Falcon, but with the oil crisis came the Cortina and the Escort, which were adapted for the Australian market from 1972. In 1977, lack of capacity meant that the Cortina wagon was in fact assembled in Renault’s Australian factory.

The start of the 1970s saw Holden launch the new HQ series in 1971. At this time, the company was producing all of its passenger cars in Australia, and every model was of Australian design; however, by the end of the decade, Holden was producing cars based on overseas designs. 

Holden’s most popular car to date, the Commodore, was introduced in 1978 as the VB, which was loosely based on the Opel Reckord, but with the Holden six-cylinder and V8 engines. Keith Moss, a worker who stayed with Holden throughout the 1960s and 1970s, had the opportunity to visit Detroit in 1970 and noted manufacturing at Holden was keeping pace with the US.

"Because we had a new press and assembly line in Elizabeth, we were right up to them. In 1970 we had as good as high volume assembly, pressings and sub-assembly, as the US," Moss told Manufacturers’ Monthly.

"However, later on, when I went to Japan, I saw first-hand how it should be done. Once back, we started tidying up the plant, painting floors, and generally improving the plant; better housekeeping and so forth.

"Their equipment was not as good as ours, but they had higher efficiencies. Even now, Japan has no raw materials, they have to import everything so waste in Japan is minimal, unlike us and the Americans who just frittered it away."

A new entry to car making in Australia in the 70s was Nissan Motors who set-up factories in Australia to build small 4-cylinder cars in the wake of the 1973 oil crisis. Models produced in Australia included the Pulsar, Pintara and Skyline. 

In 1972 Toyota bought out British Leyland’s interest in AMI (Australian Motor Industries) and announced plans to spend $27 million on an engine and gearbox plant. A production plant in Altona, Victoria was established and began the production of engines in 1978, following the progressive growth of AMI.

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