Monday 14 April 2014

Australians love their cars. And for much of the past six decades the cars they've loved most have been home-grown. In that time, Australia has been one of a select group of countries with the capacity to design, engineer and build its own cars. For 60 years that capacity has been a cornerstone of the country's industrial capacity. Now all that is about to change.

When the new Coalition Government made it clear it wasn't prepared to spend more money assisting the car industry, the big manufacturers Holden and Toyota said goodbye. Next on Four Corners, reporter Stephen Long looks at the impact as the car industry heads to the end of the road.

Long finds that for some, this represents a triumph of good policy with limited fallout:

"This form of restructuring will have quite profound effects on individual regions... but not necessarily have a significant effect on the economy as a whole." Bill Scales, Former Head Automotive Industry Authority

Others see it as the road to potential economic ruin - a decision which, when taken to its logical conclusion, would make the economy vulnerable to external shocks:

"Australia will start to become a third world country in its living standard." Professor Goran Roos, Advanced Manufacturing Council

Travelling to key industrial centres, Long reveals startling new research describing the likely impact of the car industry's demise. He talks to the workers who've already been pushed onto the unemployment lines and he goes into the factories of car-part makers desperately seeking new markets outside the automotive industry.

Respected industry experts warn that although manufacturers know they need to stop relying on making car components, as few as ten per cent might survive the transition.

Four Corners also looks at Britain's response to a failing car industry. Initially, like Australia, Britain took the view it didn't need car manufacturing. The Global Financial Crisis changed all that. Realising the folly of simply relying on service industries to supply jobs, the Government backed car makers in a way that has turned them into the country's biggest export sector.

End of the Road, reported by Stephen Long and presented by Kerry O'Brien, goes to air on Monday 14th April at 8.30pm on ABC1. It is replayed on Tuesday 15th April at 11.00am and 11.35pm. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners.

Transcript

END OF THE ROAD - Monday 14 April 2014

MARK BANNERMAN, PRESENTER: The end of the road for the car industry, welcome to the program. I'm Mark Bannerman, sitting in for Kerry O'Brien.

When the Prime Minister's own trade agreements with Japan and Korea, one of the selling points was the prospect of Australians buying cheaper Corolla's, Camry's and Hyundai's. But will cheaper cars make up for the loss of the domestic car industry?

Australia is one of only a handful of countries that can take a vehicle from concept to car yard, designing testing and building cars. But come 2017 that will come to an end. Last may ford called time, Holden followed in December and Toyota in February. For the critics it's good news to see the end of an industry that's always relied on tariffs or tax-payers subsidies for its existence. To industry supporters the loss of car making threatens to erode the nations skill base and its industrial capacity.

Tonight reporter Stephen Long goes to the regions that will be hardest hit by the end of car making, assessing the impact on the people there and the broader economy.

(Sound of car driving)

STEPHEN LONG, REPORTER: It's a Sunday morning in Melbourne's outer suburbs. Arthur and Gael Martin are taking their pride and joy out for a spin.

A 1964 EH Holden Premier, from the glory days of the Australian car industry.

ARTHUR MARTIN: We had about four of them in the family at one point because my dad was keen on them and they were reliable and easy to work on.

STEPHEN LONG: The EH Holden was Australia's fastest selling car; a quarter of a million bought in 18 months after its launch in '63.

This car used to belong to Gael's mum, it's been in the family for 50 years.

(Stephen with the Martin's in their car)

STEPHEN LONG: Sounds like you two had a love affair with Holden that led to a love affair.

GAEL MARTIN: Yeah, it does. I remember Arthur gave me my first ring which I was besotted with in a Holden car. It was just a friendship ring but that led to an engagement ring, which led to a wedding ring.

ARTHUR MARTIN: It's an iconic brand. For me, it's been a symbol of Australian motoring.

(Montage of archive Holden commercials)

VOICEOVER: No other car performs like it. Because Holden is the only car designed and built for Australia.

VOICEOVER 2: This is the new Australian automobile, designed and tested by General Motors engineering department.

STEPHEN LONG: The birth of Australia's car industry was a source of great national pride.

JULIA GILLARD, FORMER PRIME MINISTER: In 1948 Chifley wasn't just launching a car he was building a nation, taking Australia into a future beyond wool and wheat.

STEPHEN LONG: For much of the last century, the ability to design and build our own cars was equated with progress and development.

But just as today's sleek Commodore bears little resemblance to the FJ or the EH, public attitudes have also changed.

By last year, what was once seen as a vital industry was openly jeered as a wasteful drain on the public purse.

JOE HOCKEY, TREASURER: Let me give you some facts, the net-combined assistance to the automotive manufacturing industry in 2011 was $1.1 billion taxpayers money, $1.1 billion in one year. There's a hell of a lot of industries in Australia that would love to get the assistance that the motor vehicle industry is getting.

MIKE DEVEREUX, MD, GM HOLDEN: Today we're announcing that Holden will cease manufacturing in Australia by the end of 2017. This will mean the eventual closure of our Elizabeth plant, as well as our Victorian engine plant, our engineering centre and our proving grounds down at Langley.

STEPHEN LONG: It was the news that thousands of Holden workers didn't want to hear.

GEOFF DYMMOTT, HOLDEN WORKER: I thought that I would be there for the rest of my working career.

STEPHEN LONG: Geoff Dymmott has worked on the Holden assembly line at Elizabeth in South Australia since 2001.

Geoff spent seven years in the army, serving as a peace keeper in East Timor. When he left the forces, he thought working at Holden was an ideal job for a bloke raising a family.

GEOFF DYMMOTT: I think that working in the manufacturing industry, the people that actually are attracted to that type of work actually take pride in their work. They like to feel like they're actually achieving you know a good quality product, and I think that's what we do at Holden. We do make a very good product.

(Speaking to his family) So who's gonna win the footy? First showdown, Port versus Crows, who do you thinks' going to win? Port? We know Port's going to win don't we? Easily.

STEPHEN LONG: Geoff's wife Vanessa remembers the day, late last year, when Holden announced it would stop making cars here.

VANESSA DYMMOTT: The day was a very dismal day. It was obviously all over the media, on the radio, so everywhere you sort of went or, you know, you got in the car, you could hear it on the car.

GEOFF DYMMOTT: The day of the announcement I came home from work and basically I sat in my car, when I drove into my driveway, and I was listening to talkback radio, listening to all the people that were criticising us workers, criticising the union, saying that you know it's the union's fault for pushing the wages so high, which is just totally wrong.

STEPHEN LONG: What do you make working on the line?

GEOFF DYMMOTT: My gross wage is roughly around $50,000 per year.

VANESSA DYMMOTT: I think he's feeling very gutted inside. I think it's the uncertainty of everything. You don't know what's going to happen. We can't predict. We don't know how it's going to affect our kids.

STEPHEN LONG: The family has a hefty mortgage to service, but Geoff is as concerned for his colleagues as he is for himself.

GEOFF DYMMOTT: There are people where I work that are in their 50s, you know, 55, they're getting close to retirement. You know, they're not going to be able to secure full-time work most likely. It's going to be very difficult for them. You know, it's going to be difficult for me and I'm 40.

STEPHEN LONG: The experience of Mitsubishi workers is an ominous sign.

Flinders University tracked hundreds of workers who lost their jobs when Mitsubishi closed its doors in 2008.

Two years on, only a third of them had found full-time jobs, a third were rotating in and out of casual work, and a third never worked again.

JOHN JOHN, FORMER MITSUBISHI WORKER: There's not much work around so we're off work at the moment. We might not be working for about another month, two months and of course we don't get paid for it 'cause we're casual.

STEPHEN LONG: John John worked at Mitsubishi for 13 years. He's only had dribs and drabs of casual work since.

Ocean fishing's his passion, but if he doesn't get work soon he'll be forced to sell his boat to keep up the home mortgage repayments.

JOHN JOHN: Well, all I can say is when Holden's, Toyota's close up, be careful with your money cause if you go and spend it stupidly you're going to be in a lot of trouble. It's going to be very hard to find work. So you got to live off that day by day.

(Inside Albi's kitchen)

ALBI PETRECCARO, HOLDEN WORKER: I'll show you something, Steve, which they gave me. That's for 25 years or service.

STEPHEN LONG: For 25 Years of Dedicated Service to General Motors.

ALBI PETRECCARO: And there's another one I've got from General Motors, this one here's the 30 years, 30 years of service.

STEPHEN LONG: Thirty years. Not quite a gold watch, but.

ALBI PETRECCARO: No. Close enough.

STEPHEN LONG: Albi Petreccaro has spent most of his working life at Holden. I'll show you something Steve....

If it lasts that long, he'll have clocked up 35 years of service when the last car comes off the assembly line in 2017.

ALBI PETRECCARO: Every car you see on the road, you know that you made something that gets in that car and you see the person driving with a big grin on his face, think look at that, he bought a car that I've put a part in.

STEPHEN LONG: He's deeply saddened by the looming closure.

ALBI PETRECCARO: Come December, they made the announcement, but the guys in front of me when we did the announcement on afternoon shift, there's guys in front of me crying. It's f'in hard. Really is hard, when you see these quite standin there crying...grown men, because they got a family to support, but, we don't get anywhere, nobody cares, governments don't give a shit. You know they should support people payin off their houses, their kids, this is frustrating.

STEPHEN LONG: For the Petreccaros, Holden has been a family affair, with three generations employed by the company.

ALBI PETRECCARO: My dad come here with a suitcase from Italy, a suitcase, nothing else but a suitcase, no money in his pocket. Then he brought out my uncle, then he, they both worked at Holden's. My uncle did 55 years, my dad until the day he died did 32, I've done 32 and my son, one and a half years and he got retrenched.

STEPHEN LONG: Tens of thousands of migrants like the Petreccaros came to Australia and found work in the car industry.

(Sounds of cars being made on production line)

It was the post-war vision: populate the wide brown land, build the skills base, and grow the economy with a protected manufacturing industry providing decent jobs.

Nowhere encapsulated that vision more than Elizabeth.

(Archive video of Queen Elizabeth II giving speech)

QUEEN ELIZABETH II: My husband and I are delighted to see Elizabeth, may this town and its people prosper and develop in the years to come.

(Sound of applause)

STEPHEN LONG: Named in honour of her majesty and home to thousands of ten-pound poms.

ASSOC. PROF. JOHN SPOEHR, ADELAIDE UNIVERISTY: Elizabeth grew up as a new town essentially around the auto industry and the white goods industry. It was a very proud area of manufacturing and the city itself was a modern city, designed to support the young and thriving manufacturing community.

(Archive General Motors commercial)

VOICEOVER 3: General Motors Holden's is pretty big business up this way now, with a modern, well equipped factory in very pleasant surroundings.

STEPHEN LONG: South Australia attracted Holden to Elizabeth with the offer of cheap land and power, along with a willing workforce paid a modest wage, but given subsidised housing.

VOICEOVER 3: There's a place for you in Elizabeth where there's housing that gives you plenty of opportunity to create a real home for your family.

STEPHEN LONG: In Elizabeth today, you can still see the remnants of that model city.

But you don't have to go far to find the fallout of de-industrialisation and urban decay.

(Peter and Stephen driving through Elizabeth)

PETER SANDEMAN: So some of these are the old factory buildings that are pretty derelict from a previous wave of industrialisation and not a lot goes on inside these buildings.

STEPHEN LONG: Our guide in Elizabeth is Peter Sandeman, the CEO of Anglicare in South Australia.

PETER SANDEMAN, CEO ANGLICARE SA: You could conservatively say there's about a fifty per cent youth unemployment rate here in reality in the northern suburbs in Elizabeth and Playford.

STEPHEN LONG: That's fairly shocking.

PETER SANDEMAN: It's not unknown in this region. This is an area where you've got third generation families where nobody's ever worked.

STEPHEN LONG: The jobless rate in Elizabeth is more than 21 per cent - one of the highest in the country. Its school completion rates are among the lowest.

As tariff barriers that protected manufacturing were gradually pulled down, Elizabeth has morphed from workers' housing, to welfare housing, to wasted housing.

(Stephen and Peter walk up to a house)

PETER SANDEMAN: As you can see there's a number of derelict houses in the area, there's been a good attempt to try and redevelop the area and bring life back into it, but Holden's decision I'm afraid is going to mean that investors are going to be less keen to invest in the area. And so the whole revitalisation program I think is now going to be thrown into some question because where are the jobs going to be?

STEPHEN LONG: This was the model town, the new town that was meant to be...

PETER SANDEMAN: Oh in the 1950s, this was the vision splendid of the British new town coming to Adelaide, the designers laid out the place beautifully, walkable shopping centres, local schools, local churches; fantastic layout. But unfortunately, it's got everything it needs except an economy.

STEPHEN LONG: This is now the growth industry.

(Inside Anglicare's Elizabeth Mission food hall)

ANGLICARE VOLUNTEER: We haven't got enough staff at the moment so as soon as we've got all the food out, come up and we'll make you teas and coffees, alright?

STEPHEN LONG: At Anglicare's Elizabeth Mission, they're doling out free meals for the poor.

ANGLICARE VOLUNTEER 2: Thank you my darling.

ANGLICARE VOLUNTEER 3: You're welcome.

STEPHEN LONG: Brenda Davis, a volunteer here, has lived in Elizabeth or nearby all her life. Two of her three adult children are unemployed.

(Talking to Brenda) How many people are you feeding here a day Brenda?

BRENDA DAVIS, ANGLICARE VOLUNTEER: Usually um anything between fifty and a hundred. They're clients who are in need of a feed and they're really appreciated of it and there's no questions asked. Everybody's welcome.

STEPHEN LONG: What do you think of the situation here in north Adelaide and Elizabeth?

ANGLICARE VOLUNTEER: I think it's very sad that what's happened to Holden and what could be in the end, we could be seeing a lot of clients in here. We could be seeing a lot more people to feed.

(Sound of shopping bags being packed)

STEPHEN LONG: The demand for food parcels is already overwhelming.

HANS LINDFORD, ANGLICARE VOLUNTEER: I think we're going to be snowed under. As you see now, we're hectic now. I can hate to see what it's going to be like down the track. I think we're going to be yeah, full on.

(Sound of an AFL match)

VOX POP: Go doggies.

VOX POP 2: Come on doggies.

STEPHEN LONG: At Elizabeth, Holden is ingrained in the community.

It's the major sponsor of the local football team, the Central District Bulldogs.

About half the club's members either work at Holden or have family ties to a Holden employee.

(Talking to Brenda) When the news came through, what was the impact in the community here?

BRENDA WIESMAN: Shock, is probably the biggest, and then just horror, because you know like, what's gonna happen, I mean it's like your stomach drops out, you know, like my god, it's something that's been an institution, been there for so long and it's always been expected to be there, and all of a sudden it's like a bomb's hit, it's not there.

(Stephen standing with a VF Commodore)

STEPHEN LONG: This is the VF Commodore, the latest model and the last one they'll build here. And it's still one of the most popular cars in Australia.

(Sound of car taking off)

This car is full of hi-tech gadgets and engineering nous, built from thousands of parts made in more than a hundred factories across Australia. The big question is, when they stop making cars here, what will the fallout be?

BILL SCALES, FORMER CHAIR, AUTO INDUSTRY AUTHORITY: This form of restructuring will have quite profound effects on individual regions and quite narrow, narrowly defined regions, but not necessarily have a significant effect on the economy as a whole.

STEPHEN LONG: But others argue there will be a significant impact on the national economy.

(Talking to John Spoehr) The impacts are going to devastating, particularly in an area like Elizabeth.

JOHN SPOEHR: Yeah we were up there the other day...

STEPHEN LONG: John Spoehr runs the Workplace Innovation and Social Research Centre at the University of Adelaide.

JOHN SPOEHR: Yeah we commissioned this report on the full impact of the closure of the auto mobile industry in Australia...

STEPHEN LONG: According to new research it's commissioned, direct and indirect job losses from the end of car making could number in the hundreds of thousands.

JOHN SPOEHR: As you can see here the impact is around 200,000 jobs nationally.

STEPHEN LONG: That's a huge impact, so is that the ripple effects moving beyond auto through other industries?

JOHN SPOEHR: Absolutely, it goes right down through the supply chain, right down to the corner store.

That's direct and indirect jobs, and around about $29 billion in economic activity over four years. This is the worst case scenario. If there is no substantial intervention and if the workers find it difficult to find alternative jobs and the companies affected find it very difficult to transition, then you would expect that the impact will be very severe.

STEPHEN LONG: In Adelaide, Carr Components has been supplying auto parts since the industries earliest days, way back in 1928.

But history counts for little, and its future is precarious at best. Eighty-five per cent of its output goes to Holden.

BILL SARDELIS, CARR COMPONENTS: The simple fact of the matter is that come D-day, whatever that day happens to be, there's seventy people that have worked for me that won't going to have a job and one of those will be me. I've been here twenty years. I started on the floor with them.

We move about 4000 tonne a year of coil steel, straight away that's all from BlueScope, that's gone. And then right down to the other spectrum, the guy that fills our vending machines here for, with chips and drinks on a daily basis, we're forty per cent of his business - that's gone.

(Daniel Bell and Stephen Long walking through factory grounds)

DANIEL BELL, CARR COMPONENTS: I started up my life, came straight out of school.

STEPHEN LONG: Co-director Daniel Bell started out as an apprentice toolmaker.

DANIEL BELL: Followed on by doing my Advanced Diploma in Mechanical Engineering, then went on and did my post-graduate through uni, so.

STEPHEN LONG: That's a real path for guys who wanna work with their hands or men and women who wanna work with their hands.

DANIEL BELL: Oh definitely, and how are you gonna get that opportunity now going forward without the industry there?

STEPHEN LONG: He's worried the loss of car manufacturing will undermine the nation's skills base.

Australia's car manufacturing industry directly employs some 44,000 people, with about 30,000 workers in the car components sector.

DANIEL BELL: Your core or bed skills are gonna go and they generally are generated from the automotive industry because they employ so many people and when you employ so many people you have universities and TAFEs and so on that are built around these industries. Once that industry isn't there anymore, you don't need the services that go with it.

BILL SARDELIS: We can't all make coffees, we can't all serve cocktail drinks for tourists, for the tourist industry. You know there's, there has to be a widespread of employment opportunities in any country.

STEPHEN LONG: The company's invested more than $20 million in advanced robotics and machinery.

In the past eight years, with no loss of jobs, it's lifted productivity by 400 per cent - while expanding the range and complexity of its output.

But unless it can reinvent itself, that investment will be worthless.

BILL SARDELIS: Most of that equipment or a great lot of our equipment will be scrap metal

STEPHEN LONG: How many of the car components manufacturers do you think will survive?

PROF. GORAN ROOS, ADVANCED MANUFACTURING COUNCIL: Unfortunately, my view is very few. I think you're talking of a number of somewhere between 20 and 25 per cent.

STEPHEN LONG: Will survive?

PROF. GORAN ROOS: Will survive.

BILL SCALES, FORMER CHAIR, AUTO INDUSTRY AUTHOIRTY: There have been a number of - albeit a bit too small - a number of component companies who have really understood the challenges that are before them. They will do well. They will do well because they saw this coming, they planned for it, they put in place good management systems to enable them to operate under a highly competitive market, they've diversified and they've established themselves in other markets in other countries in the world.

STEPHEN LONG: What proportion of car manufacturers, car component manufacturers, have done that?

BILL SCALES: Oh I would put that at less than 10 per cent.

STEPHEN LONG: Carr Components was one of many local companies offered inducements recently to move offshore and join the booming Thai car industry.

BILL SARDELIS: So it was only two years ago the Thailand board of investment came to see us and other companies in South Australia and Victoria and made particular offers to us, just for example seven years corporate tax free, three to eight years tax free for our employees, free land, etc etc.

STEPHEN LONG: Why didn't you go?

BILL SARDELIS: Look our base is here, our families are here, we wanna run our business here, but there other companies that I know have taken the opportunity, and moved the skills and moved the technology to there.

STEPHEN LONG: Like Thailand and Korea now, Australia built its car industry in the 20th Century behind massive walls of protection and assistance.

HOLDEN COMMERCIAL: This is the new Holden...

STEPHEN LONG: Import quotas, tariffs, local content schemes.

The layers of protection allowed the nation to build manufacturing capacity, jobs and skills, but they came at a considerable cost.

BILL SCALES: Well, the consequences were many. First of all, the effect was that prices were higher than they would otherwise have been in this country. So Australians were paying substantially higher prices for their motor cars than almost anybody else in the world. The other element of course which was very important, has become even more important over time, is the quality tended to be lower because there was less competition.

Even diehard Holden enthusiasts Arthur and Gael Martin acknowledge the downside of the protectionist era.

(Talking to Arthur and Gael) They didn't exactly come with all the mod cons though when they were built these cars, did they?

ARTHUR MARTIN: No, they didn't, no. In the early '60s or '64 they didn't have things like heaters and radios and demisters as a standard item. So if it wasn't for the for the Japanese imported cars at the time, we may still not be driving around without a heater, demister or a radio.

TOYOTA COMMERCIAL: Standard Corona luxuries include heater demister and electric washers, four headlights and reversing lights too.

STEPHEN LONG: It wasn't til the competition came in from the Japanese cars then that Holden had to lift its game.

ARTHUR MARTIN: It did really yeah and that's been I think the case with a lot of features and innovations that car companies have done, as they've imported cars, we've been sort of playing catch up really.

STEPHEN LONG: Arthur, Gael and the EH Holden reach their destination.

A classic car rally at Healesville in the Yarra Ranges north east of Melbourne. There's row after row of Fords and Holden's from the days when these cars ruled the road.

When this Holden Premier rolled off the production line in 1978, the trade barriers protecting the local industry were at their highest. But all that was about to change.

(1978 Four Corners story)

REPORTER: The flagging fortunes of General Motors Holden demonstrate the uphill battle for survival that local manufacturers face against Japanese competition and plain economics in the Australian sphere.

STEPHEN LONG: When Four Corners reported on the Australian car industry in '78, inefficient local plants were foundering despite sky high tariffs and import quotas.

(Video of family buying a car)

CAR SALESMAN: I have here your invoice Noah, with the agreed price of $6,951.

STEPHEN LONG: And the cost of cars was a burning political issue.

(1978 Four Corners story)

BILL HAYDEN, OPPOSITION LEADER: The price of a car in this country is about 50 per cent higher than a comparable car just about anywhere else in the world and right now there is enormous buyer resistance to the price of Australian cars.

BILL SCALES: Even the industry became so concerned about this that when the Labor government came into power, the Hawke Keating Labor government came into power, they actually said to the government of the time we need to do something about this.

(Bill Scales and Stephen Long in an office)

Quite frankly there's been almost as many reports as cars produced, but ah...

STEPHEN LONG: So we've got 1983, 85...

BILL SCALES: 2002, 1993...

STEPHEN LONG: And you've been involved in most of these?

BILL SCALES: I've been involved in most of them.

STEPHEN LONG: As head of the Automotive Industry Authority, Bill Scales oversaw the biggest shake up in the car industry's history.

BILL SCALES: It had to be an industry that could survive based on high levels of productivity, high levels of quality and provide consumers with vehicles that they wanted to purchase.

STEPHEN LONG: In the mid-1980s, the Hawke Government began the process of dismantling car industry protection.

Since then, we've gone from the most protected car market in the world to the most open. As the tariffs fell and quotas were scrapped, car imports rose and rose.

By 1997, for the first time, the market share of locally-made cars fell below 50 per cent. In 2006 to just 25 per cent. By last year, Australian-made cars accounted for less than 12 per cent of sales.

MIKE SINCLAIR, EDIOT-IN-CHIEF, CARSALES.COM.AU: It really comes down to the fact that consumers don't want to be bound by one style of car, one size of car, one type of car. There is enormous choice out there and the consumers vote with their feet.

STEPHEN LONG: These days, we're spoilt for choice. Fifty different brands, more than 330 different models. More makes of car on offer here than in the US, though Australia has a fraction of the population.

It's the most competitive and fragmented car market in the world - so fragmented that a local plant could produce four of the top selling models and still not be viable.

MIKE SINCLAIR: If they produced the number one seller in the small car segment, in the compact SUV segment and a couple of other segments they would've only sold last year 75,000 cars. That's about a third of what you really need to do to make a factory work.

STEPHEN LONG: For a while, it looked as if exports might save the day.

(1999, Tim Fischer addressing audience)

TIM FISCHER: Three cheers for the three millionth export engine. Hip hip.

AUDIENCE: Hooray

STEPHEN LONG: Then came the global financial crisis and the soaring currency.

It was a perfect storm. The high dollar killed exports and made imported cars a lot cheaper. Then there were the trade deals. Zero tariffs on cars from Thailand and pretty soon from Korea and Japan - three of the biggest sources of car imports, and all countries which pretty much have a closed door policy to foreign cars at home.

In the face of all this, governments responded with direct financial assistance to try and keep the Australian car industry alive. And Labor was prepared to ramp the assistance up.

KEVIN RUDD, FORMER PRIME MINISTER: I believe in the car industry, I believe in the 200,000 jobs which are supported directly and indirectly by the industry.

JULIA GILLARD, FORMER PRIME MINISTER: This is an investment not a subsidy. An investment in capacity, skills, innovation.

STEPHEN LONG: But the parties poised to win power had a very different view. The Coalition Government cut back on Labor's subsidies and after years of bipartisan support for continuing car industry assistance, they did a major policy u-turn.

TONY ABBOTT, PRIME MINISTER: I want Australia to be a country that makes things, we can make things, make sophisticated things in this country without a government subsidy.

(During a 3AW radio interview) It's essentially about a half-a-billion dollars a year that's available to the motor industry, it's available Mel. It's available to the motor industry but there is no more.

JOE HOCKEY: Calling on Holden to come clean...

STEPHEN LONG: Behind the scenes the new government was telling journalists that Holden had already made up its mind to pull the pin on production.

JO HOCKEY: Either you're here or you're not.

(Sound of Parliament members)

STEPHEN LONG: What role do you think the attitude of the new Government's played in the demise of the car industry?

MIKE SINCLAIR: It certainly didn't kill manufacturing, because I think there was an inevitability to the death of the local car manufacturing, but it didn't help.

STEPHEN LONG: Two months after Holden's announcement, Australia's only remaining car maker followed suit.

MAX YASADA, TOYOTA PRESIDENT: It is one of the saddest days in Toyota's history.

STEPHEN LONG: As the news sank in, unions and workers found themselves in the firing line.

JOE HOCKEY: Toyota demands IR reform, remember that...

PROF. JUDITH SLOAN, MELBOURNE UNIVERSITY: When a government subsidises an industry, some of the gains of that will be snaffled by the employer, but the trade unions and the workers will see that and think yeah look I want, we want a piece of that action.

STEPHEN LONG: According to Holden management, 90 per cent of the workers at the Holden Elizabeth plant earn between $43,000 and $55,000 a year.

PROF. JUDITH SLOAN: Well I mean for quite a few of those jobs, which are pretty unskilled by the way, that's actually a relatively high rate of pay and they have other bits and pieces, for example, they have the rostered days off, they have you know, lots of other conditions which a lot of other workers don't have.

STEPHEN LONG: You think 43,000 to 55,000 a high rate of pay in this country?

PROF. JUDITH SLOAN: Well it's all relative to the opportunity cost and of course relative to unemployment benefits it is quite a high rate of pay.

MURRAY AKEHURST, HOLDEN WORKER: Workers in general are sick and tired of hearing that they're greedy and lazy and unproductive when we've done everything we possibly could to keep, keep the company viable and make our contribution to help, help Holden stay in Australia.

STEPHEN LONG: Murray Akehurst is a union delegate at Holden's Elizabeth plant.

MURRAY AKEHURST: During the GFC you know, we went to working week on week off to keep the company viable and even though that really hurt a lot of people we were prepared to do it because we realised that you know the company are in strife and we have to do this or we're not going to make it. We accepted a pay freeze for three years.

PROF. GORAN ROOS: The labour cost in car manufacturing is around 8 to 10 per cent and that means it's a very small chunk of the total costs.

STEPHEN LONG: What role did industrial relations play in the demise of the car industry?

BILL SCALES: Well I mean it, it played a part. It's not the central part in my view. The central issue in my view is that there was never sufficient volume in this country to be able to produce the level of volume of vehicles that would enable the industry to survive on its own.

STEPHEN LONG: As manufacturing dwindles, and the industry that took the nation beyond wool and wheat departs, there are concerns that Australia is destined to be a farm and quarry.

PROF. GORAN ROOS: What we are seeing in Australia at the moment is a rapid hollowing out of the economy. In other words, we lose our economic complexity.

STEPHEN LONG: Goran Roos is a world renowned expert on innovation, technology and the future of industry. He's advised governments in the UK, Scandinavia, Spain and South Australia.

He's one of many who fear the mining boom and the high dollar are destroying our manufacturing capacity.

PROF. GORAN ROOS: If we do not make things, that means we do not sell things, but we still want to buy things. The question then becomes where is the money going to come from that allows us to buy the things that we want as a country. And yes the services will be able to do some of that, but to replace the manufacturing export that we do have, there's going to be a very, very large growth needed in the services industry.

STEPHEN LONG: Compared to the services industry, manufacturing has high productivity - car manufacturing in particular.

Unlike mining, it takes raw materials and adds value to them.

PROF. GORAN ROOS: If we do not have the manufacturing that adds value to the raw materials, we are not capturing all the value we can and that has implications for our standard of living.

STEPHEN LONG: We're just digging up things and growing things and sending them overseas unprocessed?

PROF. GORAN ROOS: Basically that is it and that is a big challenge for the economy and if we do not change that and add more value, we are relatively speaking having to reduce our standard of living.

(Sound of machine in factory)

STEPHEN LONG: This is the future of manufacturing. Gleaming, hi tech and high skill.

Redarc at Lonsdale in the south of Adelaide is a world away from the dark satanic mills of the industrial revolution.

(Stephen and Anthony walking through factory)

ANTHONY KITTEL, MD. REDARC: So once that door closes the we can go in through the next door and into the clean room.

STEPHEN LONG: Hermetically sealed?

ANTHONY KITTEL: That's right, we control temperature, humidity and dust.

STEPHEN LONG: Wow so what could you make here?

ANTHONY KITTEL: We could even make medical products it's so clean.

STEPHEN LONG: Incredible.

Redarc makes advanced electronics. Its products include isolators that shift power between different batteries.

ANTHONY KITTEL: ...So it's an amazing quick machine, loads about 16,000 components every hour, but the circuit design....

STEPHEN LONG: Managing director Anthony Kittel began his career in the auto industry.

ANTHONY KITTEL: There's no reason why Australian manufacturing cannot thrive moving forward. It has to be advanced manufacturing. You know, we can't be traditional manufacturers of the past where we're just putting a widget into a into a machine.

(Redarc workers having a meeting)

REDARC WORKER: We can adjust these rails down to suit you, ok?

STEPHEN LONG: Redarc began as a backyard operation with a handful of staff. It now employs 100 people and has a turnover of $25 million.

But it didn't get there on its own.

When Mitsubishi shut its Adelaide engine plant in 2005, Redarc gained a $1.6 million government grant tied to targets for job creation. It provided critical capital for expansion.

ANTHONY KITTEL: Government's got to be involved, there's a lot about developing a new product. You can't do that on your own. So you've got to work with universities and government has a role to play there as well in stimulating the innovation in a state, in a country.

STEPHEN LONG: If it's just left to the market, what will happen?

ANTHONY KITTEL: Oh if it's just left to the market, then it's going to be, it's going to be bloody tough for sure.

STEPHEN LONG: There was more than a hint of irony last month when luminaries gathered in Melbourne for a conference on The Cars of Tomorrow.

(Audience listening to conference speakers)

CONFERENCE SPEAKER: Who would have thought standing up here, between standing up here this time last year and standing up here today, that we would have managed to lose our car industry.

STEPHEN LONG: But there were lessons on offer for Australia - as it debates what role, if any, government should play in supporting manufacturing.

In the early 200s, the UK's vehicle industry was moribund.

NEVILLE JACKSON, RICARDO PLC: Lots of job losses. Overall direct job losses there 11,000, using the department for business multiplier on indirect, that takes us to 95,000 job losses from auto industry in the UK. You're beginning to feel what that is like in Australia and we've been through it.

STEPHEN LONG: After a wave of factory closures, car manufacturing seemed destined to die out.

NEVILLE JACKSON: General attitude was that manufacturing was a sunset industry, that manufacturing was going to move east, was going to move to lower cost countries, that making things was perhaps something that you couldn't do in the UK anymore and the future was probably in services.

STEPHEN LONG: Then Britain's finance sector collapsed in the Great Recession and both sides of politics changed their mind.

Six years on, the car industry is the UK's biggest export sector, with a global reputation for innovation and quality.

NEVILLE JACKSON: The turnaround in the UK really came from a view from government that we need to have a more positive strategy to what was called rebalancing the economy, that a lot of jobs were being lost, we couldn't make up for all those jobs in the services sector 'cause they were the wrong type of jobs and that we needed to find a better balance between manufacturing services and other sectors, particularly advanced manufacturing where you would look for very high quality, you'd look at added value, not necessarily very simple components but things that could actually add value to the economy.

STEPHEN LONG: Would have you have achieved all that if the government had merely left it to the market?

NEVILLE JACKSON: In my view no, absolutely not. It just would not have, would not have happened.

STEPHEN LONG: Can we transition towards advanced manufacturing simply through the market or does government have to play a role?

PROF. JUDITH SLOAN: I mean what is the evidence that governments really help on this? You know like, I lived in South Australia for a long time and they'd had sort of precincts and clusters and bureaucrats sort of giving out free advice and the like. You know, I'm not sure that that sort of thing ever works at all.

STEPHEN LONG: Where do you see Australia's economy in 10 years' time?

PROF. GORAN ROOS: Well I see two scenarios. One in which we decide to take decisive action and one where we just lean back and look at what's happening around us. In the second one I think Australia will start to become a third world country in its living standard. We are not going to be able to maintain the living standard we have now because the money that we generate into our system is too low.

STEPHEN LONG: For the next three years thousands of workers like Albi Petreccaro will journey to work, knowing that they have no future in automotive manufacturing.

For many, there may be few alternative careers.

ALBI PETRECCARO: I'm just frustrated now, just every day you go there to work you know and you see their faces and you think, you can tell, people just hanging on, hanging on and hanging on, but in their minds they're exact like me, they thinkin what do we do next? Where am I gonna go?

STEPHEN LONG: Across in Melbourne, Arthur Martin is doing up another old Holden.

This one's an EK, just like the shiny car with those slick fins that was used to attract migrants to Elizabeth all those years ago.

(Stephen standing with Arthur as he sands his car)

STEPHEN LONG: I reckon she'll be beauty when she's finished.

ARTHUR MARTIN: Yeah it'll be a nice car, I'm looking forward to that, I remember when they were brand new, off the production line, they were a good looking car.

STEPHEN LONG: Do you reckon you'll have this old EK restored by the time the last Holden comes of production line in Australia?

ARTHUR MARTIN: Yeah I'm hoping I will.

STEPHEN LONG: That might be the future of car assembly here, blokes like you doing them up in their back yards.

ARTHUR MARTIN: Yeah, I think you're right, it's a shame.

MARK BANNERMAN: And we should tell you Industry Minister Ian Macfarlane was unavailable to participate in the program. He has issued a number of press releases and statements which are on our website. A spokesperson for the Minister has told Four Corners that the Australian Government is continuing to work with industry in South Australia and Victoria to build the industries of the future.

Next week on Four Corners, a special Easter Anzac Day presentation, seventy years on from the D-day landings we relive the drama and the horror of these events that were crucial in ending World War Two.

Until then, good night.

END

Background Information

MINISTER FOR INDUSTRY STATEMENTS

TRANSCRIPT: Doorstop - Toyota's decision to end car production | 10 Feb 2014 - The Minister for Industry, Ian Macfarlane's doorstop following Toyota's announcement about its planned closure.

MEDIA STATEMENT: Minister's statement on Holden | 11 Dec 2013 - The Minister for Industry, Ian Macfarlane's statement on Holden's decision to end car manufacturing in Australia.

MEDIA STATEMENT: Securing Australia's manufacturing future | 18 Dec 2013 - Joint media release from the Prime Minister and the Minister for Industry on Australia's "strong manufacturing future".

KEY REPORTS, STATS AND SUBMISSIONS

REPORT: Manufacturing Workforce Study report | Australian Workforce and Productivity Agency | Apr 2014 - AWPA's report puts forward eight recommendations to build an adaptive, skilled and innovative manufacturing workforce that will be well placed to manage the transition to more advanced and diverse manufacturing. Download the report. [PDF 3.3Mb]

FINDINGS: Assessment of the Impact of Motor Vehicle Industry Closure in Australia | The Australian Workplace Innovation & Social Research Centre | Apr 2014 - WISeR commissioned a study by the National Institute of Economic and Industry Research (NIEIR) to assess the impact of the closure of the motor vehicle industry in Australia following announcements by General Motors Holden (GMH), Ford and Toyota that they will be ceasing production in the country. The following reports, maps and tables highlight summary findings by State/Territory and Local Government Area across Australia.

STATS: Vehicle Sales for March 2014 | Federal Chamber of Automotive Industries | Mar 2014 - Detailed state by state vehicle sales report from the FCAI.

INQUIRY: Australia's Automotive Manufacturing Industry | Productivity Commission | 31 Jan 2014 - The report considers potential options for government assistance to the automotive manufacturing industry. Read the position paper.

SUBMISSIONS: You can download the submissions to the Productivity Commission Inquiry here, including those from Toyota, Ford, Geelong Manufacturing Council and the AMWU.

SUBMISSION: Strength in Diversity: Diversification, Innovation and Jobs | The Australian Workplace Innovation & Social Research Centre (WISeR) | Jan 2014 - WISeR, in collaboration with the City of Playford and the City of Salisbury, has developed a submission to the Commonwealth Review of South Australia's Economy. [PDF 1.3Kb]

REPORT: Industrial Rejuvenation: Lessons from International and National Experience | WISeR Working Paper | Jan 2014 - With the collapse of the automotive industry, John Spoehr outlines what we can learn from the management of company closures in the past. Prepared for Department of Manufacturing, Innovation, Trade, Resources and Energy and the Stretton Centre[PDF 1.6Mb]

REPORT: The impact on the Australian economy of the closure of GMH production facilities in Australia | National Institute of Economic and Industry Research (NIEIR) | Dec 2013 - This report the NIEIR explains that the Australian economy could suffer an annual shock of $4 billion and result in the loss of over 65,000 jobs by 2020 if Australia's car manufacturing industry ceases operations - nearly 12,000 of these jobs being lost in South Australia. [PDF 65.9Kb]

REPORT: The Contribution of GMH Elizabeth Operations to the South Australian economy and the Potential Impacts of Closure | Australian Workplace Innovation and Social Research Centre | Nov 2013 - This paper presents the results of an analysis of the contribution that the GMH manufacturing facility in Elizabeth makes to South Australia. Updated assessment. Written by Barry Burgan and John Spoehr. [PDF 1.8Mb]

REPORT: Australian Automotive 2020 Technology Roadmap | Australian Automotive Industry Innovation Council | Aug 2010 - The Automotive Australia 2020 roadmap represents an ambitious program to understand Australian automotive capability and link it to opportunities to address emerging social and technological trends.

REPORT: An Evaluation Of The Impact Of Retrenchment At Mitsubishi | Flinders University | 2006 - The research aims to understand how the loss of employment arising from the closure of Mitsubishi at Lonsdale, a significant manufacturing plant - and voluntary redundancies at Mitsubishi at Tonsley Park - affects the well-being of workers and their families. From the Department of Families and Communities through the Human Services Research and Innovation Program (HSRIP). [PDF 635Kb]

RESEARCH: Trade Reforms and the Survival of the Passenger Motor Vehicle Industry in Australia | University of Wollongong | 2003 - The Passenger Motor Vehicle (PMV) industry in Australia experienced extensive trade reforms in the late 1980s which were expected to promote a competitive PMV industry. This paper tests the hypotheses that decreasing protection have had a significant effect on production, imports, exports, labour productivity and organizational innovations. By Elias Sanidas & Kankesu Jay Jayanthakumaran.

RELATED NEWS COVERAGE

AUDIO: Japanese FTA disappoints Australian car manufacturers | RN Breakfast | 8 Apr 2014 - After finally coming to a Free Trade Agreement with Japan the Government is trumpeting the elimination of the tariff on Japanese cars which should make buying a new vehicle up to $1,500 cheaper. Download audio.

AUDIO: Car lobby tips falls in the price of imported Japanese cars | AM | 8 Apr 2014 - The automobile lobby says Australian consumers will benefit from cheaper Japanese cars, tipping price falls of between one to two thousand dollars. That was one of the main selling points of the Japanese-Australian Free Trade Agreement, which will see import tariffs on cars fall from five per cent to zero. By Chris Uhlmann.

OPINION: 838,100 new jobs, but few with blue collars | ABC The Drum | 2 Apr 2014 - Hundreds of thousands of jobs will be added to the Australian economy over the next five years, but that's of small comfort to workers in the declining mining and manufacturing sectors, writes Greg Jericho.

Car parts suppliers meeting in Geelong say their future in Australia is looking tough | ABC News | 12 Mar 2014 - Car parts suppliers are pessimistic about being able to survive in the export market, when vehicle manufacturing ends in Australia.

Bill Shorten cherrypicking manufacturing job loss figures | ABC Fact Check | 3 Mar 2014 - Is Mr Shorten right? Have 1,000 manufacturing jobs been lost - or announced as lost - every month since September last year? ABC Fact Check investigates.

AUDIO: Electric car maker plans to outlast the big 3 | RN Breakfast | 17 Feb 2014 - The exit of Ford, Holden and Toyota from Australia by 2017 will not mean the end of local car manufacturing. The Electric Vehicle Corporation is only a minnow compared to the Big Three car makers, with around five staff in recent years producing an average of five electric cars every year. Download audio.

YOUR SAY: Six things we learned about your favourite Australian-made cars | ABC News | 17 Feb 2014 - We asked you about your favourite Australian-made car. Here's what we learned about Australia's nostalgia for home-grown models...

ANALYSIS: Carmaking in Australia - Driven away | The Economist | 15 Feb 2014 - Toyota's move to the off-ramp signals the demise of a prized industry.

VIDEO: Government could not have changed Toyota's decision | Lateline | 11 Feb 2014 - Prime Minister, Tony Abbott, says he regrets Toyota's decision to cease Australian production in 2017 but insists there is nothing the government could have done to make the company reverse that decision.

VIDEO: Toyota to end Australian production in 2017 | Lateline | 10 Feb 2014 - Toyota has announced that it will stop making vehicles in Australia in 2017 which will lead to the loss of 2,500 jobs at the car maker and as many as 30,000 in component manufacturing.

VIDEO: Toyota's closure will affect thousands of workers | Lateline | 10 Feb 2014 - Paul Bastian, the National Secretary of the Australian Manufacturing Workers' Union discusses how Toyota's announcement that it will cease production in Australia in 2017 will affect workers.

VIDEO: Ticky speaks to Senator Kim Carr about the demise of Australia's car industry | The Business | 10 Feb 2014 - The end of the road for Toyota! The car maker's shock departure marks the death knell for the Australian car industry. Two thousand five hundred jobs will be lost when Toyota pulls out in 2017 but there are dire predictions tens of thousands more will go. Ticky spoke to Senator Kim Carr.

AUDIO: Ford redundancies may signal end of car parts industry, automotive federation warns | ABC AM | 7 Feb 2014 - The Federation of Automotive Products Manufacturers warns Ford's decision to bring forward a number of redundancies in Victoria could signal the death knell for the car components industry.

Productivity Commission report calls for an end to car industry bailouts | ABC News | 31 Jan 2014 - The Productivity Commission says all financial support for Australia's struggling car industry should be phased out. The commission's position paper paints a bleak picture for the industry.

VIDEO: Hard road ahead for auto-workers | ABC 7.30 | 18 Dec 2013 - If Mitsubishi shutdown of 2007 is a guide, 3000 Holden auto-workers face a tough transition into the post-manufacturing future. Alex Mann reports.

AUDIO: Ian Macfarlane's tough love plan for Toyota after Holden's exit | RN Breakfast | 12 Dec 2013 - Minister for Industry Ian Macfarlane says Toyota employees must adjust to changed working conditions in the wake of Holden's decision to cease manufacturing in Australia. As Matt O'Neil writes, the minister also flagged the potential for former Holden workers to transition to defence manufacturing positions.

Holden must adapt to survive in diverse Australian car market, analysts say | ABC News | 11 Dec 2013 - Australia's domestic car market remains one of the most competitive in the world and Holden must adapt quickly if it plans to maintain a presence here, analysts say. By consumer affairs reporter Amy Bainbridge.

WATCH RELATED STORIES

On the Brink | 18 Jul 2013 - Australia's economy - and unemployment rate - might be the envy of countries around the world, but it doesn't mean poverty and unemployment have been eradicated.

Holden advertisement from the 1970s | ABC News - Watch this classic archive advertising the Holden circa 1970; "Football, meat pies, kangaroos and Holden cars!"

LINKS

Advanced Manufacturing Council - The Advanced Manufacturing Council steers development and implementation of policies and programs to support the growth and international competitiveness of South Australia's manufacturing sector. Read more.

Australian Manufacturing Workers Union | AMWU Australia - AMWU members include production and trade workers in metals and engineering, automotive, printing, food processing and confectionery manufacturer. www.amwu.org.au/

Australian Workplace Innovation and Social Research Centre | @wiseruofa - WISeR focuses on how organisational structure and practices, technology and economic systems, policy and institutions, environment and culture interact to influence the performance of workplaces and the wellbeing of individuals, households and communities. www.adelaide.edu.au/wiser/

FAPM - Federation of Automotive Products Manufacturers - An association of manufacturers engaged in the production of a comprehensive range of automotive products. www.fapm.com.au/

Federal Chamber of Automotive Industries - FCAI is the peak industry organisation representing the manufacturers and importers of passenger vehicles, light commercial vehicles and motorcycles in Australia. www.fcai.com.au/

FURTHER READING

End of the Road? | Author: Gideon Haigh | Publisher: Penguin Books Australia (2013) - Australia is one of just thirteen countries in the world equipped to take a car from design concept all the way to a showroom - a remarkable achievement in a market so small. Yet the industry has few friends, and many vociferous critics who argue that the country should not make cars at all. In this engaging and insightful analysis for the lay reader, Gideon Haigh explains why the industry has become an ideological battleground, and reveals the more complex and surprising truth behind the partisan rhetoric.