With the announcement that Toyota will stop its manufacturing in Australia in 2017, Australia has become one of the few wealthy nations on the planet without a car industry. But there’s a good argument that Australia never had a car industry in the first place.
The mass production industry began with General Motors Holden’s FX model in 1948, with GMH being a 100 per cent-owned subsidiary of General Motors in the United States. The same pattern followed with Ford, then Chrysler, and at one time up to five foreign-owned car manufacturers were producing almost exclusively for the Australian domestic car market. This is very different to all other car-producing nations, which normally began with domestic manufacturers expanding output, firstly for a local market and then for exports. Many of these were subsequently bought out by the major US and Japanese producers during the Age of Globalisation, but for at least three decades after WWII, most car producers were nationally-owned affairs.
Except in Australia, where the car industry was shaped more by government policy than by the evolution of local manufacturing.
The government policy motivation for inviting foreign car manufacturers to set up shop here was employment. The early post-WWII economic ideology was a very different one to that which prevails today, best epitomised in my favourite phrase from the 1945 White Paper, Full Employment in Australia. The emphasis was, it said:
“To maintain such pressure on employment as to guarantee a shortage of men rather than a shortage of jobs.”
This could have been done by encouraging locally-owned manufacturing, but it was faster to entice foreign manufacturers to either expand existing plants (as with GMH) or set up shop here (as with many others including Leyland, Volkswagen, Renault) via the carrot of a largely captive local market and the stick of high tariff barriers.
This employment strategy had many Achilles heels, but to me the outstanding one was economies of scale.
