What Happened to the Australian Car Industry? – a detailed mini-history on the rise and demise of Australian car-making

“Why Australia Doesn’t Make Their Own Cars” (Asianometry, 17 January 2022)

Compared to other mini-documentaries presented by the Asianometry channel, this episode is quite lengthy – it’s nearly 30 minutes long, longer than most commercial TV current affairs shows would devote but this mini-history on the rise and downfall of the Australian car-making industry is an outstanding introduction to the topic. The episode is a blow-by-blow chronological account of the fortunes and misfortunes of the Australian car industry, starting with its founding in the 1950s and how the Australian government initially supported it with tariffs and other restrictions on foreign imports.

Right from the very start the Australian car industry was dominated by foreign car-makers and therein lies a major part of the problem. Foreign firms have little loyalty to the governments in the nations hosting their factories and will often demand more government subsidies to cover the costs of staying or will shut down their operations and move them to another country where production costs are cheaper. Early car-makers in Australia were General Motors and Ford, two US car-makers, later to be joined by Japanese car-makers like Toyota, Nissan and Mitsubishi in the 1970s. A few European manufacturers established factories in the 1950s but these were small and were later sold to the major Japanese car-makers in Australia. Although the US and Japanese car-makers tended to have an anti-union stance, they accommodated the demands of Australian unions representing their employees, in large part because the management of the factories, even the Japanese-owned ones, was fully Australian.

Over the decades, changes in the global political and economic environment such as the oil crisis in the early 1970s and the collapse of the Bretton-Woods agreement in 1971 put pressure on governments around the world to reduce local tariffs on foreign goods and the Australian government did so gradually over the 1970s and 1980s. Since the main reason for foreign car-makers to establish factories in Australia was to circumvent tariffs and other import restrictions, the incentive to stay in Australia grew less over time. At the same time, the Australian car-buying market has always been small and there is little room for growth. That the US and Japanese companies continued their operations in Australia well into the early 2000s came down to the increased subsidies, amounting to hundreds of millions of Australian dollars, given by Canberra to the companies to cover their costs of operating in the country. Even so, the entry of other countries into the car-making industry – most notably, countries in East Asia and Southeast Asia – and Australia’s own economic fortunes which came increasingly to rely on mining and sending raw materials overseas (and which affected the Australian dollar’s value relative to the US dollar and Japanese yen) put pressure on the local car-making industry with its high labour expenses and low output.

The final chapter in the steady decline of the Australian car-making industry begins in 2008 when Mitsubishi closed its factory in South Australia then – the Global Financial Crisis was in full swing then – followed by Ford in 2016. Eventually only GM and Toyota were the only car-makers left in Australia. Both companies did have plans to continue operations in Australia to 2020 at least but an unsympathetic government under Tony Abbott’s leadership which refused more subsidies led the two companies to depart Australia in 2017.

There is no doubt that the car industry’s relations with Canberra could have been a lot better – a Labor government might have made a very different decision and GM and Toyota would not have left – but as the mini-documentary demonstrates, other factors that led to the demise and death of a local car-making industry had been in the making for a long, long time. As the documentary notes, Canberra could have encouraged small car-makers in the 1950s and 1960s to amalgamate into one big Australian-owned and managed manufacturer. The Australian government under John Howard and his Liberal / National coalition successors could have done much more to encourage manufacturing instead of relying on primary industries like mining and to stop local manufacturers here from relocating operations overseas. There are also issues that Australia could not have overcome: geographic remoteness from potential export markets, competition from Thailand and China (both much closer to Japan), and overseas financial and economic crises did not help either.

There’s much detail to absorb and plenty to ponder over in this mini-documentary and it serves as an excellent introduction to the much broader topic of Australian economic and cultural history. While it lasted, the Australian car-making industry had a deep influence on Australian culture, reflecting and reinforcing Australian values of individualism, self-sufficiency and resourcefulness in a tough and often hostile environment. When GM and Toyota left Australia, the impact of their departure on the towns that grew up around their factories – to say nothing of the impact on the people who worked in the factories, the businesses that supplied parts and the businesses that relied on the workers’ custom – was immense. Long-term impacts such as Australian access to science and technology through car manufacturing are yet to be seen. As the film notes, a significant chapter in Australian history was formed by the car industry with its influence on Australian politics, economy and society – and that chapter has now closed.