Lessons from the car industry

You would have been hard-pressed to miss the politicians debating and disagreeing about the current state of the Australian automotive industry, which is in dire straits. 

Depending on who you listen to, the three remaining local car manufacturers – Ford, Holden and Toyota – enjoy enormous government support and, according to reports, are the beneficiaries of an assistance package that will provide $5.4 billion to the industry from 2008-09 through to 2020-21.

There is a wide range of reasons why these companies are being subsidised by state and federal governments. Those in favour of the subsidies say that Australia needs a local car manufacturing industry, given that reports say that it directly employs some 50,000 people and indirectly around 250,000. 

On the other hand, opponents say that the industry is inefficient and uncompetitive and should no longer be subsidised, especially given that it’s a sunset industry (in decline).

If governments should be subsidising industries – and there is debate about that – they should be supporting sunrise industries (up and comers). 

Opponents say the car industry needs support because no-one is buying the cars designed by the three local manufacturers because they are making the wrong cars and have not kept pace with changing consumer demand.

Supporters of the industry say that some of the reasons why the local industry is struggling include the high Australian dollar and the high manufacturing costs when compared to overseas. 

In addition, Australia should maintain a manufacturing base because, once it’s lost, it’s gone forever – they point to many other categories where there is virtually no local manufacturing done anymore. The Australian jewellery industry is a good example of this, but that’s not the reason for this article. 

Over recent months there has been extensive debate about the number of apprentices in the jewellery industry. Indeed, the issue even made the nightly news recently, quite literally! The ABC news reported on the current state of jewellery retailing and the decline in apprentices.

The problems are not new but recently gained momentum when the Federal Government announced cutbacks to TAFE funding. That, along with the demise of large-scale jewellery manufacturing and a lower number of workshops employing apprentices, means there may soon be almost no trained bench jewellers coming through the ranks. 

Currently, there are two pathways to training as a jeweller or metal artisan: the traditional jewellery apprenticeship, where a person is indentured to an employer for up to four years and learns their craft predominantly in the workplace while undertaking a TAFE component called a Certificate III in Jewellery Manufacture; or, the Advanced Diploma in Jewellery Making, a two-year TAFE course covering hand skills, design and business skills, and culminating in a graduate exhibition. 

At present there are five TAFEs with around 120-130 apprentices being trained nationally. By anyone’s estimate, neither figure is large and the government would be remiss in its duties if it did not continually review where resources and money would be best spent, so it might be difficult to argue a good case for those TAFEs under the current funding situation. 

There is also much debate about whether the traditional way in which apprentices are trained is still appropriate today.

But back to the car industry; I was listening to a talkback radio station when a caller suggested that government money would be better spent supporting one company, rather than three, concentrating all the country’s efforts and finances to create, or support, one successful car manufacturer. 

I mean, it makes sense because government money is being split across three companies which then compete against each other in what is, essentially, a zero sum game; if you buy a Toyota, you don’t buy Ford. One portion of government money (subsidy) is being used to put the other portion of government money out of business!

In fact, the caller went a step further suggesting that, just like everything else, the three car companies should have to tender for the government money, just like his business has to do when it works for the government. 

Let them formalise a long-term plan and compete against each other to receive government subsidies, he said.

Now … choosing one company raises the question, should the government actually be in the business of picking winners? Well, arguably it’s already doing so, picking (subsidising) the car industry at the exclusion of many other sunrise industries. 

All that politicking aside, I wonder if the idea has a message for the Australian jewellery industry? I wonder whether the jewellery industry would be better served if all our energy and resources went into one updated, apprentice training school. 

Again, that raises many other questions - for example, where would it be located and how would it be funded? - but wouldn’t it be better to ensure the success of one trade school (and scheme) rather than five struggling TAFEs. Might that not better serve the industry long term and help increase apprenticeships?

During periods of extraordinary economic times I have found extraordinary ideas are often required. That one might be worth considering.