“The end of Australia’s car manufacturing industry has arrived,” writes the Sydney Morning Herald after Toyota announced today that it will no longer make cars in Australia beyond 2017. “various negative factors such as an extremely competitive market and a strong Australian dollar, together with forecasts of a reduction in the total scale of vehicle production in Australia, have forced us to make this painful decision,” Toyota’s CEO Akio Toyoda said today.
With 22 million people, Australia has about the population of Beijing or Shanghai, and nobody would expect one city to carry three automakers. Cars had to be exported for volume, and they used to be a lucrative Australian export – until the Aussie dollar became too strong. Australians bought 1.14 million units last year, but most of them were imported from lower cost, cheaper currency markets.
What may have sounded like a bit of overdramatic copywriting on part of the Herald is actually true. All large automakers operating in Australia have called it quits.
- Ford was first to bail from Australia. Blaming a strong currency, it announced in May 2013 that it would close shop in 2016. A few days ago, Reuters wrote about “worries the carmaker may exit the country sooner than its planned 2016 deadline.” A year before, Ford had negotiated a rescue package with the Australian government.
- GM’s Australian operation had been “propped up by billions of dollars in government support,” as Reuters wrote. When Tony Abbott’s conservative coalition was a bit less generous with the subsidies, GM made a few more attempts at what was called “blackmail,” and when that didn’t work, GM pulled the plug from Holden. In December 2013, GM said it would ”stop making cars in Australia by 2017 due to high costs and a cripplingly strong currency,” as Reuters wrote.
- Before Toyota decided to close its doors in Australia, “Toyota have made no requests to us other than express their frustration with the difficulty they were having with the industrial relations process” Industry Minister Ian Macfarlane told Reuters in Canberra today.
In front of this background, it is hard to believe that Ford still has the nerve to blame Japan for currency manipulation, just because the Japanese yen eased up a bit, throwing the Japanese car industry a new lifeline. Just a few days ago, Ford’s America chief Joe Hinrichs urged “congress to oppose a TPP agreement if it does not include strong and enforceable currency disciplines,” and to “address the critical issue of currency manipulation.” Ford was the first company to quit, fold, and run away from a strong currency, and now it has the gumption to attack Japanese companies that vowed to preserve the production bases at home, a cripplingly strong currency notwithstanding.
Supported by an artificially weakened U.S. dollar, American auto exports are up. Hinrichs praised his company for being “the largest exporter of automobiles from the United States.” When Japanese manufacturers want to sell abroad, Ford labels them as criminals.
Ford needs to stop taking its customers for fools. Ford is not worried about currency manipulation which it knows not to exist. Ford is worried about an eventual drop of the 25% chicken tax, if the Trans Pacific Partnership trade deal becomes reality. The tax would drop eventually, in 10 or 20 years. Even that prospect is too much for Ford. The tax protects Ford’s pickups and obscene $10,000+ profits from foreign competition. While shouting “currency manipulation,” Ford manipulates its customers, politics, and the truth.
The American farmer would gain big from a Trans Pacific Partnership. Food is expensive in Japan. Farms are small and inefficient. The American farmer also is a big buyer of Ford’s trucks. Ford is stealing money from the American farmer, money that is badly needed to pay for those $40,000+ pickups.