To the surprise of almost noone, Ford has announced that it’s planning to shut down Australian production in 2016.
Ford has been the weakest of the local manufacturers for some time. Nick Gruen – who worked with Hawke government industry minister John Button whose car industry plan delayed this day for at least 20 years – observes that despite continued subsidies Ford has been underinvesting in its local manufacturing for a decade. He suggests that the government should have, instead of continuing subsidies under its present owners who were obviously uninterested, the government should have used the money to encourage and subsidize a sale to a Korean or Chinese manufacturer looking for a halo car for sale both here and overseas.
It’s long been my view that the travails of Australia’s car makers get far more attention than they should. Similar industries have departed offshore over the last 30 years, and we’ve done rather well; there’s nothing special about making cars. And the magnitude of the job losses is miniscule in the context of the broader Australian economy, and nothing like Campbell Newman’s decimation of the Queensland public service. Indeed, across Australia there were 390,000 retrenchments in the 12-month period starting February 2011, which makes the 1600-odd job losses from Ford’s manufacturing shutdown look like a piddle in the ocean.
But such nationwide aggregates can cruelly miss the pain caused to families and communities when a large source of employment disappears. So, rather than just spouting aggregates, I think it’s kind of important to look at what actually happens to communities who undergo factory closures. And – blow me down with a feather – academics have looked at these kinds of questions, and the answers are – surprise surprise – more complex than a simple “oh it’s a disaster” or “things sort themselves out pretty quickly”.
For instance, Chapain and Murle examined the impact of the shutdown of the British sports car maker MG. Despite a relatively benign job market in Britain in this pre-GFC period, there was a real spike in unemployment in the area; however, this did fade over time:
However, that didn’t mean that life necessarily returned to normal for the former factory workers and their communities. Long term unemployment seemed to go up significantly and persistently, more than the national average:
While some of these long-term unemployed were factory workers, not all were; the arrival of a large “spike” of workers from the factory closures probably made it more difficult for other job-seekers. Furthermore, while the article doesn’t cite any quantitative data, it notes anecdotal reports that the jobs that former MG factory workers were getting were less well renumerated than their previous factory work.
Did the loss of MG destroy its surrounding communities? No. Do findings like these justify the billions of dollars we’ve thrown at Ford, both explicitly and implicitly through things like the second hand vehicle tariff, over the years? Not in my view. Could we have spent that money on more useful things? Absolutely. But it’s a nonsense to suggest that a future without Ford won’t involve some pain for its workers, and for Geelong.