Federal Industry Minster Kim Carr has spent a lot of time, effort and taxpayers funds trying to help the automotive industry and the textile, clothing and footwear sector in the past couple of years.
Events of the last few days may well show that Carr is fighting a losing battle.
Overnight, the chief executive of US-based car market Ford revealed that the current Ford Falcon might be the last Falcon designed and built in Australia and sold only in Australia.
As we’ve seen in the last 12 months, the global car industry is very, very sick and Ford simply cannot justify spending billions making a car that is sold in one, relatively small Australian market.
“(Carmakers) who make one vehicle, a different vehicle for one country, I think those days are gone, because you can’t compete with the global companies, and Ford’s going to be a powerhouse globally,” Ford global president Alan Mulally told reporters last night.
That could spell the end of the Falcon in about five year’s time, when the current model is due to be refreshed.
Of course, Ford Australia could continue to build cars in Australia using the company-wide large-car template that will be designed in the next few years. Toyota follows this model with its locally built Camry, which is sold and manufactured in numerous plants around the globe.
But the Ford president’s message is clear – the automotive sector is a global one and it’s just increasingly hard to see where it fits.
The collapse of fashion label Ksubi, which was placed in administration yesterday, underlines how tough the rag trade is right now. Margins are so thin and competition so fierce that any slight misstep puts a company in the firing line.
Again, these are global forces at work. Australian fashion companies need to be global to survive but the vagaries of currency, raw material prices and cheap competition makes it so very tough.
You can’t begrudge Carr for helping to give these sectors a fighting a chance. It’s not surprising either, given the strong union membership in both sectors.
But the Government needs to realise that it is time to refocus on other areas of the economy that can drive Australia’s long-term growth.
Forget about these dinosaur sectors and spend more money backing smart, innovative SMEs who just need a bit of a push to shine on the world stage.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
