The automotive industry in twentieth-century Australia

Wheels and Deals: The automotive industry in twentieth-century Australia

Wright, Christopher

Robert Conlon and John Perkins, Wheels and Deals: the automotive industry in twentieth-century Australia, Ashgate, Aldershot (2001), 190 pp., L45.00.

The automobile is one of the defining elements of the twentieth century. Given its central role in modern industrialisation, the automobile industry has also been viewed by governments as a key to national economic development. In the aptly named Wheels and Deals Robert Conlon and John Perkins focus on the relation between the State and car manufacturers, and highlight how this interaction has shaped the historical development of the Australian car industry. The authors argue that the industry was fundamentally shaped by government policy, specifically a range of industry protection which included tariffs, local content schemes, subsidies, import restrictions and other measures. Rather than producing an efficient and sustainable industry, the authors argue, the pattern of government intervention encouraged the development of a fragmented industry which lacked sufficient economies of scale, involving too many manufacturers for the available market. It is a history which highlights many mistakes and missed opportunities. The specific forms of State intervention that developed around this industry are shown to have often been badly thought out, expedient and ad hoc.

The analysis is well written and clearly structured, and the authors mount a convincing critique of the various stages of industry protection based upon an extensive range of government archival materials, trade journals, government reports and statistical sources. Moreover the analysis is extended to explore overseas developments which shaped the Australian industry, most notably in the United States, Canada and Britain.

The book is structured around nine chapters. Chapter 1 sets out the argument regarding the limitations of protectionism and provides a summary of the developments reviewed in detail in the following chapters. Chapter 2 examines the early years of automotive manufacture, from the turn of the century to the end of World War I, and highlights the early reticence of Australians to embrace the motor car, the rapid success of the imported Ford Model T, and how the early tariff protection directed the car industry towards inefficient production and outdated technology. Changes in industry protection during the 1920s and 1930s are reviewed in chapters 3 and 4. Key developments during this period included the establishment of local subsidiaries of the big three American producers, Ford, General Motors and Chrysler, as well as the emergence of a car manufacturing ‘lobby’ which came to have a powerful influence upon government policy. Chapter 4 also retraces the fascinating, albeit largely forgotten, story of the federal government’s attempts to promote complete car manufacture through legislative enactment. Although this initiative failed, it spurred the foreign manufacturers into the expansion of their operations, resulting in the eventual complete manufacture of Australian cars, beginning with GMH’s Holden in 1948. Chapters 5 and 6 expand on the themes developed in the earlier chapters through comparison with the Canadian car industry and the influence of the British car companies. Finally, chapters 7 and 8 cover the history of car industry development during the post-Second World War decades and the 1980s and 1990s respectively. Here government strategies shifted to issues of `local content’ as well as more recent industry plans which sought to incrementally reduce protection, increase competitiveness and rationalise the number of manufacturers.

The authors do a good job in supporting their argument that protectionism has been one of the influences, if not the major influence, upon the structure of the car industry. However, other factors do emerge in their analysis which explain the deficiencies of local manufacture. In particular the small size of the domestic market and its remote geographical location appear to have had a significant impact. For instance, transport costs underpinned a large part of the different trajectories of the car industries of Australia and Canada during the 1930s. While car bodies were bulky and costly to ship, making them more suited to local manufacture, the chassis and engines (the core of the motor car) were more amenable to importation. The authors argue that in the inter-war period Australian tariffs reinforced the logic of production that flowed from transport costs, by providing higher protection for car bodies and lower duties on chassis.

However, while the analysis of the impact of government policy upon the car industry is excellent, the policy implications of the history are somewhat muted. Free-market advocates could easily interpret this study as providing support for a general critique of State involvement when in fact the research appears to highlight the need for a more carefully planned approach to industry assistance. Clearly the specific forms of protection that were introduced failed to achieve many of their publicly proclaimed goals. As a result, the authors argue, protectionism benefited the vehicle manufacturing lobby while acting as a substantial tax upon consumers. However, it is unclear from the authors’ analysis what alternatives could or should have been adopted. It seems doubtful whether car manufacturing in Australia would have been viable without protection; General Motors, Ford and Chrysler did after all establish local subsidiaries in order to operate inside the tariff wall. Indeed, in the absence of the early tariff protection, one can ask, would Australia have had a car industry at all, and what sort of society would Australia now be in the absence of industry protection? Potentially a very different society, given the pivotal role of car manufacture in the development of Australian manufacturing industry, as well as a major employer of post-war labour.

A second shortcoming of the analysis for this reviewer was the neglect of labour issues within the historical development of the industry. While this may be outside the book’s immediate focus, some reference to the role of the work force and their representatives is perhaps warranted. The car industry was a core employer of manufacturing labour, particularly the post-war influx of non-English-speaking migrant workers. In the 1960s and 1970s these employment practices became a source of violent industrial disputation that paralysed the industry. In the last two decades, trade unions have also been key actors in the development of industry policy and work restructuring. While the authors make reference to the early ‘corporatism’ that emerged in the 1930s, trade union involvement in more recent corporatist manifestations could have received greater attention.

These criticisms aside, Wheels and Deals offers a fascinating insight into the political processes and lobbying that underpin industry policy and real-life economics. The book will be essential reading for anyone interested in the Australian car industry, its past and its future.

Christopher Wright, University of New South Wales

Copyright Manchester University Press Sep 2002

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