FCAI: Oz car-makers safe

AUSTRALIA'S peak automotive industry body has refuted claims in a newspaper report that the federal government was warned about the the future viability of up to three of Australia's four car-makers.

But The Australian stands by its story, claiming on Saturday that the concerns were relayed verbally by senior car company executives, who warned that "union trouble or higher wages would be a poison arrow" for local car manufacturing.

The Weekend Australian said an October 3 submission from the Department of Prime Minister and Cabinet (PM&C) to John Howard warned of the possible 2008 closure of Mitsubishi's Adelaide assembly plant, and "question marks" over Ford's two Victorian operations.

"It is important to note that as the industry is very keen to maintain its relationships, and appears fearful of union retribution, that concerns noted above will not be expressed publicly by the car companies," the submission is reported to have said.

According to The Weekend Australian, the PM&C submission says it is "widely recognised that Australian car manufacturers are facing serious pressure, raising real questions about the long-term viability of at least two, and possibly three, of the companies.

"In essence, the question that the industry is raising is why would a Toyota, Ford or a General Motors in Tokyo or Detroit respectively want to invest millions in upgrading an Australian operation when they are facing higher labour costs, greater union militancy and the threat of more strike action when they can put their money into low-cost and highly efficient Chinese operations?" Federal Chamber of Automotive Industries chief executive Andrew McKellar issued a press release on Friday, the same day the article first appeared in The Australian, refuting claims made in the report.

Mr McKellar said the article - which also claimed that Toyota, Ford, Mitsubishi and GM Holden last month warned the Government that future investment in the industry was in doubt and that they had recently written to the Government on the issue – was without foundation.

The press release reiterated the FCAI's stance in welcoming the federal government review of automotive industry policy in nearly 2008, backing calls by Toyota, GM Holden, Ford and Mitsubishi for a "serious review" of the government's $3 billion car plan, including the freezing of tariff cuts and financial assistance to develop hybrid models.

But it denied any industrial relations demands had been placed on the government.

"No such letter exists, nor has there been any industry discussion on industrial relations matters as suggested in The Australian's story," said the FCAI press release.

"Vehicle manufacturers have built a constructive relationship with their employees and it is essential that this remains the case.

"Australian vehicle manufacturers agree that it is appropriate that a broad ranging review of automotive industry policy arrangements should be undertaken as a matter of priority.

"Both the government and the opposition have already committed to undertake such a review early in 2008.

"The industry has welcomed these commitments and looks forward to the opportunity to present its views on the future direction of policy arrangements as part of the forthcoming review process," he said.

Mr McKellar late last month said he would lobby to have Automotive Competitiveness and Investment Scheme (ACIS) discussions fast-tracked in the wake of concerns voiced by Toyota Motor Corporation executives, who said the planned reduction in the new-car import duty from 10 to 5 per cent from 2010 would, in concert with the strong Australian dollar, make Australian vehicle production more difficult.

ACIS will provide local car-makers with a total of $2 billion between 2005 and 2010, mostly in the form of import duty credits, plus a further $1 billion between 2010 and 2015, when the current "car plan" expires and the imported vehicle tariff could be abolished.

However, some industry analysts – and South Australian Treasurer Kevin Foley – have dismissed these concerns as a political ploy by the car industry to extract more government assistance in the midst of an election campaign.

"See it for what it is: there's not a greater seeker of assistance than the car industry in this world," said the treasurer of SA, which is home to Holden and Mitsubishi factories and previously provided capital to keep Mitsubishi's doors open.

However, according to The Australian, the PM&C submission states the Labor party's industrial relations policy remains a "real concern" for Australian car-makers.

"It is clear there is a deep nervousness about the possibility of pattern bargaining, despite public assurances by the alternative government to the contrary.

"The proposed abolition of AWAs is not really an issue for the industry as few employees are covered on the shop floor, but the possibility of wage outcomes being set without regard to the economic capacity of the individual enterprise to absorb is a real concern," said the submission.

Federal opposition leader Kevin Rudd has agreed to bring forward industry discussions, and the Labor party has committed to a $500 million "Green car innovation fund" to back the development of electric-powered vehicles including hybrids.

PM John Howard said last week the nation's four car-makers had already received significant financial support from Australian tax-payers.

"We have been very ready to help the car industry," Mr Howard told Southern Cross radio on Friday. "But as a matter of sensibly handling this, we would look at requests from the car industry but we have to pay regard to the level of assistance we've already provided to the car industry.

"It is very, very high... I think there has to come a point, you just can't go on giving more and more. I think one of the interesting things out of the car industry dilemma is that they're concerned about a change in industrial relations," he said.