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  • Writer's pictureEdwin and George

Holden Closure – A Wake Up Call for Australia and Ultimatum to Pioneer AI and Automation

When the shift finished at Holden on 20th October, it marked not only the end of the factory, but also the end of car production in Australia. The last Holden to be fully manufactured in the Adelaide plant, a red VF11 SSV, rolled off the production line on the final day.

Sticking with the automobile industry theme, as Mike and the Mechanics sang in "All I Need is a Miracle":

"But it's always the same old story You never know what you've got 'til it's gone."

It’s the end of a great era for the Australian car industry.

The last Toyota was made in Geelong earlier in October. Ford and Mitsubishi closed manufacturing plants in the last year. It’s cost around 50,000 jobs, across all the industries impacted.

The Holden plant made a massive contribution to the quality of lives of South Australians. The closure is a truly momentous event. The first car was produced there during the first world war. The 50s,60s and 70s were the boom years. In the 70s, the Holden site at Elizabeth was ‘state of the art’ and a car was coming off the line every minute.

Changes to tariff rules, making imports cheaper from Asia, started the problems. Then high wage costs, the strength of the dollar, lack of government subsidies and import barriers in Asian markets brought Holden’s Australian downfall.

The closure raises huge questions for economies like Australia.

Put simply, how can high cost advanced economies compete in manufacturing and heavy industry against cheaper emerging markets?

In the USA, for example, car manufacturers are investing in Mexico despite threats from President Trump. In Europe, Jaguar Land Rover is taking production to cheaper Eastern European countries.

Perhaps robotics and automation give some hope.

‘The rising use of robots and automation may help tip the balance back in favour of developed countries’ says Dr Sam Luttrell, an Australian based partner at Clifford Chance. ‘Robots can perform most of the major steps in the production line and can be used across manufacturing. ‘

His view is shared by Roy Green, Dean of Technology at the University of Sydney Business School, who says that ‘for manufacturing to survive in high costs economies they need to embed a high level of robotics and automation in operations.’

But how prepared is Australia for robotics and automation?

At present Australia ranks 9th in the number of robots per manufacturing job and will need to speed up their deployment to remain competitive.

Professor John Spoehr of Flinders University is of the view that an urgency has been created to ‘move quicker on automation.’ (See our blog ‘South Australian Economy – Unemployment Down, but Beware the Train Coming Down the Track’).

However, there are other worrying signs. For example, a survey at the start of 2017 found that ‘Australian companies are the worst prepared for the arrival of artificial intelligence technologies when compared to all other major economies.’ (see ‘The Guardian’ 24 January 2017).

Australia needs a winning strategy in the whole area of automation – or more jobs will be lost to lower cost competitors. Perhaps the Holden closure will be the wake-up call needed.

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