Employment, spillovers and ‘decent work’: Challenging the Productivity Commission’s auto industry narrative

Abstract

The 2013 and 2014 announcements by major car manufacturers that they would wind down all their remaining Australian automotive operations by 2016/2017 pre-empted the March 2014 release of the Productivity Commission's final report into motor vehicle manufacturing. The Commission suggested that government subsidies had only delayed car plant closures and reiterated its longstanding opposition to industry policy and redistributive regional adjustment programmes by government. Industrialists, employer associations, state governments and trade unions have, however, questioned the Commission's forecasts for both economic spillover effects and social impacts in regions affected by automotive plant closures. In addition to challenging several underlying assumptions used to calculate the Productivity Commission's forecasts, this article argues that insufficient attention has been paid to the quality of future work. It extends insights from previous studies of industrial decline by proposing a new research agenda based on the idea of 'social spillovers'. JEL Codes: O14, O38, Z13

Hidden Between Craft and Industry: Engineering Patternmakers’ Design Knowledge

“…33 Ultimately, this led to the exit of all large-scale automotive manufacturing from Australia in 2017 (which has had cascading impacts in many other sectors, including patternmaking). 34 Evidently, the story of manufacturing decline is by no means exclusive to Australia; patternmakers are a declining profession elsewhere (particularly in the Global North), 35 owing to a confluence of economic and technological factors.…”

Automotive surrender: The demise of industrial policy in the Australian vehicle industry

“…19 Thus, while direct auto industry employment and output are never large as a share of national total employment and GDP, the sector carries a disproportionate strategic (and ultimately political) importance because of those extensive external benefits. Barnes et al (2016) identify an additional category of positive externalities from automotive production, which they term ‘social spillovers’, in the form of the social inclusion and cohesion which results from the presence of higher-quality employment opportunities in manufacturing regions.…”

Industry policy in Asia’s demographic giants: China, India and Indonesia compared

“…In response, the Productivity Commission framed all prior industry assistance as wasteful as it only ‘forestalled’, but did not prevent, these announcements (Productivity Commission, 2014). The Commission’s prognoses are based upon a neoliberal view of industry policy and a predictive economic model with a range of related assumptions about the Australian economy, including the operation of labour markets with close-to-perfect competition conditions, perfectly mobile capital within Australia, perfectly immobile capital globally and further assumptions that economic distribution and technology are not important priorities in the economic development process (Barnes et al, 2016). In the context of Asia’s emerging economies, this view is similar to the neoliberal ‘transition orthodoxy’ in which fiscal conservatism is necessary, alongside individual property rights and transparent or democratic political and regulatory institutions, for successful economic development (Lo and Zhang, 2011).…”

“…This pessimism has been accompanied by the ongoing influence of neoliberal economic ideas, specifically in Australia via the Productivity Commission’s (2014) most recent report on assistance to the auto industry. The Commission has continued to promote strong opposition to industry policy in all its forms, as well as related remedial policies like regional adjustment programmes in response to the carmakers’ announcements (Barnes et al, 2016).…”