Did Free Trade destroy British and US Manufacturing?

[Luke Plaizier]

http://machinedesign.com/article/tha...ee-trader-0115

While all of our partners in the local region either have signifcant Tariffs on imports, or non-Tariff taxes like Thailand, has any business in Australia seen any benefit from Australia's low Tariff economy to anyone other than those in foreign countries selling goods into Australia?


Lukeyson

[turbodewd]

I dont think British or US manufacturing was destroyed per se. Certainly the japs simply made better bikes, they have a ruthless attention to detail and focus on quality. There is a japanese saying to the effect of 'quality first, profits later'. This is why Toyota is so good, they have spent decades on ensuring there are no faults in their cars. While GM or Ford have focused on the price of things in order to make the car as cheap as possible. They want people to buy new cars every 3 yrs.

In the US the want their cars disposable so they can sell you a really cheap one as soon as possible.

[aussie muscle]

d the idea of free trade was impractical because “that doctrine rests on two conditions — international peace and general reciprocity

that's Australia's problem: no reciprocity

[turbodewd]

Australia reduced/eliminated tariffs on TCFs a long time ago, that is textiles, clothing, footwear. Now I think we would all agree there's no need to make socks or shirts here when they can be made in Asia for 50c or less. But Australia certainly should keep its economy diversified, we cant live off the mining industry forever.

When China's economy suffers a hiccup or worse then metals prices will dip, or worse, and mines will close. Then our dollar will dip. The question is will all those miners have other jobs to return to.

[vanman_75]

Problem is we are Australian , we want high wages but won't buy local high priced products, if everyone did maybe the bloke in aus would keep his job and around it goes in a big circle...

[turbodewd]

Originally Posted by vanman_75

Problem is we are Australian , we want high wages but won't buy local high priced products, if everyone did maybe the bloke in aus would keep his job and around it goes in a big circle...

I do my bit. I bank with CBA. Telstra is my telco. I have a Falcon with the i6 motor. I buy that Nudie all-Australian fruit juice and Dick Smith's products. I fly Qantas. Altho my wife is Indian!

[RedHotGT]

Originally Posted by vanman_75

Problem is we are Australian , we want high wages but won't buy local high priced products, if everyone did maybe the bloke in aus would keep his job and around it goes in a big circle...

Was going to say something very similar to that...

We want the high wages - but we're happy to pay $2.00 for a T-shirt that's been made in a sweat shop o/seas.... and squeal like pigs when we're seeing T-shirts that are 'basically' the same for $35.00.

[burnz]

Yep need higher wages to pay rent, food, fuel.

[Luke Plaizier]

Originally Posted by turbodewd

I do my bit. I bank with CBA. Telstra is my telco. I have a Falcon with the i6 motor. I buy that Nudie all-Australian fruit juice and Dick Smith's products. I fly Qantas. Altho my wife is Indian!

Outsourcing to India for a wife? That's a new one.

Lukeyson

[stev3n]

[QUOTE=turbodewd;4593762]I dont think British or US manufacturing was destroyed per se. Certainly the japs simply made better bikes, they have a ruthless attention to detail and focus on quality. There is a japanese saying to the effect of 'quality first, profits later'. This is why Toyota is so good, they have spent decades on ensuring there are no faults in their cars. While GM or Ford have focused on the price of things in order to make the car as cheap as possible. They want people to buy new cars every 3 yrs.

I seem to remember Toyota having issues with their flagship model, the GXL turbo diesel Landcruiser. Low milage 'criusers were spinning big end bearings, requiring replacement motors. Another fault with thier diesels was the timing belt letting go at 60 000 ks, causing untold damage. Harmonic balancers becoming loose that caused it to machine out the front main seal.
The first Coronas that were imported here were tested by an Ausssie motoring mag in the outback, three out of four of these cars had a diff seizure on initial test.
Prius brake dramas.
Kluger rolling over on test due to poor ESP / ESC program.

Toyota has a reputation for reliability due to a healthy advertising budget. Don't underestimate how much clout advertising has. Picture the old grandfather sitting at home all day listening to John Lawes read a script written by Toyota about quality and reliability. Grandson asks grandfather what car should he look at ? What is he gunna say?

Funniest thing about Toyotas and their customers? Glad you asked. A workmate bought a new td cruiser, some of the boys at work had patrols, he used to tell them the Patrols are rubbish. Anyhow, coming home from work one day cruiser engine seizes up, Toyota fixes problem under warranty. Took around 4 weeks to fix though. I offer to take mate to work while he is without his wheels. He keeps telling me why he would not buy anything other than a Toyota. Brand loyalty or stupidity, I'm not sure.

[stev3n]

Sorry OP got a little side tracked in my post above. I'm no economist but I think Aussies got a raw deal on the FTA

[mik]

Not easy to answer , I think you would have to analyze each country's trade /politics to come up with a decent answer, but to my way of thinking world trade has had major effect on how countries function, looking at our own country that was once very self sufficient with our own nanufacturing, it is becoming animporting dumping ground, to give an example I was in one of the huge hardware stores today to buy some garden equipment,
Nearly every single brand out of about 20 types where 99% made in china, even once well known brands thar where either american made or australian made where chinese.
I dunno how you guys see this , but to me this is an absolute disaster for us and I would'nt be surprised if US and uk are suffering the same fate to some degree.

[Struggo]

The rot started back in 1977 with The Lima declaration.

http://en.wikipedia.org/wiki/Interna...t_Institutions

[jpblue1000]

manufacturing and mining are not the only thing we do in australia, we need to see some value in the other economies which exist. plenty of countries have done so and suceed. Diversifying our income stream by encouraging and adopting industries that are more recession proof, not affected by commodity prices and are more transportable. I believ ein a healthy manufacturing base if it can be done efficiently and remain economically viable, but don't believe its the only income stream worth /supporting/propping up at the expense of more efficient, rewarding, profitable industries
JP

[82XD393.3v]

the government sacrificed our manufacturing so they could sell our gas to asia for 1/20th the price they charge us and same with the mining steel coal etc the tariffs went so asian nations would buy theses things from us

[chevypower]

Yes and no. Opening free trade just globalizes the markets, but now countries have to compete with each other. With people (esp unions) pushing for more entitlements (like Western countries) it becomes harder to compete with countries with little to no entitlements, like China.

[Luke Plaizier]

Originally Posted by chevypower

Yes and no. Opening free trade just globalizes the markets, but now countries have to compete with each other. With people (esp unions) pushing for more entitlements (like Western countries) it becomes harder to compete with countries with little to no entitlements, like China.

Read this. http://www.heritage.org/research/tes...trade-barriers - Barriers to Trade with China.

Of interest are terms like:

* Artificially cheap exports due to Chinese subsidies
* Weak intellectual property protection
* Aggressive economic espionage
* All land is state owned in China. State business, therefore, get land for free. Private business do pay for land but can be evicted for reasons that include reducing competition for state businesses.


And here's an article that shows, despite a flat Tariff of %25 in China (compared to 5% for Australia), cars made in the US and exported to China are still cheaper than US cars made in China, so China slapped AN ADDITIONAL 18 to 21.8 percent penalty on selected US cars imported in China.

http://www.forbes.com/sites/baizhuch...e-tariff-wall/

China also artificially subsidised/dumped Solar Panels into export markets, effectively killing off the Solar Panel industry in Australia - arguably the leading solar panel developer in the world thanks to the efforts of the CSIRO and our Solar Car challenge. But governments in the US and EU were smart and quick enough to catch this before it destroyed their own local manufacturers.

http://www.bloomberg.com/video/eu-op...0kRFJNY5g.html
http://www.bloomberg.com/news/2012-1...r-imports.html

I argue that Australian manufacturing is competitive, and that it's Australian government policy opening our market up so readily to foreign competitors, without effectively reciprocating our access to those same foreign markets, that is causing us this pain.

Australia should set a policy of EQUALISING Tariffs to partner nations, with a view to reducing tariffs between partner nations on an EQUAL basis - NOT one sided tariff reduction exposing Australia to what we are experiencing now.


Lukeyson

[bobthebilda]

Originally Posted by Luke Plaizier

Read this. http://www.heritage.org/research/tes...trade-barriers - Barriers to Trade with China.

Of interest are terms like:

* Artificially cheap exports due to Chinese subsidies
* Weak intellectual property protection
* Aggressive economic espionage
* All land is state owned in China. State business, therefore, get land for free. Private business do pay for land but can be evicted for reasons that include reducing competition for state businesses.


And here's an article that shows, despite a flat Tariff of %25 in China (compared to 5% for Australia), cars made in the US and exported to China are still cheaper than US cars made in China, so China slapped AN ADDITIONAL 18 to 21.8 percent penalty on selected US cars imported in China.

http://www.forbes.com/sites/baizhuch...e-tariff-wall/

China also artificially subsidised/dumped Solar Panels into export markets, effectively killing off the Solar Panel industry in Australia - arguably the leading solar panel developer in the world thanks to the efforts of the CSIRO and our Solar Car challenge. But governments in the US and EU were smart and quick enough to catch this before it destroyed their own local manufacturers.

http://www.bloomberg.com/video/eu-op...0kRFJNY5g.html
http://www.bloomberg.com/news/2012-1...r-imports.html

I argue that Australian manufacturing is competitive, and that it's Australian government policy opening our market up so readily to foreign competitors, without effectively reciprocating our access to those same foreign markets, that is causing us this pain.

Australia should set a policy of EQUALISING Tariffs to partner nations, with a view to reducing tariffs between partner nations on an EQUAL basis - NOT one sided tariff reduction exposing Australia to what we are experiencing now.
Lukeyson

So what you are saying is that the government should be taxing us more so the outcome is that we pay alot more for our cars, sheer economical brilliance. Now when the imported mazda 3 becomes $30,000 driveaway, how do you guarantee that the base Ford Falcon doesnt become $46,000?

[monte.b]

Originally Posted by Struggo

The rot started back in 1977 with The Lima declaration.

http://en.wikipedia.org/wiki/Interna...t_Institutions

Yep thats true ,that was the beginning of the end of our industries and it was sighned by no other than GOUGH WHITLAM,The lima declaration stated that because the third world countries were so far in debt that the developed countries would give the third world countries our technology and we would then give them preferred import status and that is what has happened .We now find we have hardly any industries left other than mining and it will get a lot worse yet .We are bound to become the white trash of asia if we dont put our tariffs back on and get our industry base back ,yep things will be a lot more expensive to make here and will cost more in the shops but what choice is there left

[aualright]

Originally Posted by bobthebilda

So what you are saying is that the government should be taxing us more so the outcome is that we pay alot more for our cars, sheer economical brilliance. Now when the imported mazda 3 becomes $30,000 driveaway, how do you guarantee that the base Ford Falcon doesnt become $46,000?

This today in the SMH:

http://www.smh.com.au/opinion/politi...118-2cyt3.html

I think with places like China, as the general population becomes more educated and wants more, their system of protection will come back to bite them. For now they get away with it because, after all, they are a Communist nation and people don't really have a 'choice'.

I'm a supporter of free markets and choice. I think reverting back to high tarrifs and dare I say it, a fixed dollar set a low levels, will limit that choice.

We can becme the food bowl of Asia, and we already have an FTA with the US for much of this produce except for Sugar production as it was something the Howard led LNP had to forsake due to the US still wanting to protect their local industry.

We are also the 'thinkers' of this region, so we need to take advantage of that.

I don't have a solution, but to go back to high tariffs would see an increase in cost for almost everything.

****

[Luke Plaizier]

Low tariffs are clearly the way of the future, I don't argue with that. But not just for Australia, it has to be for every country we trade with as well, and that's what's not happening. Ignoring that seems to be the key to objections I'm hearing - ie having a Tariff Scheme that mirrors that of the foreign country that Australia is trading with. Fair Trade.

Does the Australian 'consumer' deserve some blame on this? I won't argue that point. The right to choice and foreign competition for low cost items while demanding high wages and quality of life is now the Australian Way.

Bob's comment strikes right at the heart of this. How dare we increase prices on consumers for the sake of local employment and jobs! Those guys in Thailand and China must be livid that there are huge tariffs or non-tariff taxes on imported goods into their country. But then again, look how much money they are raking in exporting goods to markets like Australia, or selling locally made goods into their local markets! Poor them.


Resolving the inequity of tariff schemes in the local region is crucial. China just dropped a bunch of tariffs in Dec 2012 - especially on powdered baby milk, since the stuff they make seems to do more killing than nurturing. Some view this as a positive indication that China may be favouring the Free Trade agreement with Australia that Australia has been chasing for years. But then, with Australian having an FTA with the US, with Thailand, with China - is this just a 'Spaghetti Bowl' solution? Or should true Fair Trade in the area be pursued more vigorously with FTAAP?

And can Fair Trade with viable target markets in the Asia Pacitic region all happen before Ford pulls the pin in Australia? Man I hope so.


Lukeyson

[JG34JA]

Great links and topic Lukeyson.
OK, we have realised trade is not going exactly in Australia's favour (except: selling raw materials) and many of us can feel some sense of hardship increasing. So how do we reverse this? Can we manufacture cheaper and better than China? What would it take - new technology, capital, automation and the elimination of labour/regulations & entitlements attached to this? Is our niche in other places - can we outperform there (like mining, education, clean food and what should have been the 'big one' -solar)? Can we deploy our capital to better use overseas and seek a better return - after all banking and opportunity have also been globalised. While I'd like to see an equality of trade situations, it aint gonna happen, so the question is how do we deal with it? What I fear is that tariff reciprocity will beget trade blocs and currency wars (happening) which will beget capital controls and embargoes, which last time tried (1930's) led to war.

[Luke Plaizier]

How do we deal with a situation where we have no equality of trade and no prospect of equality or true fair trade being established?

I'd say shut down businesses that can't compete and put people out of work, like we are doing now. Move all local manufacturing off shore so companies can finally make a profit by selling back into Australia, like we are doing now. Just ask Harvey Norman how his off-shore website is going. Sell everything we own for short term gain - even the ground underneath our feet, like we are doing now.

Create a situation where nothing is made in Australia, we run out of things to sell, and all we ever do is buy from overseas. The Australian dollar is then worth nothing, and we get to a point where we can't afford to even buy anything from overseas.

Maybe you could sell your house, live in a tent, and take a such a hefty pay cut to ensure you're on lower wages than those in China so we can make up for their Tariff inbalance?

China and US foreign policy focuses on outcomes that benefit China and US. Australian Policy seems to focus on outcomes that benefit everyone other than Australia. Nice one.


Lukeyson

[monte.b]

Originally Posted by aualright

This today in the SMH:

http://www.smh.com.au/opinion/politi...118-2cyt3.html

I think with places like China, as the general population becomes more educated and wants more, their system of protection will come back to bite them. For now they get away with it because, after all, they are a Communist nation and people don't really have a 'choice'.

I'm a supporter of free markets and choice. I think reverting back to high tarrifs and dare I say it, a fixed dollar set a low levels, will limit that choice.

We can becme the food bowl of Asia, and we already have an FTA with the US for much of this produce except for Sugar production as it was something the Howard led LNP had to forsake due to the US still wanting to protect their local industry.

We are also the 'thinkers' of this region, so we need to take advantage of that.

I don't have a solution, but to go back to high tariffs would see an increase in cost for almost everything.

****

How are going to become the food bowl of asia by letting them buy up all our farms and that is what is happening so we become slaves to them or letting mining overtake our farming land ,we might be the thinkers of the region but that wont feed us ,they take our ideas and use them so what is the point of that

[Luke Plaizier]

Originally Posted by aualright

We are also the 'thinkers' of this region, so we need to take advantage of that.

That's a good comment.

Why would we perceive ourselves this way? Is it because we have a better education system in Australia than either China or India?

In nearly every job I have had overseas, UK, Canada, US, there have been quite a number of Indians and Chinese. I found myself in a pretty serious minority in terms of foreign employment in those countriesa.

But I can't deny that Australia fares pretty well in just about every educational statistic I can find - performance, government spending per capita, ranking - specifically science and maths. Not as well as US, Canada or New Zealand perhaps, but then most Kiwi's come to work in Australia anyway.

But Monte has a valid point too. Of what valid is our better 'thinking' if we come up with ideas that are copied by China, with their notoriously relaxed intellectual property protection?

Lukeyson

[mik]

Originally Posted by JG34JA

Great links and topic Lukeyson.
OK, we have realised trade is not going exactly in Australia's favour (except: selling raw materials) and many of us can feel some sense of hardship increasing. So how do we reverse this? Can we manufacture cheaper and better than China? What would it take - new technology, capital, automation and the elimination of labour/regulations & entitlements attached to this? Is our niche in other places - can we outperform there (like mining, education, clean food and what should have been the 'big one' -solar)? Can we deploy our capital to better use overseas and seek a better return - after all banking and opportunity have also been globalised. While I'd like to see an equality of trade situations, it aint gonna happen, so the question is how do we deal with it? What I fear is that tariff reciprocity will beget trade blocs and currency wars (happening) which will beget capital controls and embargoes, which last time tried (1930's) led to war.

you often hear people say bugger it, let the non efficient industry`s fall by the way side, but you can only be so efficient, let`s take mining iron ore and making steel, these are not only Labor intensive but also energy intensive industries(energy is very expensive here), when you compete with the likes of china where labor is cheap, even if you equal or exceed their technology you are still behind the eight ball, not to mention the good old fair trade that puts us further behind. and the same can be said for other industries too cars are just one of many feeling the pinch.

you can only rely on resources to take you so far, there will come a time when as resources get harder(more expensive) to come by , when it`s no longer viable to dig resources to sell over sea`s where will we be, this is my worry, where will our kids be.

[2011G6E]

English car industry? Ruined by militant unions and workers who couldn't give two craps about quality of the merchandise they were making, combined with much better imports from overseas that meant the public demanded better cars (that last bit sound familiar?) which the makers just couldn't or wouldn't do.

English bike industry? They refused to face up to the reality of Japanese bikes and what they represented, instead preferring to "just soldier on" with what they'd been doing for decades. When the amazing Honda 740-4 for example came out, English makers were still doddering along with old upright twins that more or less dated to the fifties, and just polished the edges a little bit to try and modernise them, even agonising over blatantly obvious things like whether they should fit disc brakes. When a designed within their factories came up with something revolutionary that would have maybe saved them, they turned their back on the idea...one prototype and design papers exist for a 350cc twin overhead cam lightweight Triumph twin with disc brakes that actually went and handled, but it was knocked back by management. They simply refused to move with the times.

American makers? Same as the British with the quality...but even more so. "Planned Obsolescence" meant that your shiny new Yank Tank was falling apart as you drove it away from the showroom, and was only designed to last a few years so you went back and bought another...but hey, they were cheap! Sadly, we even saw this up until recently with "built down to a price" American new cars imported here by Chrysler and Jeep...shoddy, ugly, but artificially expensive here because of tariffs and taxes, which made Australians wonder who would pay so much for such rubbish...the answer was, in America, no one. They were cheap over there.In fact they still do it with a lot of their vehicles especially their huge pickups. Down around $23,000 for a massive Silverado pickup? Come on...


Australia used to be the same...if it hadn't been for lowering tariffs and taxes and stronger import markets, our makers would have been quite happy to plod along selling "just good enough" cars to a captive audience, and don't deny it. I still remember my father coming home in 1974 with a brand new Mazda 929 wagon (top of the line at the time) for which he paid about the same as our neighbour had for his also new Holden Kingswood wagon. Air con? Push button AM/FM (whatever "FM" was ) stereo, four speed manual gearbox instead of three as standard. Tinted windows! Metallic paint standard! Disc brakes! Our neighbour wasn't at all happy, and his next purchase was a Toyota Crown.

Move with then times, produce a good product, and realise there's a big bad world out there that you shouldn't be protected from (for your own and the customers good), and you will thrive and survive. Fail to learn from history or whinge that it's all so unfair, and you'll go down the tubes.

[82XD393.3v]

Originally Posted by 2011G6E

English car industry? Ruined by militant unions and workers who couldn't give two craps about quality of the merchandise they were making, combined with much better imports from overseas that meant the public demanded better cars (that last bit sound familiar?) which the makers just couldn't or wouldn't do.

English bike industry? They refused to face up to the reality of Japanese bikes and what they represented, instead preferring to "just soldier on" with what they'd been doing for decades. When the amazing Honda 740-4 for example came out, English makers were still doddering along with old upright twins that more or less dated to the fifties, and just polished the edges a little bit to try and modernise them, even agonising over blatantly obvious things like whether they should fit disc brakes. When a designed within their factories came up with something revolutionary that would have maybe saved them, they turned their back on the idea...one prototype and design papers exist for a 350cc twin overhead cam lightweight Triumph twin with disc brakes that actually went and handled, but it was knocked back by management. They simply refused to move with the times.

American makers? Same as the British with the quality...but even more so. "Planned Obsolescence" meant that your shiny new Yank Tank was falling apart as you drove it away from the showroom, and was only designed to last a few years so you went back and bought another...but hey, they were cheap! Sadly, we even saw this up until recently with "built down to a price" American new cars imported here by Chrysler and Jeep...shoddy, ugly, but artificially expensive here because of tariffs and taxes, which made Australians wonder who would pay so much for such rubbish...the answer was, in America, no one. They were cheap over there.In fact they still do it with a lot of their vehicles especially their huge pickups. Down around $23,000 for a massive Silverado pickup? Come on...


Australia used to be the same...if it hadn't been for lowering tariffs and taxes and stronger import markets, our makers would have been quite happy to plod along selling "just good enough" cars to a captive audience, and don't deny it. I still remember my father coming home in 1974 with a brand new Mazda 929 wagon (top of the line at the time) for which he paid about the same as our neighbour had for his also new Holden Kingswood wagon. Air con? Push button AM/FM (whatever "FM" was ) stereo, four speed manual gearbox instead of three as standard. Tinted windows! Metallic paint standard! Disc brakes! Our neighbour wasn't at all happy, and his next purchase was a Toyota Crown.

Move with then times, produce a good product, and realise there's a big bad world out there that you shouldn't be protected from (for your own and the customers good), and you will thrive and survive. Fail to learn from history or whinge that it's all so unfair, and you'll go down the tubes.

you are right unions are out pricing our uncompetitive industries by demanding to much, even the desperate are taking advantage with pray times and workers are taking advantage of conditions, if aussie's had a go like they did 30 years ago and earned there money they could still have a nice pay but well damn they may have earned it we might go ok and some industries might survive, but without unions we would be asking for bread money each week. damned if we do damned if we dont, ill ask anyone here in a industrial job if they really feel they have earnt there money for the week
i have work in the plastics industry for several years and cant believe how many spend so much time trying to find so little to do, you lazy assed mf create most of the problem here, do a job and get payed ffs rant over
thing i dont agree with is that the product offered in 74 by ford or holden was substandard to toyota or mazda back in 74 they where like a 2 dollar shop bells and whistles for 1 year till they failed like all the things the asian markets sent us back then

[vanman_75]

I agree that people are very lazy these days , and a lot get more than they deserve . But blaming unions is a cop out , double edged sword we would have nothing without em ( you don't think that company really wants to give you a pay rise each year do you ) and on the other side it protects idiots that wouldn't work on an iron lung . Fact our government is greedy and now its biting them on the rear , wanting to be friends with everyone ...going to be a long road fixing our countries problems , just hope it starts sooner rather than later while we all still have somewhere to work

[82XD393.3v]

Originally Posted by vanman_75

I agree that people are very lazy these days , and a lot get more than they deserve . But blaming unions is a cop out , double edged sword we would have nothing without em ( you don't think that company really wants to give you a pay rise each year do you ) and on the other side it protects idiots that wouldn't work on an iron lung . Fact our government is greedy and now its biting them on the rear , wanting to be friends with everyone ...going to be a long road fixing our countries problems , just hope it starts sooner rather than later while we all still have somewhere to work

well who else is to blame they should set a standard that if you dont do this much u cant be protected, there is give and take ffs if its all for the employee then we have no hope, unions help theses people do nothing or very little with protection. i think you will find by working harder you keep labour cost down and productivity up they will happy pay you more, also means they wont need to employ more inter-national students to do the things that there employees should be doing