Ford pulling out of Australia

[Spoonman]

Assembled or manufactured? Huge difference.
Common practice in the car industry in Australia and other countries has often been to assemble vehicles from "CKD Kits" ie completly knocked down, or packing crates of foreign made parts, panels, engines, trans etc simply put together and painted on site in Australia in order to avoid vehicle import taxes, higher shipping charges etc.

Working the automotive industry here in Thailand Iam very familiar with the differences between manufactured and assembled hence I said assembled which is atleast providing some jobs in Australia.

 

[Swifty]

I made the original post to show our members what is happening to our automotive industry (and other sectors) in Australia. It appears that it has now ended up all about wages for management and workers. Whilst wages would amount to a fair slice of the price of a new vehicle, there are other costs involved. Raw materials, power, new machinery, plant upkeep, shipping etc. these costs are always going up as well.

Lets throw some loose figures together, Ford car production per day was fairly low, lets say 200 units, average car cost, let's say $25,000. This makes the daily output about $5,000,000. Now we take the wages for the 1200 workers who will be losing their jobs, don't know what the wage is but lets say $200 per day per worker, this makes $240,000. I am only trying to show how small a percentage the workers wages are in the final cost. Of course there are other wage costs involved, holiday pay, superannuation, sick leave etc, but as I said, these are only loose figures and I don't wont anyone jumping on me pulling it all to bits. If someone can prepare a better costing, please do so.

Paul.

 

[aarggh]

Now we take the wages for the 1200 workers who will be losing their jobs, don't know what the wage is but lets say $200 per day per worker, this makes $240,000. I am only trying to show how small a percentage the workers wages are in the final cost. Of course there are other wage costs involved, holiday pay, superannuation, sick leave etc, but as I said, these are only loose figures and I don't wont anyone jumping on me pulling it all to bits. If someone can prepare a better costing, please do so.

Paul.

Hi Paul, I'm not nit-picking but I think the figure of $200 roughly per day might be too conservative and not really representative of the bigger picture in business. I know in the company I worked for previously, if I got paid $200/day wages, any work I did for other groups or customers was billed at $900/day to cover costs and actually produce a net profit. Sounds like a big gap but it's not really, as for any given number of workers, you need x square feet floor space, x tooling, tea room space and use, toiletries, OH&S, insurance, training, first aid, auditing and compliance, electrical safety testing, etc, etc, etc. You get the idea. So a company might be paying $200 per worker, but it may actually be costing them 3 or more times that amount once all the associated costs are taken into account.

cheers, Ian

 

[Swifty]

Hi Ian,
That's what I was trying to point out, there are a lot more costs involved, the wages are only a minor part.

Paul.

 

[rondunn]

No matter what we think of trade unions and big business, this is still a bad day for Australia.

When we're all serving fast food and mowing lawns, and every product we buy comes from overseas, and all our food production is owned by China, where will the money come from?

At the time it happened I was firmly in favour of free trade, getting rid of tariffs, and "levelling the playing field". Boy, was I wrong.

 

[Swifty]

Rondunn, free trade isn't working, it breaks my heart to see things like oranges and apples bulldozed into the ground because imports are cheaper.

Paul.

 

[aarggh]

Rondunn, free trade isn't working, it breaks my heart to see things like oranges and apples bulldozed into the ground because imports are cheaper.

Paul.

Places like Shepparton, along with farmers in general have really suffered with the squeeze from the big retailers. From what I understand, not so much because costs are high, but to maintain high x% net margins on groceries, the buy price has to be below $x. You really have to feel for the guys on the land doing it hard, and then getting a pittance for their efforts, or told to get lost otherwise. And when the produce buy price goes down in cost, that doesn't equate to a sell cost reduction, usually it simply means larger margins. One company I worked at years back used to buy fabric and ready made curtains ( there's huge profits in curtains!) in bulk from overseas, and we'd whack around 300-600% on top, compared to 200-300% for the stuff from our local workrooms.

A greedier person would have closed the workroom and just imported and sold direct, but luckily the boss was quite down to earth and had around 150 staff employed, and he still made good income.

cheers, Ian

 

[Hopper]

A greedier person would have closed the workroom and just imported and sold direct, but luckily the boss was quite down to earth and had around 150 staff employed, and he still made good income.

cheers, Ian

This is part of the problem. Fewer and fewer businesses being owned and run by individuals or families. They are usually happy to make a good living, employ a bunch of local people and have fun making the widgets they are passionate about, be it curtains or car parts.
Seems like most of those businesses have been bought up by the larger corporations who are not happy to just make a good living but have to squeeze every last penny out of the operation regardless of everything else.

 

[aarggh]

The sad fact, is that increasingly the sales and product forecast for most companies, is only what affects this or the coming quarters revenue and targets. Years ago companies would plan for the future measured in years, the future now is measured in days. And instead of a reasonable profits, they have to be ever increasing mega profits. Remember the days, not too long back, that banks with a small number of customers and holdings, could afford to have a large number of staff, and still find time for the branch manager to occasionally drop new checkbooks off in person? How did we go from modest returns and high staff ratios where everyone was happy, to mega-super-dupa-returns, but they can't afford to keep staff?

cheers, Ian

 

[vederstein]

A couple of years ago in Indianapolis (USA), GM was shutting down a stamping facility. Another company agreed to purchase the plant and keep all the employees if the union would accept a $15 per hour wage so the company could be competitive with other suppliers.

This wage was about half the wage the UAW (United Auto Workers Union) were getting. The union bosses, recommended the rank and file members to take the deal - a job is better than no job. The rank and file members had a shoutdown and offer company's offer was refused. The plant closed and everyone lost their jobs.

My only point to relating this story is that labor is a market and is no different than any other marketplace. There is supply and demand. In this case the supply was larger than the demand and to compensate, prices must become lower or you exit the market. That's exactly what happened.

Eight years ago I lost my job to a combination of government interference (steel import excise taxes designed to protect US steel jobs - but not apparently my engineering job that used that those steel products) and reduced demand (contracting market for our product). So I got another job. Worked hard. Stuck through it though I despised my boss. Now I make about 30% more than when I lost my previous job.

I'm rambling now.

Sorry...

...ved.