SamuraiBlue, your comment is a further example of the flawed thinking that is currently prevalent in Australia. The labour unions are not to blame for the decision made by the final three car manufacturers in Australia, Ford, Holden and Toyota to cease local production. The labour unions did add to the cost pressures faced by these manufacturers but this was nothing new nor was it a major factor. The sustained and historically high Australian dollar, the FTA's and the absurdly low 5% passenger vehicle import tariff for non FTA producers like Europe simply tipped the economic equation towards 100% importation of vehicles being more profitable for Ford, General Motors Holden and Toyota. These negative factors fall within the realm of Industrial Policy which is the responsibility of the Australian national government. It is the Australian national governments, both Conservative and Labor that are responsible for the appalling industrial policy settings that have switched the economic balance towards 100% imports.
Australia, like Europe, Japan and the US have always had higher labour costs than the cheapest Asian producers such as Thailand, China and South Korea. The higher labour cost nations all rely on trade protection or government incentives to compete in the global market place. Even the low labour cost nations have trade protection and generous government incentives. All these nations, including Thailand and China are able to apply technology and automation more or less equally well. Japan, China, South Korea and Europe all have highly protected home markets with over 90% of new vehicles being supplied by local producers. The US market is more trade exposed but US owned manufacturers have regularly received enormous government incentives from US national and state governments. With trade protection and government incentives, the automotive manufacturers in all of these nations, including Australia have attained similar levels of productivity, quality, technical proficiency and product/manufacturing innovation.
The Toyota Australia Altona vehicle manufacturing plant in the western suburbs of Melbourne is a modern 150,000 unit p.a. plant and its production costs are only slightly higher than equivalent Toyota plants in Japan, the US and the UK. The Toyota Thailand operations have even lower production costs but a moderate 10% - 15% vehicle import tariff for Australia would tip the economic balance back towards Australia. The manufacturing operations of Holden and Ford Australia can and have attained productivity levels equivalent to Toyota Australia when their plants are run consistantly at their design capacity.
Both Holden and Toyota Australia had expansion plans for their Australian manufacturing operations in mid 2013 to replace and expand their locally produced product range but the moderate level of government incentives that were requested were flatly rejected by the current Conservative (Liberal and National Party Government). Both the Conservatives and the Labor Party have rejected the more rational alternative of moderate tariff protection.
Australian vehicle manufacturers have competed successfully in the global market place and can continue to do so with moderate tariff protection simply because the assembly plant labour cost is typically only about 10% of the total vehicle manufacturing cost in highly automated factories. Some small local manufacturers such as pharmaceuticals and medical device manufacturers like Cochlear may be able to compete globally without tariff protection but these businesses in total will unfortunately never attain the size of the Australian automotive manufacturing industry which is currently at a historically low $5 billion p.a. turnover. If a national goal was set of 50% of the Australian 1 million p.a. new vehicle market being manufactured locally, plus exports to keep plants at capacity, then this could be a successful $15 - 20 billion p.a. industry. The total industry assistance involved would be far less than that currently provided to the mining and finance/superannuation industries and would in any case be returned back to the government through increased taxation revenue and back to consumers through increased employment and economic activity.
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All of the free trade agreements Australia has so far implemented are not in the best interests of the majority of the Australian people and generally only serve the interests of Australia's mineral and energy resources industries, the agricultural export sector and their financial backers.
Australia's once capable manufacturing industry is being deliberately destroyed to further increase imports thereby lowering the Australian dollar and further improving the profitibility of the resources and agriculture export sectors which unfortunately employ far fewer Australians than manufacturing.
The 'neo liberal' economic thinking that is driving this foolishness is currently entrenched in all of the major Australian political parties (including the Labor Party which has betrayed its constituency), most relevant government institutions and by most economists yet it will inevitably lead to a huge increase in unemployment and Australia inevitably having an economy more like a 'banana republic' than a developed nation.
A moderate level of trade protection (10 - 15% tariff) would have enabled highly automated manufacturing sectors such as the Australian automobile manufacturing industry and the white goods industries to not only survive but also to expand but this has been refused by all national governments even though far higher tax payer funded subsidies are provided to the resources industries and finance/superannuation industries.
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The overwhelming majority of atmospheric scientists including all the most credible scientists, believe that human induced global warming is an extremely serious problem that must be addressed urgently to avoid catastrophic consequences. It is the responsibility of governments and relevant international institutions to seek out the best available credible advice, determine the possible consequences of human induced global warming and to undertake the most appropriate preventative measures. I would recommend that interested persons seek out the recent report by James Hansen and his associates released on December 3, 2013 for a credible summary of the danger imposed by human induced global warming.
Nearly all the disinformation constantly repeated by climate change deniers should be treated with contempt as not only is it almost universally incorrect but what is worse this disinformation is predominately funded by special interest groups such as the fossil fuel industry and acts to frustrate the implementation of the most timely, appropriate and cost effective measures to protect the worlds people, the economies of nations and the natural world.
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Each industry sector applies pressure on governments to serve their interests in preference to the interests of citizens. Before Japan expands its military and military industry much further, the national democratic institutions, media freedom, media quality and the participation of an active and informed population all need to be strengthened. The Japanese people must learn to control the agenda of Japan, not just elected officials, unseen experts and outside power groupings.
A strong military and military industry that are both under the firm control of a strong liberal democracy is a fair and reasonable goal for Japan. Both China and Russia are rapidly increasing their military capabilities and both have shown a willingness to make dangerous but calculated territorial gains in recent times. North Korea and the Islamic world remain highly unstable. Power vacuums will be exploited and Japan and other liberal democracies must retain adequate military strength to face down any challenges. The alternative of military and political weakness will lead to increased instability and danger for everyone. No one should have to live under tyranny and its progress can only be avoided by the liberal democracies standing together and by having adequate military, political and economic strength.
Resolution of conflict should wherever possible be done by peaceful, just and legal means but this becomes more difficult from a position of weakness or irrelevance.
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Russia has returned to its old ways of treating neighbouring nations with contempt analogous to a cat playing with a dying mouse. The Ukrainian people are not Russia's possessions and are not subservient to Russia and they deserve to be treated as justly and lawfully as any other nation. The issue of territorial control of Crimea should not have been decided by military invasion. Hastily improvised democratic elections under the total control of an invading nation have no validity. Russia does have a valid historical claim to Crimea and internationally accepted and legal methods should have been used to decide sovereignty.
Once again Ukraine has been violently assaulted by an expansionist Russian national government. The persecution of Ukraine by Russia has been almost continual through Imperial times but was most appalling during Bolshevik rule with at least 5 million Ukrainians dying from starvation and associated disease during the Bolshevik organised great famine of 1932-1933. At least two other major famines were deliberately imposed by the Bolsheviks on Ukraine as well as many other atrocities. Russia has repeatedly used violence, genocide and colonisation by ethnic Russians to weaken Ukraine and this process continues to the present day.
The comments praising Vladimir Putin's illegal invasion of Crimea are foolish and reckless and mostly display mindless Russian patriotism of the worst kind and will only serve to further isolate Russia from Europe.
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The continued use of fossil fuel powered electricity generation is unacceptable due to the rapidly approaching cumulative atmospheric CO2 limit set to avoid global catastrophic climate change (currently 500GtC atmospheric carbon set on December 3 2013 by James Hansen). Even 2 deg C warming will lead to 4 - 6 m sea level rise after a few centuries and Tokyo is on average 5m above sea level.
Japan like all nations must rapidly develop renewable energy and implement energy conservation. Regulations to mandate super insulation of all habitable buildings such as the European “Passivhaus” methods is cost effective and environmentally sustainable. Japan can also make greater use of distributed photovoltaic electricity, solar thermal generated electricity, ground sourced heat pump heating and cooling and geothermal energy.
Public transport as well as modern safe bicycle networks and pedestrian paths should be given higher priority over the use of grid locked roads for cars. Cars and trucks should also be progressively moved to electrical power and renewable fuel sources such as algae produced bio-fuels. Better urban design is required to minimise travel time and energy wastage.
Nuclear electricity is beneficial to the extent that greenhouse gases are not emitted but as Japan well knows this industry presents other serious environmental hazards as well as major financial burdens arising from the high construction cost, waste management cost, decommissioning cost and the cost of accidents and disasters.
Current reactors are inherently dangerous and should be phased out as soon as possible. The nuclear industry has been badly regulated by the Japanese National Government and industry has acted irresponsibly with reactor location and with non-fail-safe designs. Public support has been squandered and without public consensus more short sighted, economically wasteful and environmentally damaging solutions are likely to be implemented. If renewable energy sources and aggressive conservation measures prove insufficient to meet demand then safer third and fourth generation nuclear reactors may be a good supplementary option.
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GREATER RESPECT NEEDED FOR UKRAINE
Ukraine is as entitled to its independence as any other nation and over the course of its history has been the greatest victim of Russian brutality apart from the Russian people themselves. The despotic regimes of Russia from Imperial to Bolshevik to Putin have an appalling record of brutality and subjugation of neighbouring nations and internal ethnic and independent minded groups.
The Putin regime has engaged in persecution and war against Russia’s southern, predominately Muslim minorities that has claimed over 250,000 lives during his period as leader. This behaviour is just a continuation of a very regular pattern throughout Russia’s history.
http://www.sbs.com.au/dateline/story/watch/id/600211/n/Russia-s-Hidden-War http://hotterthanapileofcurry.wordpress.com/2010/03/31/255000-muslims-killed-in-russias-war-against-the-caucasus-region/ http://faminegenocide.com/resources/causes.html http://www.artukraine.com/famineart/famine10.htm
The Russian invasion of Crimea is totally unacceptable even if Russia happens to have a strong historical claim to this territory and that a slight majority of residents have Russian ethnicity. Russia has used its military superiority and the threat of invasion to intimidate Ukraine into submission analogous to a rapist using the threat of greater violence or death to have his way with his victim. A price must be applied by the rest of the world against Russia because of this.
The hostility Russians see being directed towards them by the rest of the world is a natural and reasonable response by the rest of the world to Russia’s inability to form strong democratic systems of government, its inability to have a moral and independent system of justice, its inability to respect the rights of all people, its military expansionism and the ongoing brutality and lack of respect toward its neighbours, ethnic minorities and even for its ethnic majority, the ethnic Russian people.
Mikhail Gorbachev probably understood this and chose to liberalise the Soviet Union but the present Putin regime has chosen to follow a political strategy closer to past despotic Russian leaders.
It does not need to be this way. Russia could have become a non-threatening, truly democratic country where the rule of just law applied, that respected the rights of all of its citizens and that respected other nations. Russia has a sizable economy with many competitive advantages and through commerce could have become a large, valuable and respected member of the world community of nations. Even nations that have legitimate historical grievances towards Russia would have been brought closer to Russia through economic self interest, trade and closer contact between their peoples. Perhaps the current Russian leadership genuinely do not want this and prefer the old ways that have been such a disaster for the people of Russia and their neighbours.
The Russian people need to stop blaming foreigners for their problems and for threatening and persecuting them but instead need to look at themselves more critically and ensure that they take control of their own destiny and have truly representative governments and institutions.
No nation wants to invade Russia nor could any nation or military alliance succeed in any form with such a foolish concept. NATO only acts to defend the borders of its member states and provides an essential military balance with Russia that enables much smaller nations such as the Baltic States of Lithuania, Latvia and Estonia on Russia’s periphery as well as the other member states to have an independent and more secure future. NATO is a mechanism for stability and not for military conquest and it also acts in the interests of Russia by denying any reckless Russian Governments the opportunity for opportunistic territorial expansion.
The world is nothing like it was prior to World War II and no totalitarian states apart from North Korea exist, not in Europe or in Asia. Russia and China have however shown in recent times a willingness to expand their territorial boundaries in a calculated way and the world must negotiate a return to former borders and/or apply a price for this illegal and reckless expansion.
http://www.smh.com.au/world/us-assures-japan-in-islands-dispute-with-china-20131128-2yays.html http://www.economist.com/blogs/economist-explains/2013/12/economist-explains-1 http://www.bbc.com/news/world-asia-pacific-11341139
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The dear leader has been busy for quite a while now 'fighting terrorists' to Russia's south and anyone else who doesn't bend to his will. We should have been watching things more closely and holding the dear leader to account. The world must progressively reduce its demand for Russian oil and gas.
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THE DEMOCRATIC WORLD MUST REMAIN MILITARILY STRONG
I refer the reader to the attached article by Janet Daley, a columnist for London’s Sunday Telegraph that appeared in the Age on February 24, 2014 which raises the same concerns that I raise in this article.
Quote from Janet Daley's article: [So tell me, those of you who have demanded for years that America and the West should end their ''domination'' of geopolitics, and their interference in the affairs of far-flung nations: is this what you wanted? A free-for-all for rogue states, lunatic extremists and long-dead imperial powers, in which the lives and freedoms of populations caught up in the murderous power play would count for nothing?]
One of the major failings of progressives, centralists, liberals and the 'left' is to assume that by good deeds and a pure heart that the world will somehow take notice and progress to a better world. This would only be true if all peoples and nations thought the same way but currently many do not and are unlikely to for many more generations unfortunately. The evil and the selfish will always exploit such a vacuum of power and they will try to advance their reprehensible causes.
For the democratic world to unilaterally disarm or retreat into isolationism for financial reasons; in a world with so many despots, nations with imperialist ambitions, extreme religious movements, unresolved conflicts such as in the Middle East and the Korean Peninsula, where nuclear weapons are held by unstable states like Pakistan and North Korea, where China seeks to be an economic and military superpower, where the relative economic capacity and technical superiority of the democratic world is shrinking, where the world faces increasing stresses from global warming, population growth, shortages of clean water, food shortages, arable land shortages, perverse concentration of economic wealth and so on; is highly irresponsible and counterproductive to the long term goals of world peace and human and environmental advancement.
The forces of good must be strengthened and international institutions such as the United Nations and the International Criminal Court must be strengthened. More resources must be devoted to international economic and social development and to resolving areas of conflict and economic and social inequity. Military forces however must not be neglected and democratic nations of good will must always be able to influence and bargain from a position of adequate strength as well as virtue.
A good role model for this approach was Sweden during the cold war where a strong military was retained while the cause for world peace, strict neutrality, justice and human advancement was pushed with great vigour. Sweden was able to do this while still supporting a generous system of social welfare and free education. Sweden has unfortunately decided to almost abandon its military in the modern era and is currently an example of how the democratic world should not proceed in this particular respect. Sweden will lose political power and relevance as well as endangering her own security and lose what was an important part of her economy, that of military production where Sweden was once a world leader. Sweden’s close neighbour Russia is highly unstable and continues to demonstrate imperialist ambitions.
The recent decision by the US Government to phase out the still very capable 350 strong fleet of A10 ground attack aircraft and the large KC-10 aerial refuelling tanker fleet is an example of reckless and short sited decision making by the centre left of US politics. The quoted savings are peanuts compared to the original cost of acquisition and deployment and these platforms have ample remaining service lives. The US national budget deficit should not be used to justify such poor decisions. The US must remain as a military superpower at least until other world players such as Russia and China decide to pursue military moderation. The US should not repeat the mistake of almost total demobilisation after WWII which probably emboldened Stalin and North Korea to invade the South and led to the death of so many in the Korean War.
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On the 6 December 2012 Toyota announced the opening of its new engine plant that is located at Toyota Australia's centralised manufacturing operations in Altona, a western suburb of Melbourne.
This is a little more than a year ago. Although times were tough then with a historically high Australian dollar, a fragmented market, almost no trade protection and only moderate government co-investment (to partially compensate for relatively high Australian wages) Toyota must still have seen a future for the Australian automotive manufacturing industry.
These external negative factors have not really changed from one year ago till today. If anything the Australian dollar has fallen so conditions should in reality be better.
What is different is the attitude of the current Federal Government with Kevin Rudd’s Labor Government being replaced by Tony Abbott’s Liberal National Coalition Government in September 2013 and the hardened attitude of the governments primary economic advisory body the Productivity Commission. The Productivity Commission recently recommended that all government support for the Australian automotive industry cease by 2020. This is effectively a decision that an Australian automotive manufacturing industry is not welcome past 2020 and that the governments key advisors want the industry to close down.
The Tony Abbott Government has politically moved to the right much more than any previous national government. Philosophically they could be described as neo-liberals who promote small government, minimal government intervention in the economy, free trade, globalisation and free flow of capital to the most profitable sectors of the economy. This philosophy currently has wide support in the community especially from people who work hard, face a high cost of living and resent governments taxing them excessively and wasting that money on unnecessary social services or corporate welfare.
As the inevitable consequences of this ‘dry’ economic philosophy become better known public support will fall and in fact it is already unlikely the LNP Coalition will win the next federal election in late 2016 even with most of the Australian commercial media being heavily biased toward the conservative side of politics.
The neo-liberal philosophy is however an overly simplistic and failed economic philosophy. No one, not even China or India follow this philosophy, nor does the United States even though its business leaders often claim to be free traders but the world is well aware of the local, state and national government support US industry receives.
In a country like Australia with a relatively high living standard, the concept of total free trade will inevitable mean a race to the bottom. Firstly most of the manufacturing industry will disappear but it will not stop there and eventually much of the service sector will also be transferred to lower cost foreign providers. The internet provides easy trade for information based occupations such as accountancy, education, engineering, architecture, IT support and so on.
Even work that must be performed in Australia such as construction, food harvesting, plant operators and maintenance services are now performed by non-resident workers allowed into the country with temporary visas such as the 457 visa.
The only sectors of the Australian economy likely to prosper in such an environment are the bulk minerals/resources industry and the bulk agricultural commodity export industry. Neither of these sectors employ many Australians. The inevitable end result of neo-liberalism is unemployment for most and fabulous wealth for a few. The classic third world banana republic.
With China switching to renewable and nuclear power as fast as it possibly can at the moment and also transforming its economy across the board to an advanced sustainable economy, it is inevitable that the demand and price for mineral resources will fall substantially. Australia will suffer badly in such a downturn with such a narrowly focused economy.
The global atmospheric CO2 limit that has been set to avoid catastrophic climate change will also lead to a collapse of the coal industry and possibly much of the gas industry in the near future. This is another factor our current conservative government fails to acknowledge. Much of the associated unserviceable loans will fall onto the major Australian banks, the government and the Australian taxpayer.
The alternative economic approach to neo-liberalism of balanced trade protection which allows a larger and more equitable mixed economy with a healthy manufacturing, service and resource export economy is essential for Australia’s future prosperity. This approach provides a ‘level playing field’ for Australian businesses but does not remove national or international competition.
So with a Labor Government likely to be returned in late 2016 that is most likely to support a balanced trade protection philosophy, why did Toyota announce yesterday the closure of its Australian manufacturing operations for late 2017? Will Toyota change its mind about closure of its Australian manufacturing after the Labor victory? I certainly hope so.
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Don't forget to build enormous sea walls as Tokyo will be under water if rates of CO2 emissions continue to climb.
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For Toyota to make a record profit is excellent news as it will bring some stability and job security for its employees. Further investments also become more likely. The Japanese manufacturing model of a partnership between industry, government, employees and citizens is a successful role model for the world and shows how nations with relatively high labour costs can succeed in a competitive world marketplace.
I am a former employee of Toyota Australia’s manufacturing operations and I am deeply concerned with the current hostile attitude of the Australian conservative LNP national government towards the manufacturing industry. The current leadership of this government wants to cease direct support for the Australian automotive manufacturing industry with Toyota Australia being the last remaining local manufacturer, eliminate all trade protection and has actively taken measures to force the closure of the industry even though it has productivity levels that are only a little behind world best levels.
The Australian national government foolishly acts to implement a future for Australia without most of its manufacturing industry and which is based primarily on bulk mineral/resource exports and bulk agricultural exports. The economic vulnerabilities, enormous social dislocation, economic contraction and unemployment that will result have not been given due weight.
The Japanese people should consider themselves very lucky to have such a well thought out manufacturing industry and government partnership.
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