Carr to lose Industry Minister portfolio in reshuffle?

Senator Kim Carr has been a vocal supporter of the local auto manufacturing industry in Australia, fronting up to numerous media events in the past and lending his support to all three local manufacturers.

Various news organs reported today that Prime Minister Julia Gillard will announce a cabinet reshuffle — and the Senator is anticipated to be one of the priority shufflees. It's expected that he will be offered a junior ministry in exchange for his portfolio of Industry and Innovation, allegedly for his support of former Prime Minister Kevin Rudd.

Last week, during the first (brief) drive of Holden's Volt on local turf, motoring.com.au spoke with Holden MD Mike Devereux — also President of the FCAI — concerning the industry's relations with government and the Senator. Devereux had delivered a speech to the National Press Club earlier in the week, outlining the importance of vehicle manufacturing in Australia. While the message was subtle, it was explicit nonetheless; government needs to maintain active support for the industry to survive in this country — and that's nothing less than governments in other countries also do for their respective auto industries.

Devereux (pictured here with the Senator) didn't reveal what feedback he had received from the government following the delivery of his speech, but he has certainly spoken with the Senator since then.

"I talk with various members of the government quite often," he said. "Minister Carr and I, we speak usually about once every week to 10 days. And we have had a chat about that speech..."

Given Senator Carr's considerable support in the past, does that make him the industry's man on the inside?

"No, I wouldn't put it that way," Devereux replied. "We have broad relationships across the whole of government."

Indeed, the government was represented at the Volt presentation by Minister for Infrastructure and Transport, Anthony Albanese, which was appropriate given the Volt won't be built here. Clearly Albanese's presence at the event indicates in-principle support for Holden and its first attempt at marketing a low-emissions vehicle. According to Devereux, the government remains firmly behind the local industry, although he expressed disappointment for the end of the Green Car Innovation Fund.

"We were bitterly disappointed at the cancellation of the Green Car Fund; there's no question about that," he said. "We had plans to activate against that industrial policy. But I also think that the rules of the game have changed since the New Car Plan was even instituted in 2008.

"The world is now going through its second major crisis, in terms of the contagion in the debts of the southern European countries, so the world isn't the same world that it was, even back in '08, when the original New Car Plan was instituted. I think that there needs to be another look at manufacturing competitiveness, policy competitiveness and the environment that people like Holden and Ford and GM operate in."

That suggests Devereux's speech was timed to prompt government in a certain direction. And certainly Devereux had called for government to provide the industry with "clarity, consistency and certainty" as he put it. It's reasonable to assume from the content of the speech that Devereux — also wearing his FCAI president's hat — represents an industry not entirely happy with government's current policy direction. But according to Devereux and Holden's Director of External Communications, Emily Perry, there was nothing sinister about the timing of the speech. He had been approached by the National Press Club to address its members on a date in December, "quite a long time ago".

"I don't know about the timing of the speech, [but] when I look at the timing of our next-generation product decisions, what I tried to explain in the speech was that 2015, 16, 17, is almost 'now' — in terms of global vehicle development and companies making what I would say are manufacturing footprint decisions.

"We do need to make some decisions about what we do in this country in the future, and I think we have great dialogue with the government and have always had great dialogue with the government."

But in light of the government ending the Green Car Innovation Fund and imposing a carbon tax that places vehicle manufacturing in Australia under further stress, is there a failure of policy at the senior levels of government? Holden’s Director of Energy, Environment and Technology, Richard Marshall, had said earlier in the day that the current carbon tax legislation was less favourable to the industry than the Rudd government's stillborn Carbon Pollution Reduction Scheme. Devereux agreed with Marshall's summation, but does believe the government is broadly supportive of the industry — it just needs to come up with a market environment that benefits the industry sooner, rather than later.

"You can point to things like the Prime Minister's taskforce on manufacturing and what I would call the whole of government approach to it — and the membership of that taskforce [from] within Finance, Treasury, Trade, Industry and the Prime Minister herself. I think that's a pretty big signal that they're taking a whole-of-government approach to the challenge of: 'how do you create great conditions for manufacturing to exist in Australia. That's really what the speech was about on Wednesday.

"So the timing of the speech... was fortuitous, because the debate rages. I think people realise that you can't mortgage your future for a mining boom that might be temporary."

The mining boom has bolstered the local economy when others have been falling by the wayside, but it has been a double-edged sword, strengthening the Australian dollar and thus crippling other industries, such as manufacturing and tourism.

"I think you need a base of manufacturing jobs in order to have a balanced economy," Devereux explained. "The UK figured that out during the GFC... heavily reliant on the financial services sector... and I think the Cameron government has done a supreme job of attracting billions of dollars in capital investment.

"And Australia, I think, is fast coming to the realisation that it needs to take another look at its policies — not to give handouts, but to be competitive with other countries and what they're doing to attract this industry."

Devereux stresses that the government backs the local manufacturing industry and he doesn't believe it's unpopular in the community to support the local manufacturers.

"No, I think manufacturing has gotten an appropriate amount of focus — from both camps; from the coalition and the Labor Party. I think people in general understand that you can't just have one form of a future.

Our dependence on mining may leave us ultimately exposed to financial ruin in the longer term, says Devereux.

"You can't be a hole in the ground for China and South-East Asia, and ship them our raw materials, and have them improve on them substantially by adding huge engineering value, huge technology and manufacturing value — and then just ship them right back to us as finished goods. That is not a future for the country."

When asked about a turn-around in government philosophy, Devereux asked his own question in response.

"Before the August 2013 timeframe? Can you really see it happening?"

But on a completely hypothetical basis, he continued with a blunt observation.

"Holden would not exist."

"If the government of Australia — and the country — doesn't play the game the way all the other countries in the world play it, then manufacturing of automobiles in this country would probably cease to exist."

Presumably GM would remain in Australia as a full-line importer, as other former manufacturers — Nissan and Mitsubishi — have done in the past.

"I wouldn't speculate on what would happen to Holden as a brand," Devereux replied, "but we believe that our brand is intrinsically linked to making things, designing things, engineering things in this country — and that's what we're committed to doing."

STOP PRESS: News Limited papers have reported that Kim Carr has been handed the new role of Minister for Manufacturing and Defence Materiel, which means he retains some interest in the local auto industry, but has lost some influence in government as he is no longer a cabinet minister. His replacement in the Industry and Innovation portfolio is Greg Combet.

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