How Australia can make cars again

The slow decline and eventual cessation of Australian vehicle manufacturing left a hole that seems to get larger as each year passes. Beyond the vehicles themselves, the institutional knowledge, the career pathways, the talent pool and Australia’s productivity have all diminished. Premcar CEO Bernie Quinn has been a vocal advocate for Australian manufacturing and outlines the case for its revival.

Bernie Quinn has become the unintentional spokesperson for the revival of Australian vehicle manufacturing. Those of a cynical disposition might express little surprise at this.

As the CEO of Premcar, who along with Walkinshaw and RMA are the biggest names in Australia’s second-stage vehicle manufacturing industry, Quinn would be well-placed to benefit from an increase in support for local manufacturing.

On the other hand, few are more knowledgeable about what it takes and what it would take to increase Australia’s manufacturing capability and capacity.

Time spent at Ford, Toyota and Prodrive, along with Premcar’s current relationships with Nissan, Mitsubishi and Chery, has given Quinn plenty of exposure to the opportunities and pitfalls of making cars in this country.

The most important thing to note is that this isn’t about bringing back our beloved large sedans, or even cars that are unique to this country.

“To me, it’s an evolutionary approach,” he said.

“You take the secondary manufacturing industry that we’ve created already, that makes money and employs people and pays taxes, and you expand that gradually into something that becomes manufacturing a full vehicle.”

Key to Quinn’s plan is the acronym CKD, which stands for Complete Knocked Down, where the component parts of a vehicle are sent from the original production facility and then assembled locally.

Australia has a long history of CKD assembly, spanning all the way back to the Ford Model T, but Citroëns, Renaults, Volkswagens, Mercedes-Benzes, Peugeots, Studebakers, Hillmans, Triumphs and more all rolled off Australian production lines in the 1960s and ’70s.

According to Quinn, there are myriad advantages to this approach: “The really heavy capital investment that’s required for making a vehicle is things like a body shop, frame welding shop, a paint shop... billions of dollars to set those up properly for volume production.

“I don’t think the market really supports that sustainably, given the competition is doing it very effectively in places like China and Thailand.

“I’m saying we start with a semi-knockdown or complete knockdown vehicle and then we build it up with some Australian content, with Australian innovation from Australian engineers who understand what the market really wants.”

The CKD approach also eliminates the waste associated with second-stage manufacturing.

Whether it’s RMA and Walkinshaw converting vehicles from left- to right-hand drive or Premcar upgrading Patrols, Navaras and Tritons, the current approach – where fully-built vehicles arrive at the respective factories – necessitates brand new parts being discarded.

Under the CKD model, those parts wouldn’t be fitted in the first place, while also opening up a world of possibilities in terms of increasing local content or even creating unique Australian variants.

As an example, Citroën built a simplified DS for Australia in the 1960s called the ID19 Parisienne, which used a traditional manual gearbox instead of the semi-automatic, manual steering and locally sourced interior trim.

Given the state of the Australian market, there is an obvious place to start when it comes to vehicle choice.

“The kind of vehicle specification that’s very popular here is a separate frame pickup truck and a separate frame SUV,” Quinn said.

“To me, taking a separate frame SUV and pickup and converting it to specs that are perfectly suited to the Australian customer, I think you’d easily build a positive business case – at 10,000 (units per annum) you’d probably make a business case, you’d definitely make one at 20,000.”

Government support for local manufacturing has long been a controversial topic, but Quinn says it would largely pay for itself with benefits that stretch far beyond the balance sheet.

“I’m not a pro-tax person and I think there’s already a level of taxation in the market that could be relieved or relaxed, given a certain amount of local content or local added value.

“Things like NVES, Luxury Car Tax, those sorts of things can be scaled back to incentivise manufacturers to set up here and do CKD, SKD-type work.

“I think that’d be enough incentive alone [and] what you lose, let’s say, in NVES or in Luxury Car Tax, you’re gaining payroll tax because you’re employing people here in highly skilled jobs and Australia has got a really tragic history of productivity decline over the last 20 years.”

Reestablishing a local manufacturing presence would also strengthen pathways for local design, engineering and financial talent to be promoted overseas, following in the footsteps of Jacques Nasser, Mike Simcoe, Max Wolff, Trevor Worthington, Ian Foston, Paul Batten and many more who have started their careers locally and gone on in some cases to the very top of their organisations.

“I had the opportunity to graduate from school and go into an automotive company and all my dreams came true,” Quinn said.

“I think if it was thought about very strategically it could be very fruitful for a lot of people. This market is very attractive to carmakers, that’s why they’re all here, why not try to get something out of that?

“It may not always be like that, so we should be trying to leverage that, so I think it deserves more discussion and more thought.”

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