Never had it so good?

Words -- Otto Insider

Comment

Does manufacturing still have a future in Australia? I was wondering this the other night when, on the telly amid the plethora of US crime and punishment shows (reeking of unsubtle moral messages from the American right), I spotted a segment about a family in the USA trying hard to spend a year without buying anything "Made in China".

Surprisingly, it appears this was hard… Very hard! Even in the USA.

And it's going to get harder -- not only for them Yankees, but for us too. Just about the only part of this featured suburban family's life not dominated by Chinese-made goods was their wheels. But just wait a year or two for the Chrysler-Chery partnership to get up a head of steam and we'll see.

Made in China is becoming ubiquitous, even if to many hard-working Australians the working conditions of many Chinese who make these goods, are iniquitous. As jobs have run offshore in the face of hiked production costs fed by our many comfy penalty rates and other non-cash benefits, manufacturing is now the preserve of guys who have never heard of an RDO, let alone enjoyed one.

Yet Aussies out on an RDO are spending their cash on imported goods, many from China -- and bringing them home in imported cars and trucks.

Have you stopped to think about the cost to Australia of the ever-increasing impact of imported goods? Lost manufacturing jobs won't be offset by increased demand for more wharfies to unload more container ships. And what about the loss of national pride in our technical and manufacturing ingenuity? Just another 'pawn' on the imported barbie?

Australia's hip pocket is bursting with cash. Sales of new vehicles rocketed past the one million mark for the first time in the 2006/07 financial year. It is music to the Treasurer's ears, not only for the GST and import duty haul, but because it underlines public confidence in the ongoing strength of the economy.

Want to see just how well we're doing? Treasurer Costello offered baby boomers a one-off bonus pre June 30 -- the ability to throw a seven-figure sum into super. It was a very attractive and popular offer.

The fact that so many had the wherewithal to invest such sums is a wonder in its own right.

Even now in the 2007/08 tax year you can add significant six-figure sums to your super and draw it out tax-free later on.

Even so, Aussies were flush enough to snap up hundreds of hyper expensive cars in the first six months of the year: hundreds more cars than ever, (57 per cent more based on the examples below!). And that's hundreds of cars that are more expensive than ever, generating lots of lovely Luxury Car Tax as well as GST.

Cop an optic at this lot:

Nice work if you can get it, for the 655 folk with enough cash to spend north of $150K (in most cases w-a-y north!) on a set of wheels.

Of course, not everyone in this golden age of economic prosperity and automotive indulgence is spending up big. For some, the urge to splurge on a new vehicle is tempered by the running costs. For them, a locally-made car is barely an option.

Business is finding it increasingly important to keep a lid on running costs, which is why in the days of yo-yo fuel prices, consumption is being brought under control buy a marked swing to diesel, especially in the Light Commercial Vehicle market.

LCV sales can be analysed by type of buyer: private or business. Private LCV sales are usually owner-driver tradesmen who use their steeds for work and play.

In the LCV market, locally-made utes have been fairing poorly. Part of the Ford and Holden sales slide will be attributable to their avoidance of diesel fuel and their resolute attachment to six or V8 petrol (and LPG) powerplants. Given the figures below, it will be interesting to see who bites the diesel bullet first.

Ford ute sales are down 14 per cent YTD and the superannuated Holden ute is 25 per cent worse off. True, every Terry Tradesman knows a VE generation ute is just weeks away.

Still, the figures are interesting. Compared with the same period last year, the private light commercial market -- which includes stellar performers such as Toyota HiLux and Nissan Navara -- has swung behind diesel. Growth here for compression ignition outstrips the growth in the sector itself, with diesel this year more popular than petrol.

In the business-owned light commercial sector, the picture has also changed. Last year diesel out-sold petrol by the narrowest of margins (162 units) but this year diesel sales are a staggering 12,000 units, or 43 per cent, stronger than petrol. The business LCV market has grown by around 3500 units but overall diesel sales have grown by around 7500 units.

The bigger picture of course is underlining the strength of the economy in two ways: businesses are confident enough to invest in new and additional assets, and they have additional workload that requires additional transport assets. This then flows into increased employment, and finally increased profits and tax, further boosting the economy (Source: Otto's Economic Theory 101).

In the passenger car market, diesel sales in both private and business sectors have doubled compared with last year, but diesel private passenger sales are just five per cent of the market and only 3.2 per cent of the business passenger fleet.

Numerically, private diesel sales are double those of business.

So, despite the continued mushrooming of diesel passenger availability, business buyers are sticking to benzina. Maybe one day a locally-made car will be offered with a diesel engine...

Or, better still, maybe we will get a locally-made Ford or Holden ute with a diesel engine. Undeniably, Ford and Holden know how to sell diesel powered utes: Rodeo and Ranger are proof of that. The figures show that business buyers of LCVs are tuned into diesel.

So when will Ford and Holden give fair dinkum Aussie ute buyers a fair go with some diesel power? Prove that mateship's not dead and you don't have to pick-up a Thai-built truck to save on fuel bills (not to mention the Ozone layer)?

The alternative will be coming soon enough. And it'll say Made in China.

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