Monday 11 February 2008

Industry Structure - Australian Auto - Tentative Steps in New Directions

Through its history Australia’s remote geography, colonial & commercial ties and relatively small population (only now 20m) means it has had much domestic and export induced flux. Mitsubishi’s (5th Feb) decision to close its MMAL Clovelly Park plant, after the Lonsdale engine plant closure, demonstrates the latter of the consistent ‘boom & bust’ experience.

The ‘Australianisation’ of Detroit & Birmingham products (from successful Valiants to the infamous Leyland P76), were always thought to be key to developing the archetype Aussie motor. Of course Holden and Ford were the historical victors with basic longlasting, adaptable, evolved large cars & utes; the Holden vs Ford rivalry still present in the ‘blue-collar’ public consciousness – but like elsewhere, rapidly declined given Japanese product uptake in small and medium cars and SUVs, Toyota king.

The supplier system that grew to support the Big 3/4/5 (inc BMC/Mitsubishi) was greatly assisted with government incentives, infact the auto-sector still is to this day. But all know that previous Japanese & Korean (now Chinese) export pressures have consistently squeezed the real viability of the domestic industry; but its importance to (especially) the South Australian economy means that it is at times artificially supported. Inward investment made by the Japanese when it requires additional global capacity or sees an opportunity to steal local market share – as it did with the 6-cylinder large cars.

The reaction was (and debatably still should be) to climb the value chain with more higher-value systems, R&D (esp IT based electrical architecture arenas. But that is hard when efforts aren’t automatically incorporated into an aligned domestic industry and Koreans and Taiwanese can undertake a similar, arguably more integrated, track.

It’s an oft discussed matter, but Australia needs to find it’s USP, part of which could be following Israel’s lead in the realm of urban EVs given the country’s somewhat insular large cities, and probably plug-in hybrid diesel large cars that can operate locally and drive interstate as required (esp relative to Ford, GM, Toyota’s large fleet customer base). The state research department - CSIRO - has taken steps to further this possibility, bringing together over 80 suppliers to produce a new 'aXcessAustralia' concept car, following on from previous versions that looked at BIW and 2 stroke powertrains, and working with the GM-H in development of the hybrid ECOmmodore concept.

Of course, this idealised new direction doesn't mean that the industry will alter overnight and that that Holden, Ford and Toyota don’t have conventional operational futures. They surely do if they can achieve export plans and incorporate smaller car production (as we see with Ford and Fiesta), and use such revenues to take a lead within their respective empires in specific new energy solutions. Such action, broadening their scope of operations into far greater R&D integration, would reduce the historic cyclical ‘boom & bust’ we’ve seen, encouraging a stable growth trend based on IPR, development and systems & vehicle manufacture instead.

So the new Rudd government should entertain these few key strategic thoughts and look to back and make South Australia a centre of electrical powertrain & diesel hybrid excellence - beyond the usual PR rhetoric of co-ordinated, but often un-linked, projects such as that from the University of South Australia.

Government, Holden & Ford could use this as their domestic and additional export nuclei. The kernal of the ideology is inherent in the GMC Denali XT Concept, developed by Holden Design and shown at the Chicago Auto Show this week. Although it could potentially be an export earner for GM-H, it's the advanced mechanics it contains, that are key to future local industry health. Australia maintain its momentum in this field, renowned since the Cross-Australia Solar Challenges that have made the country and new energy so symbiotic.

To this end the 'AXcessAustralia' industry development dream will, for its second trick, need to itself 'plug-into' leading edge larger scale ventures supported by influential backers - and here, Tesla Motor and the Isreali EV initiative appear to be at the operational and social fore. Australia, should perhaps involve itself here and now to endeavour to create that new industrial roadmap.