This essay was written as part of the Kill Your Darlings Copyright Agency Investigative Journalism Mentorship program, which was devised to help support emerging journalists.
It was two weeks to Christmas.
Just another Wednesday. Day shift had been running since six in the morning and now that the clock had ticked on past midday, those working the assembly line at the Elizabeth Holden factory were looking forward to going home; however, behind the main administration building that looks out over Philip Highway, there was movement. A shop steward soon noticed figures on the grass setting up a stage, so he called up to the seniors’ office to ask what was going on.
‘I don’t know anything about it,’ Darryl Waterman told him when he answered the phone, but the Australian Manufacturing Workers Union (AMWU) senior promised to take a look. He hung up and went down to investigate the admin building with the other AMWU senior Leanne.
There they found Bob Glass. Now retired, back then Glass was Holden’s Director of Vehicle Assembly Operations and the factory’s second in command. Glass refused to answer any questions and said they’d both find out with the rest of the workforce.
Leanne said she needed a cigarette. Together they went outside and talked over what Glass had said. Both had a pretty good idea about what it meant.
‘The union had been telling the company that if you do get to a point where you are going to pull the pin, make sure the workforce is the first to know because in the past, decisions have been made and people hear about it on the media before we’re told in the factory,’ says Waterman, months later.
Rumour spreads like fire in large factories, so the pair decided to keep it quiet and went back to their office where they called AMWU organiser, Jon Gee. They told Gee what was going on and what Glass had said before suggesting he get over to the factory. As it turned out, Gee was already on his way. He had heard whispers about what was going on.
The pair met Gee at the gate. He had arrived at the main admin building just as word was getting round that the company were shutting down the line and pulling everyone out onto the grass. Gee shook hands with both seniors and looked each in the eye. ‘I think the decision we’ve all been trying to avoid is upon us,’ they remember him saying.
It was the middle of summer, 2013, and the clock was pushing 2pm. By now, there was nothing else for the three union reps to do except join the rest of the workforce outside. Together, everyone listened to Holden CEO Mike Devereux announce that the company were going to close the factory in 2017 before Richard Phillips took over the microphone. Phillips was the Executive Director of Manufacturing and the boss of the Elizabeth factory. Tall and squared-jawed with an athletic build, Phillips spoke at length about the state of the business and praised the workers for their loyalty and service.
On the grass, the mood among the crowd was sombre. They had known this might be coming for a while, but now it was really here.
Merry Christmas, Elizabeth.
The reaction was matter of fact. It happened. It sucked. But it wasn’t up to them anyway. Mostly, people just wanted to go home and were relieved they weren’t one of those who’d be coming in for the afternoon shift in an hour.
After the Holden workforce was told, the company then put out a notice to all Tier 1 and Tier 2 suppliers.
From Elizabeth, or the City of Playford to use its official title, the news rippled outward. Next to hear about it were the suppliers down the road at the Edinburgh Parks Industrial Estate, just outside neighbouring Salisbury, an old colonial town built along the trade route that eventually became Main North Road.
Then the news thundered south, radiating out along the plains past Mawson Lakes and Gepps Cross, down towards Adelaide. The car industry once dominated out that way too, from Holden’s Woodville factory in Adelaide’s west that operated in the 40s, to Mitsubishi’s Lonsdale factory right down near Reynella. Having a car factory in your neighbourhood was once a sign of progress. Then the 80s rolled around and the big factories started to close, one by one.
And as a century-old South Australian company, CARR Components had seen it all. By this time the firm was getting by making parts for Holden’s Commodore and Cruze models from its factory at Netley in Adelaide’s west, tucked away by Adelaide Airport.
Adam Reynolds, CARR Components’ engineering coordinator who had spent more than half his life in the automotive industry, was standing in the main office when the news broke.
Everyone in the place was stunned. No one wanted to believe it. Holden was ‘bigger than the Roman Empire’, as one former Holden worker put it. It wasn’t going anywhere.
Now it was and the news ricocheted through the rest of the building.
Out the factory floor, a 50-year-old woman got talking to Reynolds. She wore a look of complete hopelessness. She had spent most of her working life at CARR Components. Factory work was all she knew.
‘Well…what do I do now?’
‘I don’t know,’ Reynolds told her.
What else do you say to someone whose entire future had just been brought into question?
Darryl Waterman knew they were screwed as soon as he saw the Chinese factories.
Waterman was part of a group of senior factory figures, including union reps and area managers, who went on an expenses-paid company fact-finding trip in April 2013. Over a two-week factory shutdown, the group visited the Vauxhall plant in Britain and toured Chinese car plants run in partnership with General Motors (GM) in Shanghai and Shenyang.
There was nothing unusual about this trip. The company organises them once every few years as new people rise to senior roles. It helps put the Elizabeth factory in its global context and their time is mostly spent plane-hopping, dealing with jetlag or touring factories.
Waterman went thinking they were supposed to be looking at production processes to see what could be brought back to Elizabeth. First stop was the British plant. And it was impressive. Following the 2008 Global Financial Crisis (GFC), the collapse of the UK’s financial services sector had made the government look twice at its manufacturing base. Manufacturing, and car making in particular, was suddenly seen as an area where the government could invest in order to buttress the economy against future recessions.
But it was the massive Chinese factories that surprised everyone. Most went in expecting sweatshops and low quality vehicles. What they found were massive factories, full of momentum, with happy workers capable of pushing out hundreds of thousands of cars a year. Last year, the Chinese car industry produced a little over 18 million vehicles. Australia made a grand total of 210,538. Where the Japanese once out-competed the Americans by learning how to build cars better through lean manufacturing, the Chinese now do it by sheer scale.
‘That’s when we sort of thought, shit, we’re in a bit of trouble,’ says Waterman. When asked what was missing from the Elizabeth operation he says, ‘Lots of things.’
Mostly, it was the high Australian dollar that did it. So long as the Australian dollar was sitting around 0.80 US cents, carmakers were earning good money and any problems with cost of production or accessing export markets were manageable. Then, the dollar started creeping up towards parity and stayed there. This made imports cheap while Australian cars became more expensive to make and more expensive to export.
Parity for manufacturing is what drought is to agriculture. For a farmer, no rain means no crops, and huge debt. For factory owners, a high dollar means high production costs and little return. In both cases, things will eventually change. Fresh rain will come again and the dollar will fall. The question is how long they can hold out, as the longer it takes, the more likely farmers and factory owners are to go broke. Left unchecked, this is how dustbowls and rust belts happen.
‘And you know, that’s why we’re not going to continue after 2017, because there was just too much that we were up against,’ says Waterman. ‘But one of the things that we were trying to do was change the Enterprise Bargaining Agreement (EBA) to something that would allow the company to get some more money out of the business, to try and reduce their costs and get more productivity. The company was struggling running the way it was with the Australian dollar, the drop of tariffs, the cost of labour and the cost of production, full stop.’
While still in Shanghai, the delegation met with two GM reps at the company’s Asia headquarters. One of these were GM’s Executive Vice President James DeLuca. Over take-out pizza and cans of Coke, the two GM company men promised to do what they could to help Elizabeth, but at the end of the day, they said, they needed three things: 1) a variation that would change the EBA 2) further government support and 3) GM Board approval to keep the Elizabeth factory open and give them the next two models.
This was the first the unions had heard about changes to the EBA. Vauxhall in the UK had just negotiated a change to keep the factory open and now the company wanted the same for Elizabeth. The company offered to help with the EBA, but this was union territory. If it was going to happen at all, it needed to come from them.
Once home, the first thing the company had to find out was whether a variation was legal. It was, so the real problem came during negotiations when the company wanted to cap the amount awarded to retrenched workers under the Voluntary Separation Package (VSP). This meant lower payouts if the company suddenly wanted to downsize the operation by 400 people.
Which did not go over well with the workforce. VSP agreements have traditionally been uncapped and tied to how long a person worked for the company. The change would punish a worker for their loyalty, as anyone who had worked the shop floor for 20 years and held out to the very bitter end may have gotten less than if they had have bailed right back when things started getting difficult.
So the union reps were sent back and the cap was removed. In the end, the unions made deep concessions that amounted to a few million dollars in savings. The variation would mean a three-year pay freeze, less break time and allow the company to call people in for overtime when they needed it, despite a national standard that prohibited just that. The unions didn’t like it, but they were convinced it needed to happen.
In the end, it didn’t mean much. The sacrifice was a nice sentiment, but a false hope. Ever since the US government had to bail out GM in 2009, the company has been getting brutal about closing old operations to prove to investors that everything is under control. And while Vauxhall may have been spared the knife, the Opel plant in Bochum, Germany wasn’t. In April 2014, The GM-subsidiary announced that the Bochum factory would close at the end of the year. This was after more than 3000 workers said no to a company offer to keep production running until 2016, in return for a freeze on pay rises.
The reality for Elizabeth was that the factory’s fate was never to be decided by labour conditions, but by a handful of very important people in Canberra and Detroit. While no one in company management will ever say so on record, or even in private, and especially to a reporter, the new government at the 2013 election brought a change in point of view. Any industry support promised by the previous government was not coming, and so GM’s decision fell on the side of closing the plant.
About two months after Holden made its future known, Toyota followed. Extra security was present when Toyota told the 4200-odd employees at its factory in the Melbourne suburb of Altona that they would also close by 2017.
Industry observers were not surprised. The two companies shared the same supply base and Holden’s decision effectively sealed Toyota’s fate. One without the other increased the risk of a supply chain collapse. While both companies could have limped on without Ford, Holden and Toyota needed each other to survive.
As of 11 December 2013, the Australian car industry was given three years before it would be turned off for good.
Soon after, Ford’s sales started to sag and there was talk that, like Mitsubishi before them, Ford would not reach its own 2016 withdrawal deadline. Meanwhile, companies in the supply chain started to consolidate, leaving workers to watch as the industry broke up around them.
Then the first job losses trickled in and Adam Reynolds at CARR Components was among them. He is 41 years old, a big man with a gentle disposition. Reynolds has spent his working life in plastics and was more or less born to it. His father once ran one of the biggest plastics factories in the Southern Hemisphere before he sold his share, leaving the company to eventually become Trident Plastics.
‘South Australia used to be a big plastics Mecca at one stage,’ says Reynolds.
Reynolds says he started out at 17. He left high school at the end of Year 10 and landed a job as a machine operator at Blown Plastic Products. Pretty soon he was job-hopping his way through the industry until he landed a position at Philmac, an iconic South Australian plastics factory that first started in 1929 and specialises in making valves used in irrigation.
‘There was a position where I said that I could do a job, which I completely bullshitted my way into,’ he says. ‘They worked that out on the first day and they were going to get rid of me. They said I needed to get my act together pretty quickly, so they gave me a week and I worked my arse off and they kept me on there. I stayed there for two, three years, I think it was.
‘I’ve gone from being an operator and having seniors telling me that people who are operators haven’t got much chock, to become Divisional Manager of Injection Moulding in charge of over 40 people. And that wasn’t easy in itself. It was a steep learning curve for me.’
Much later, CARR Components brought in Reynolds as Engineering Coordinator to do Advanced Product Quality Planning Workbooks for clients making new orders, the biggest of which was Holden. With Holden’s decision on December 11, new orders stopped coming and Reynolds was no longer needed.
But Reynolds had already seen the end coming. As early as 2010, he had started to make plans for himself and his family. By the time he was made redundant, he was already on the way to getting himself qualified to work in Workplace Health and Safety. Even then, he wasn’t out of work for long, as he was picked up by aiAutomotive, another South Australian-based supplier that runs its own press shop and the state’s largest e-coating facility. E-coating is a paint process used to keep parts going into long-term storage from rusting.
This story is familiar for car industry workers. Once upon a time, anyone who found themselves out of a job could usually find work at one of 700 to 800 suppliers through word of mouth or reputation. That was the nature of the industry. Supply workers would climb the chain to the big manufacturers and the suppliers would catch workers from the carmakers.
Now, as more companies in the supply chain gradually fold, this support network is slowly slipping away.
Even for Reynolds, things won’t get any easier. He’s only on contract with aiAutomotive and the company itself has been in administration for about two years. The business was only saved when Holden and Ford stepped in to pay the company’s bills to keep the state’s largest e-coating facility running. If aiAutomotive can’t be stabilised by the time the carmakers leave, it will sink, taking its employees with it.
Things could always be worse, though. Not long after Reynolds lost his job at CARR Components, he heard they were being taken over by a younger company, Precision Components.
On 31 July 2014, Precision sacked everyone. The 70-odd people Reynolds used to work with suddenly found themselves unemployed, with the option to reapply for their old jobs.
Knowing what happens inside the Holden factory on a day-to-day basis is the first step to understanding what the end of the car industry really means.
Each day, the 123-hectare Holden factory sucks in 402,000 car parts. They are either made on site or received in one of 274 truck deliveries or 33 cargo containers from any of 33 direct suppliers in a supply chain made up of 700 to 800 companies. The average length of service is about 17 years for the 1600 people who work the factory across two shifts, the first starting at six in the morning and the second ending at midnight. Every person there helps in some small way to build 335 cars, daily.
Every 87 seconds a new car drives off the production line.
It is a complex array of individual people with different skills all working towards one, unified goal. Each machine needs to be maintained and cleaned. Each car body needs to be made from scratch. Each piece of raw steel needs to be fed into a machine, safely, and bent to exact measurements before being spot-welded in place.
Vehicle assembly is the beating heart of the entire operation. Everything and everyone is moving and every single piece, from doorframes to 5mm screws, finds its way into this giant shed before someone adds it to a car body, often from muscle memory alone. The work they do is quick. Each bay has a 72 second window per component. It takes 198 minutes for a car shell to make it through assembly from start to finish.
This is the glory of lean manufacturing. The entire process has been separated out, studied and broken down. Eliminate waste; maximise productivity. Everything is put together with perfect timing and in perfect order. Everyone knows exactly what they’re supposed to do, and where the next part is coming from, and where it’s going. There is no room for error. Even 99 per cent accuracy is not enough, as this means at least two cars a day won’t start. The ideal is 100 per cent, all the time. Stopping isn’t so much a problem then, so long as it doesn’t last too long. There are ways to compensate for downtime; error is the true threat.
What this kind of operation means is steady money. Steady money for suppliers who need stable income to make business models sustainable and plan for the future. Steady money for those who work at the factory so they can buy TVs and cars, take out mortgages and raise families. Steady money for councils and governments who can rely on tax revenue and council rates generated to fund new projects. Steady money for drivers and shipping companies, banks, bakeries and retail outlets. Take that away and what you’re left with is a gap.
Expertise is what thrives in this industry. Expertise does not exist in a vacuum, it has to come from somewhere, and once obtained, it needs to be used to create value. If there aren’t opportunities to use those skills, people either take jobs driving taxis or working security, or they move away. People looking to develop new products move to where the people with skills are. With no skills-base, a region’s economy misses opportunities to grow, which means fewer jobs to go around. People with lower pay or insecure work find it hard to support families or buy houses, and so less money is circulating in the economy. Lower incomes and higher welfare participation means fewer consumer goods bought, more personal debt, and higher deficits for government treasuries. Already struggling with issues of disadvantage, government departments and local councils become even less excited about throwing good money on bad neighbourhoods, especially if there isn’t a very strong chance anything will come of it.
If a region is not able to hang onto its skills base, its economy gets hollowed out and the standard of living drops.
Or at least that’s the case according to former Federal Industry Minister Greg Combet. In the space of about two years, Combet has gone from trying to keep the Australian car industry on the road to serving the South Australian government as ‘Chairman of the Automotive Transformation Taskforce’.
Essentially, he’s now the motor industry’s undertaker.
‘What has happened is a terrible, terrible development,’ says Combet. ‘We could see all this coming, but we wanted to adjust over a decade or so.’
Now, an entire industry is going, with any suppliers that are unable to diversify likely to fold when Holden leaves in 2017. According to Combet, most of the 33 direct suppliers in the state fall into this category. Given the timeframe of the closure, there is little chance they will diversify in time. Those that might will be companies further out in the chain and the smaller, family-run factories that tend to be lighter on their feet.
What’s needed, then, is to manage the closure well, retrain the workforce and grow new industry. Combet points to defence manufacturing, food and wine, mining and gas exploration as potential opportunities.
But things change quickly. That was Combet’s position in May 2014. Two months later, the Department of Defence published a discussion paper titled Defence Issues Paper 2014, questioning whether it would be cheaper to send South Australian defence manufacturing offshore. At that time, the Federal Government refused to commit to keeping future projects in the state, effectively leaving the future of South Australian defence manufacturing an open question.
The implications were huge. After car making, defence manufacturing is South Australia’s other big manufacturing industry, employing thousands of people. So far the South Australian government has invested over $300 million in Techport, an industrial maritime hub at Hindmarsh Island, on the peninsula’s southern edge. From there, the state was supposed to build Australia’s warships and submarines, bringing in millions of dollars and securing the future for thousands employed there.
And one report ripped that future away, sending shockwaves through South Australian manufacturing.
Mid-August 2014, Prime Minister Tony Abbott came to town. In one speech, Abbott seemed to put an end to the uncertainty when he declared, with confidence, that building the next generation of submarines in South Australia would create a, ‘massive amount of work’ for the local economy.
Days later, the Prime Minister gave a second speech at the South Australian Liberal Party’s annual general meeting. There he repeated what his Defence Minister had been saying for the last few weeks: all defence decisions would be ‘made on the basis of defence logic, not industry policy’.
The message was clear: Canberra wanted cost-effective defence manufacturing and it wasn’t going to stop looking for a better deal.
‘And by the way, economics is not a science, it’s a point of view,’ says Göran Roos when asked about the Productivity Commission’s 2014 position paper on whether or not the Federal Government should have continued to provide financial support to the car industry.
‘There are many different points of view, the difference is in the assumptions they make,’ he says. ‘If you are a Productivity Commissioner, what you have is an economic framework based on the neoclassical economic framework. So what you get is a predictable point of view and then you look for things that support that point of view. It wasn’t prejudged, so much as a predictable outcome.
‘It was expected.’
An Honorary professor at Warwick Business School in the UK and founder of the think tank Intellectual Capital Services Ltd, Roos was approached in 2010 by the South Australian government who brought him in as a Thinker in Residence. After he handed in his report Manufacturing into the future on 19 March 2012, he was offered a position chairing the Advanced Manufacturing Council.
It turned out to be an excellent career move. In places like the UK, Switzerland and Germany, the ideas Roos had been talking about have pretty much become standard in conversations about manufacturing and industrial policy.
In Australia, his ideas are new and his work tends to get referenced alongside that of Adelaide University economist John Spoehr in nearly every conversation about the future of Australian manufacturing.
It’s not hard to understand why. What Roos brings to the conversation is a level of nuance that doesn’t reduce the whole problem to a black and white argument about free market economics versus protectionism.
‘I can’t understand why we don’t have a smarter approach to industry policy,’ says Roos. ‘I mean, people hate me saying that, but the key is to create an environment where winners emerge.
‘You don’t pick winners.’
He laughs when it is pointed out to him that he is unusually blunt.
‘There’s no use not being blunt.’
Roos’s ideas come with a long intellectual pedigree, but the main concept draws on ‘Economic Complexity’ reasoning, developed by César A Hidalgo of MIT’s Media Lab and Ricardo Hausmann of Harvard’s University’s John F Kennedy School of Government. The basic concept is that economic prosperity depends largely on a country’s ability to access ‘capabilities’. All this means is that a complex economy with access to a range of skills is able to solve problems thrown up by new manufacturing projects, and in doing so, create growth.
Low levels of economic complexity see countries struggle to develop the wealth needed to maintain a high living standard. As a result, they face problems in areas like crime, health and poverty. High levels of complexity mean a deeper level of capability within an economy, more entrepreneurial activity and a wider range of skills available. This generates growth and results in the higher living standards that define developed economies.
Roos names Japan, Germany and Switzerland as examples of countries with high complexity. Each he says, scores about a two out of three on the ‘Economic Complexity Index’. By contrast, the US sits at about 1.6 and Australia at 0.7.
‘So not very high to begin with,’ says Roos. ‘This is why sophisticated economies try to develop and maintain industries that “drag-up” economic complexity.’
Car making and defence manufacturing are two such industries. Roos gives the example of a university graduate who designs a product and wants to set up a company to produce it. They can’t do so alone. What they need is access to someone who knows plastics, some other people who know how to bend metal and more still who know how to build an efficient production line. If there is no one who can do this locally, they will look somewhere else to find someone who can. The local economy then misses out on new growth, new tax income and new applications for old skills where new industrial processes push boundaries and solve new problems.
This is what the car industry provides. In Roos’s view, the industry’s end, and the wider hollowing-out of Australian manufacturing, will have knock-on effects in the rest of the economy, forcing the country to become more dependent on primary industries and low-end services. According to Roos, this will lower the amount of overall wealth, as people earn less, lowering the amount of tax revenue generated, making it more difficult to provide key services, and threatening the overall standard of living.
With this, the decision of a government to act, or not act, in support of an industry becomes less about ‘protecting’ industry or ‘letting the market handle it’. Instead, the issue is whether or not governments should invest to secure high standards of living.
Roos brushes off any suggestion that he’s calling for ‘protectionism’ and says he is ‘for a free market’ as ‘protectionism never helped anyone’. His main point is that if a country chooses to let an entire industry shut down, it must manage the closure carefully. Otherwise, economic scarring occurs where a region loses its skills base, threatening its ability to recover from a recession. From that point skills are ‘very hard indeed’ to recapture, ‘and if you wait for ten years or longer, it becomes basically impossible,’ says Roos.
And it’s not just the car industry. For a long time now Australian manufacturing has been bleeding according to Tom Skladzien, economic advisor to the AMWU.
‘What the mining boom did was push up the dollar,’ he explains. ‘The dollar went up not because we’re lazy or we don’t produce enough, it was because the world economy is in American dollars. It’s not just the car industry either. It’s other industries such as rail. We’ve got core industries shedding jobs.’
What Skladzien is talking about is ‘Dutch Disease’, so named by The Economist to describe what happened to the Dutch economy in 1959 after the discovery of a large natural gas field. Dutch Disease describes what happens where a resource boom causes foreign investors to cash in. The sudden flood of money and huge profits generated raises the value of the local currency. In turn this makes imports cheap and exports expensive, which puts more pressure on manufacturing even as economic activity increasingly focuses on resource extraction. Once the boom ends, resources run out or it just becomes too hard to get them out of the dirt, manufacturing will have withered and the wider economy is left anaemic, threatening its overall stability. According to Skladzien, this describes the current state of the Australian economy and to prove it he points to statistics showing investment in mining growing at the expense of manufacturing around the same time the dollar began to spike in 2006.
Data source: Australian Bureau of Statistics, 5204.0 Australian System of National Accounts, Table 64
Skladzien then refers to Roos when explaining that economies unable to turn resources into consumable goods don’t do well in the long run, as the main industries they tend to depend on are the rather straight-forward work of farming, mining and tourism.
‘Basically, digging up shit,’ he says.
Of course, the Federal Productivity Commission would disagree. In early 2014, the Commission released its position paper Australia’s Automotive Manufacturing Industry on whether the government should provide funding to the car industry and, predictably, advised against future government assistance. The report directly rejected the kind of arguments made by Roos and Skladzien. Essentially, the Commission didn’t seem interested in any argument that couldn’t immediately and precisely quantify, in exact dollars, why the government should continue to support Australian carmakers.
In terms of the arguments made by Roos, the Commission answered by reducing the issue to one of ‘spillover’ and then making two points. First, the Federal Government should only support industry to secure spillover benefits where those benefits would not be otherwise achievable by private companies, and second, the car industry was nothing special:
In the Commission’s assessment, it is unlikely that the spillovers uniquely associated with Australian automotive manufacturing are of sufficient magnitude (relative to those for other industries) to provide strong support for ongoing industry-specific assistance measures. Furthermore, the Commission does not consider that the particular characteristics of the automotive industry render generally available measures (aimed at supporting spillover-generating activities such as R&D) ineffective. (Page 55.)
The rest of the 215-page document follows a predictable pattern. Each argument made by representatives from various car industry lobby groups, state governments, unions and industry associations, were generally brushed aside as being too hard, too expensive, too protectionist or pointless as workers were overpaid anyway. Even the idea of softening the impact of the closure over five or ten years was rejected on the basis that it might undermine the competitiveness of the market.
The whole thing was coming down, the Commission said, and it was going to happen all at once, in one, clean motion.
The broader view of the Commission, that the car industry is not worth saving, is also endorsed by economist Richard Blandy.
‘We’ve got to adapt to the world as it evolves around us,’ says Blandy five months after the end of the industry was announced. ‘Economies evolve all the time as relative costs, demands and technologies change. You’ve got to evolve with the world economy and if you don’t, you’ll be taken to pieces by those who have. Assembling cars in South Australia cannot compete with assembling cars in Thailand.’ Blandy points out, however, that designing cars in Australia can compete with designing cars in the rest of the world. Ford and General Motors, he believes, are not going to shut down their Australian design teams.
Rhetorically, Blandy’s metaphors for talking about the end of the Australian car industry are all biological. Companies, he says, must ‘adapt’ to changing environments. Communities must ‘evolve’. Closure, like death, is part of the ‘natural order’ of things. The aim for economic policy then, is not to protect the old, but to provide fertile ground for something new.
Blandy is an Adjunct Professor at the University of South Australia’s School of Business who carved out a niche at Flinders and Melbourne Universities when he returned to Australia after graduating from Columbia University in New York in 1969.
The starting point for his thinking is a belief in the ‘virtues of competitive markets’ where prosperity is driven by competition. Where competition lags, growth stalls, leading to higher unemployment and lower standards of living. Competition works to disrupt the existing status quo in the marketplace, which gives a new company the chance to emerge, establish itself and grow. In doing so it creates new jobs. Over time, this process means jobs are made or become obsolete. All advanced economies, says Blandy, have seen a decline in manufacturing and Australia is no different.
In theory at least, this is not all that different than the kind of thing Roos would say. But then economics is all about emphasis, and small differences make for big changes in outcome.
‘Seventy per cent of our economy is services,’ Blandy says with emphasis, before pointing out South Australia has eight per cent of the country’s high tech starts-ups, slightly more than the state’s share of the national economy. This share, he argues, could be larger.
Blandy outlined these same ideas back in March 2014 in an opinion piece for The Advertiser three days before the state election. It was titled ‘Our post-industrial future is a rejection of bigness, centralisation and bureaucracy’, and opened by praising South Australian Liberal Leader Steven Marshall.
The central thesis in Blandy’s piece is that big operations have to think small to survive. It describes a post-industrial future for Adelaide that ‘is not socialistic in the sense of “big government”’ and made up of small-to-medium enterprises collectively titled ‘The Creative Industries’. This refers to small, ‘highly networked’ businesses that are ‘horizontally organised’ and heavily reliant on the Internet. They are united, in Blandy’s thinking, by the idea that ‘small is beautiful’. What Blandy is sketching is an economy driven by start-up culture, small design firms, tech start-ups of the kind that created AirBnB, and contractors working out of co-working spaces like HUB Adelaide.
In a sense, this vision for South Australia is just a twist on a set of ideas that are largely American imports. What it promotes is a vision for work that prioritises the abstract over the real; where software, finance and tourism take precedence over making, shipping and building. It is the kind of cultural and economic change that Edward McClelland’s Nothin’ but Blue Skies documented when he travelled America’s rust belt, to see how its cities have struggled with their post-industrial reality.
Once the factories have been used up and social blight has been allowed to set in over years or decades poor, post-industrial neighbourhoods suddenly get ‘rediscovered’ for their ‘grit’. These places are then remade with buzzwords like ‘revitalisation’ and ‘renewal’ for people with disposable income who had the privilege of an education that taught them a profession or how to code . Over time, the benefits tend to flow to wealthy new arrivals rather than locals who lost their jobs and struggled through the hard times, only to be pushed out as rent and rates climb skyward. This was the central thesis of an opinion piece in The Guardian written by Assistant Professor Dr David Madden of the London School of Economics and Political Science that argued gentrification does not ‘trickle down’ to help everyone.
When pushed on whether services could realistically fill the skills gap left by manufacturing, let alone reemploy those who might lose their jobs with the end of the car industry, Richard Blandy talks about protectionism.
‘Why do you want to protect something?’ he says. ‘At the end of the day, a car industry left with a significantly higher subsidy than other Australian industries survives only be transferring spending from other industries to car production. This only makes sense if the protection is temporary, and the car industry is expected to be able to stand on its own feet in the future. The idea you’re going to be a part of some industry forever is misleading.
‘I think that people who have lost their jobs should have all the assistance they need.’ But this is different from trying to protect jobs forever that are no longer competitively viable, Blandy argues.
‘Nothing stands still.’
But sometimes, things do stand still.
The Chrysler factory out at Tonsley in Adelaide’s southern suburbs opened in 1964. Until then, the company’s Valiant had been selling strong, but the car was just a rebadged, locally made American Plymouth. It lacked a certain authenticity.
That all changed once Tonsley got running and on March 31, 1964, the first Australian-made and designed Valiant drove off the line.
Models came and went, and two decades later in 1980, Mitsubishi took over Chrysler’s Australian arm. For the next 28 years the factory continued to run from its 61-hectare site along Main South Road, about a 20-minute drive south of Adelaide.
Then, in 2008, the plant fell silent.
And it couldn’t have happened at a better time. As far as industry closures go, Mitsubishi’s was relatively painless. The South Australian economy was doing well. There was a skills shortage. The mining boom was in full swing. Both sides of state and federal politics were keen to support workers. And the reason it all happened had less to do with distant global factors than it did with a bad product.
‘Have you ever driven the 380?’ One car industry worker deadpanned when asked why Mitsubishi closed.
‘It looked good, but it just wasn’t finished,’ said another.
So it was no surprise when the company made an announcement on 5 February 2008 to let the world know that production of the 380 would stop along with all local manufacturing as of 31 March. By that time sales were so poor that the company didn’t even make it to its two-month deadline.
When the last 380 rolled off the line at Tonsley on 27 March, about 500 workers lost their jobs. Around 430 stayed on for the next year to help mothball the plant and stockpile enough spare parts to last a decade. Combined with the closure of the Lonsdale plant further south, and the downsizing at Tonsley in 2004, direct job losses from Mitsubishi totalled 1700.
It took nearly a year to haul away the machinery, but by the end of 2009, the 61-hectare site was reduced to a giant, empty shed that still dominates the landscape at the shoulder of Main South Road.
The closure of the Tonsley factory was said to have cost the local economy $370 million in economic output, with a flow on effect of $230 million. It also produced probably the most commonly cited figure of all: The Triple Third.
Of all the employees who found themselves out of work after the closure, a third found stable new employment, a third found unstable employment and a third never worked again.
And this was during the good times.
After it closed, the factory sat idle for about five years as the South Australian Government and Mitsubishi first had to negotiate a handover and decontaminate the site. Then someone had to work out what, exactly, they were going to do with the 61-hectare piece of real estate.
At the time, there was a lot of talk about bringing in ‘advanced manufacturing’ and opening a hub for TAFE and the local universities. Supporters pointed to how the site was close to the city, Flinders University, arterial roads and a public train line.
It was a good idea.
Problem was, getting the place back up and running would take time. Only now has work really begun on turning the place into the State Government’s vision of an education and retail hub under the very forward-looking, if somewhat ironic, slogan, ‘Tonsley: where industry and people thrive’.
The five or so years it took to start construction is seen as a victory by former Mitsubishi boss Tom Phillips, who retired in 2005 and now sits on the Southern Economic Development Board, responsible for steering economic development in southern Adelaide. As he says, anyone who deals with government or business knows how new projects tend to move at a glacial pace.
But five years is a long time to everyday people, especially car workers whose work moves in regular 72-second intervals. It may have been a win for decision makers, but for workers with twenty years of industry experience and a mortgage to pay, it was just too long.
Mitsubishi’s significance is that it provides a blueprint for how the SA government will deal with the end of Holden in 2017.
Back in 2004, the Federal Government had responded to news that Mitsubishi would downsize with a $10 million Labour Adjustment Package and a $45 million Structural Adjustment Fund. The idea was to attract new investment so growth would soak up the excess labour, but this ended up a failure. Many firms which moved in did not meet their employment targets and those which did, tended to set up out by Elizabeth.
A lot of people did the best they could under the circumstances. The South Australian Government had also set aside $380,000 specifically for financial counselling, career counselling and resume preparation. Despite widespread publicity of a skills shortage in the state at the time, no funds were available for actual skills retraining. JobNetwork providers didn’t seem to help either, as they tried to apply a model designed for long-term unemployed people to the recently displaced.
In spite of this, people tried hard to find new work. They found jobs elsewhere in the car industry and did courses to become security guards or work in mining. The security check-in at Adelaide Airport is still largely staffed by ex-Mitsubishi workers.
By industry, 36 per cent found other work in manufacturing, 11 per cent in retail, 7 per cent in construction, 6 per cent in health services and 2 per cent each in mining and defence. Only 15 per cent of former Mitsubishi workers surveyed by Flinders University academics said they earned more than they once did, with 11 per cent saying it was about the same. The rest averaged three jobs a year, went into early retirement, or didn’t work again.
Bigger picture though, it’s underemployment that is the main threat.
‘To be taking workers with skills and to be denying them a chance to use them is a waste for the country,’ says Tom Skladzien. ‘I don’t know if you ever catch a taxi in Adelaide, but I sometimes do. And I talk to the guy driving it. He tells me he’s got 15 years experience in an industry and then I ask him why he’s a taxi driver. He says the hours are bad, the pay is bad but that’s the only job available to him. So he does it anyway.’
Work defines a person’s life. It is their contribution, their value and their sense of worth. Once a person loses a job, especially a job they love and were good at, the pattern is familiar. People start confident, but that spirit soon fades as they lose support networks of old friends they once saw every day for decades.
Car workers are particularly vulnerable, according to John Spoehr’s 2014 report Industrial Rejuvenation:
In a study of the closure of General Motors and Ford plants in California in the mid-1980s, Yoder and Staudohar (1985) found that employees and their families experienced high levels of anxiety and stress as a result of the closures. They indicate that poor management of the closure and the lack of job placement support services available to employees generated high levels of anxiety among workers. They report that employees experienced physical and psychological problems that led to a number of suicides. Spoehr and Morrision (2002) indicate that closures resulting in job loss may result in an increase in family stress levels, increase in domestic violence and child abuse and increased drug and alcohol abuse. (Page 19)
In one survey, more than half of Mitsubishi workers who responded had worked at the plant for 21 years. On the other side of town, the average length of service at Holden is 17 years. The friendships made during two decades on the production line run deep. As a worker’s support networks fade, a person will start to experience more stress with all the associated effects on the body. A person may suffer higher levels of anxiety as they worry about debt or how they’re going to pay rent. This is heightened for those with children. A person is likely to smoke more, drink more and may fall into regular drug use. Over time this can become a crutch and an addiction. The risk of heart attack rises. Depression can take over. When this goes on for long enough, a person starts to feel hopeless and may self-harm.
But the fallout doesn’t always stop there as the closure of decades-old industrial sites can affect the local environment. The residents around Tonsley and Clovelly Park learned this when the area just south of the former Mitsubishi plant was found to be contaminated with trichloroethylene (TCE), a chemical used by nearby parts-maker Monroe to remove grease. TCE finds its way into soil, air and drinking water after escaping factories through wastewater or run off. It is odourless and doesn’t show up in medical testing, but long-term exposure can cause liver problems and raise a person’s cancer risk. All of which is exactly why the Environmental Protection Agency sealed off part of the area in late July and tried to relocate residents while they did more tests.
Locals were not happy.
Testing had cleared the area three years earlier.
In physics, inertia is the ability of an object to resist change while in motion. Once an object starts moving, it will keep moving unless a force is applied to it. The bigger the object, the more mass it has and the greater the force needed to make the thing stop or change direction. Anyone who has ever had to stop, suddenly, and without warning, on some highway somewhere, will understand this concept.
Inertia is key to understanding what the future holds for Adelaide’s working class north post-2017. And there is no better example of inertia than Detroit, a city whose ghost haunts nearly every conversation about what the end of the car industry may mean.
Detroit was a company town that rose along with the Big Three carmakers GM, Ford and Chrysler. It started when Henry Ford sparked a gold rush after he turned up one day in 1910 with the idea to build the world’s first production line that would turn raw steel into cars affordable to the everyman. Detroit boomed and everyone looked to cash in, from the industrialists right down to the guys on the factory floor. The promise of a high minimum wage working the production line at a car factory drew in every poor immigrant from the American South, Canada and Europe who could make the trip. By the 30s, the population had mushroomed, making the city the fourth largest in the US. Then came WWII and Detroit’s factories went to work building the war machines needed to bomb Axis Europe into the ground.
As the 50s rolled around that all started to change. In a nutshell, the US was beginning to globalise, and the changes that process brought on pointed Detroit toward decline. In search of a bigger profit margin, companies started to experiment with decentralised production. Jobs were offshored. Automation was brought in. The rising price of fuel meant changing demand. A new network of freeways and highways delivered people from the city into the suburbs. Free market economics began its slow march to dominance and so companies could no longer bank on protectionist policies to prop up domestic markets. Pretty soon deindustrialisation had taken hold, the rot started with the smaller operations before moving up the food-chain over time to the very pillars of the city’s success: the Big Three. And as soon as the Big Three started to sink, Detroit started to sink with them.
The city’s glory days were over and nothing anyone could do was enough to stop the decline. As the factories started to close, work began to dry up and so did the money. Higher unemployment exposed underlying social tensions, allowing race to re-emerge as a fault line in a city where people were being pushed to the brink. In the Detroit of the 50s and 60s, race was a pretty good indicator of class and unemployment tended to hit the city’s black residents hardest. Coupled with racial segregation in housing and education, the stars aligned in 1967 to make Detroit the scene of the biggest race riot in US history, which only acted as a catalyst for the ‘white flight’ that came after it.
Throughout the 70s, 80s and 90s, the city kept disintegrating as crime raged and people continued to flee. A shrinking population translated to a shrinking tax base in a city with high unemployment and heavy welfare participation.
Whole factories were left to rust into ‘brownfields’, industrial ruins so thoroughly contaminated by decades of manufacturing processes running with virtually no environmental regulation, that no rational investor would touch them. Warehouses were boarded up and left to sit empty. In the suburbs, entire neighbourhoods became ghost towns, as the city did not have enough money to demolish the decayed housing stock.
In 1950 Detroit counted 1.8 million people. Over half a century later in 2010, its population would be just 700,000. Today, the plains on which Detroit was built have started to reclaim its neighbourhoods, with a third of Detroit having returned to prairie. Other neighbourhoods are playgrounds for arsonists. Every night, another house goes up in flames, making a funeral pyre out of another dead American Dream.
And most of this happened long before the GFC bore down upon world financial markets with righteous fury. For Detroit, the falling car sales caused by the GFC pushed the Big Three over the edge and the day they officially filed for bankruptcy in 2009, was a particularly crappy day in a town where bad news is the norm.
To many, Detroit is shorthand for failure. The capital of America’s rustbelt that lines the country’s northeast. A symbol for everything wrong with the American working class. Even GM executives have their offices face Canada so they don’t need to look out over their legacy that is Detroit.
But Detroit is not dead yet. It still has Chrysler, GM and Ford, crippled though they may be. Detroit struggles on.
Elizabeth only ever had Holden.
There are points of difference, however. South Australia has never really been the Australian car industry’s true home. That is Victoria, with Melbourne likely to be hit hardest, according to John Spoehr’s modelling that puts South Australia’s projected job losses at 23,903 by the end of 2017, and Victoria’s at 98,483. Not everyone agrees with this however. Spoehr’s modelling uses multipliers to make a projection and is based on assumptions about a return to favourable economic conditions, mainly the Australian dollar falling back to .80 US cents and investment in mining dropping off.
Those who take issue with the use of multipliers tend to prefer a figure cited in a Deloitte Access Economics report that optimistically put projected South Australian job losses at only 2000. This is a low figure that only recognises 1700 or so direct job losses from the closure of Holden itself.
The main thing is that trying to understand what this all means is not about drawing a scale between Detroit and Silicon Valley and throwing a dart. Every city has its story and weathers hard times differently, depending on choices made in the past and local conditions in the present. Even though patterns can also be found in the experiences of Bilbao, Pittsburg and Newcastle, they’re never quite the same in scope, scale or trajectory.
Context is everything. While parallels may be drawn between Elizabeth and Detroit, each city is distinct and each writes its own story.
For the first ten years of its existence, Elizabeth was the most photographed, talked about and written about city in Australia. Elizabeth was the nation’s first planned city and represented the triumph of reason and rationality over the chaotic, cutthroat market.
Orderly. Neat. Clean. Elizabeth was where the country first tried out importing a middle class on the promise of a house on a quarter acre block, with indoor plumbing and a backyard big enough for the kids and dog to run around in.
Elizabeth was to be nothing like the dirty, industrial towns of pre-WWII Britain, with poorly built housing clustered around huge factories that blackened out the sky with smog.
Every need of its projected 25,000 people would be met. There would be wide streets. Pleasant houses. There would be no heavy industry to dominate the horizon and spoil the crystal-blue Australian sky with pollution. Growth would be controlled.
People would be happy.
From the very moment Elizabeth clawed its way out of a muddy field on 16 November 1955, it was a symbol for everything a post-War Australia wanted to be.
People smirk now at the basic Housing Trust construction of the middle 50s and 60s, but what they don’t understand is that they offered their mostly working class British residents things they never had, like indoor plumbing and gas ovens. Even for German, Italian and Greek outsiders in the ‘Pommy Ghetto’, it was a lot better than the rubble pile that was Europe post-WWII.
But when General Motors signed on to build its second South Australian factory along Philip Highway in 1958, everything changed. The plan for Elizabeth was up-sized. GM was a universal brand. What GM gave Elizabeth was respectability and the prospect of a strong manufacturing sector. Before then here had been no real economic vision for Elizabeth. The town was planned, but how the local economy would function was largely an afterthought.
A car factory solved the problem. Putting a car factory in the middle of a field meant that a neighbourhood would form around it almost overnight. Towns and suburbs needed all the things factories needed. Electricity. Sewerage. Roads. Cheap housing. People. A supply chain. And once a supply chain was in place, smaller manufacturers making white refrigerators, washing machines, and sewing clothes, could set up at reduced cost. Where there had been once been cropland and empty plains, suddenly there was a functioning economy. For any state government looking to rapidly develop real estate, car making was, and still is, a godsend.
So with GM on board, Elizabeth could be sold across Europe and North America as a city really going places, with strong local supply chains and a happy workforce free from radical union activity. Once they settled in, the economy of Australia’s newest city became wholly dependent on big multinational companies that built fridges and cars. From that point, Elizabeth’s future would always be decided around boardroom tables in faraway cities like Melbourne, London or Detroit.
Ever since, Elizabeth has been at the mercy of the company bottom line.
The trade-off was that GM’s Holden factory was a birthright for the people of Elizabeth. Construction started in 1958 and four years later, the factory was hungry for labour as it started to churn out fuel-guzzling family sedans that quickly came to symbolise the Australian Way. Back then, a man in need of work could walk in off the street and into a job, so long as he could keep up. For Italian and Greek immigrants with barely passable English, it was a lifeline in a country that still thought itself porcelain white.
And for a while, times were good. For Elizabeth, and the rest of the country.
Then the 70s happened and a cluster of global economic events cracked the Australian economy. In 1973, oil prices skyrocketed when the world’s petrostates announced an embargo, Britain gained entry into the European Economic Community which foreshadowed the EU, and the first rumblings of globalisation meant Australian exports began to experience more competition on the world market. Coupled with protectionist economic policies, unemployment and inflation rose together for the first time since WWII in a phenomenon known as ‘stagflation’. Soon enough, South Australia was haemorrhaging manufacturing jobs and Elizabeth was the exit wound.
Between 1972 and 1982, Adelaide alone shed 10,000 manufacturing jobs. In 1981, the manufacturing sector employed around 100,000 South Australians. During the recessions of the 80s and 90s, the number of retrenchments in SA grew from 23,000 in 1988, to 48,000 in 1992. One in three of those were in manufacturing and by 2011, the total number of manufacturing jobs in South Australia had fallen to 74,000.
In 1982, only 11 of the first 21 factories that had signed on to help pioneer Elizabeth remained. Smaller firms tended to flee or fold, while bigger firms like GM Holden pushed on with a reduced workforce.
By 1986, only four of the thirteen ‘major factories’ featured in one 1965 promotional booklet for Elizabeth remained.
And by the end of the first decade of the new millennium, GM Holden was the last standing.
It’s a reporter’s nightmare.
According to Australian Bureau of Statistics (ABS) figures, crime rates in South Australia have consistently fallen over the last ten years, with a 21.1 per cent drop since 2007 alone.
It may not make for a blood-soaked headline, but University of South Australia Criminologist Rick Sarre says this is the proper starting point for any real conversation about crime in South Australia, even if the data does need a few qualifications.
First, statistics do not measure actual crime but the number of people arrested by police. The second is that different states define and record criminal offences in different ways, making comparisons between them unhelpful. While stats help to paint a picture within a single jurisdiction, they should also never be relied upon completely.
The take-away is that most crime in South Australia is ‘lower level’, involving things like shop lifting, car theft, vandalism and break-ins, which get recorded as ‘property crime’, making up 54.6 per cent of all offences in 2011. According to Sarre, all communities, everywhere have a ‘baseline’ of criminal activity and the baseline for property crime will always be high because property doesn’t fight back.
In saying that, the figure still needs to be taken in context. Property crime across South Australia has seen a five-year downward trend, with an overall 18.8 per cent drop.
Looking at the data, the only real increase across the state has been the number of drug offences recorded, which rose 74.9 per cent in 2011. This seems high, but then drug-related crime only accounted for about for 2.4 per cent of all criminal offences on record and, in raw numbers, only saw an extra 2067 offences. This is small in the scheme of things, and is partly explained by South Australia’s effort to crackdown drug trafficking over the last few years. As a general rule, any crackdown on a particular criminal activity will always show a corresponding ‘growth’ in the crime rate.
On a local level, figures also show that areas such as Elizabeth and Salisbury do experience higher levels of crime, even if they are also experiencing, generally, the same downward trend as the rest of the state. According to Sarre, the reason for this are issues of disadvantage, combined with a higher population and the tendency for Adelaide’s northern regions to attract more police attention. Again, he says, more police attention, means more crime detected.
The overall message here is that, at least on crime, South Australia has had it pretty good for the last ten years, owing to a stable economy, higher average pay, less overall drug use, more prison sentences for property offences and smarter policing.
The old way of policing would have officers out on patrol with operations controlled from Adelaide. Patrols would cruise through neighbourhoods or well-established routes and would respond to calls as they came in. In essence, it was reactionary.
This was thrown out when ‘intelligence-led policing’ was introduced in the 90s, with the release of Focus 21, a report resulting from a yearlong review that called for a change to the way South Australian Police (SAPOL) did business.
Structurally, SAPOL’s entire operation became decentralised, with each region being made responsible for reducing crime in its area of operation. Individual units were then set up to gather data about criminal activity, allowing individual SAPOL branches to pick up on trends and use police resources accordingly.
Trends, however, change all the time and anything from the weather or school holidays will affect the likelihood of a certain crime taking place in a particular area. The goal is to use these trends to see crime coming, and act accordingly.
And the end of the car industry is one event that SAPOL will be planning for, at least according to retired Elizabeth Station Police Chief Ferdi Pit.
Pit, however, says he is sceptical about any impact the closure will have on crime rates.
‘Not everyone who works there, lives there,’ he explains.
‘They live in surrounding areas. And then whatever side of politics you are on, a large amount of money is being spent on jobs retraining. And the people who work there are good, honest, hardworking people who want to work. In the overall scheme of things, it’s not going to make much of a difference.’
What Pit says makes sense statistically. Adelaide’s northern communities are interconnected. A person may live in one and drive to work in another. A population spread out across a region will not have much of an effect on overall crime rates.
The catch is, Pit’s scepticism comes from the knowledge that crime has been declining for the last ten years, partly under his stewardship; however, it rests on the belief that both senior state and federal political leaders are working hard to keep it that way.
Or that they even care to.
Politically speaking, South Australia may be too stable for its own good.
Within South Australia there are eleven federal election districts. Generally, political allegiances tend to fall as may be expected, with those seats home to the state’s manufacturing workforce in Adelaide’s north, far-west and south tending to vote Labor. Meanwhile, the Liberals tend to dominate out east and in regional areas, with Hindmarsh in Adelaide’s near-west the party’s only real ‘at-risk’ seat.
And there’s the rub. Over the last three federal elections, this pattern has only become entrenched with Hindmarsh probably the only real ‘at risk’ seat in the entire state. But even though South Australia swung right at the last election, it wasn’t enough to break the pattern. The Liberal candidate for Hindmarsh barely managed to scrape by, and a future loss there will not mean much if the Coalition can hold on elsewhere.
And without marginal seats, there is no reason why South Australia’s welfare will be particularly high on Canberra’s priority list. With nothing to win, and little to lose, the Abbott government is free to remake the state in its preferred economic vision, while punishing the State Labor government for its razor’s-edge win at the March 2014 state election.
There the incumbent Labor government was narrowly returned to office with the support of independents. Ever since, its principal task has been to deal with the car industry shutdown and the uncertainty surrounding the future of South Australian defence manufacturing.
How bad things will get largely depends on how unemployment, and particularly underemployment, is managed.
The first step is to get old workers new qualifications. A person who has spent 20 years in manufacturing will generally have very specialised skills, but little paperwork to show for it. This limits future job opportunities for a person who may have never finished high school, in a market with more labour than it knows what to do with.
In planning for this, the state government has used the 2008 Mitsubishi closure as a precedent in designing its Automotive Workers In Transition program. Under the program, workers will have access to career advice, skills recognition programs and Vocational Education and Training courses for one year.
All told, there is $45 million in funding available for the program, with specific contributions of $15 million each from Toyota, Holden and the Federal Government. The South Australian State Government is also expected to drop an additional $7 million over four years.
Which is a start. But the question it raises is whether it will be enough. Because if the shutdown hits harder than expected, the South Australian state government may find itself hamstrung by a fiscally-conservative Federal Government that operates with some very old-fashioned ideas about states’ rights.
The cavalry won’t be coming.
The significance of this cannot be underestimated, as what is happening to Elizabeth is something entirely new in the Australian experience.
The closest precedent is what happened when the global economy kneecapped the Australian steel industry in the 80s and brought a 25-year period of restructuring to Newcastle and Wollongong.
Back then, steel was in oversupply across the world. Cheap, foreign steel flooded into the country and the bottom dropped out of the Australian market. The industry responded by moving quickly to protect the bottom line and pretty soon mining pits started to close and steel plants downsized, taking with them the livelihood for thousands of people. In the end, once proud cities were broken, with a generation lost to the dole line.
And that took place over a quarter of a century.
Now, Elizabeth has been given three years to respond to the end of its last major industry. That kind of downshift, on that scale, and on that kind of timeframe, is about as close to The Edge as a people can get. Getting out alive depends on the ability to make quick decisions, but then whether this is even possible remains to be seen, as Elizabeth’s future is, and has always been, determined in the boardrooms of multinational businesses and lumbering government departments operating out of Adelaide.
All of which makes Elizabeth unique. The city and its surrounding communities are now the site of a grand social experiment, a hellish joyride with 80,000-plus potential consequences.
And in three years time, Holden goes. When it does, it will take down the rest of the car industry with it. Three generations of some families have gone to work in those factories. These are places able to take a person who barely finished high school and give them a real future building high-tech machines from the ground up. Teach them how to work with metal. Mould plastic. Maintain machines. Install computers into an engine to monitor its heartbeat. All on the promise of steady pay for hard work. On that, a person can raise a family. Buy a home. Grow old.
Blake’s little brother ‘steals shit’.
That’s how he knows crime will go up when Holden falls over.
‘Blake’ is in his mid-to-late 20s and lives in Salisbury North. He explains how his 17-year-old brother is part of a group of about seven, 15-to-18-year-olds earning $800 a day shoplifting from higher-end retail stores.
According to Blake, the group targets stores that sell name-brand consumer goods and electronics that retail for over $300. Minimum. They then take at least $200 off the sticker price and use Facebook like an auction house to move the items quickly. If the police are ever able to track them down, the items are usually gone and there isn’t enough evidence to get a conviction.
For those involved, it’s all business. Together they work in teams to generate income, with each getting a share. As a group, they regulate each other’s behaviour. Sometimes, says Blake, someone gets overconfident and hits the same store too many times. This leads to more attention from security and their image being circulated around the chain, keeping them from going back and costing them income.
Most have drug dependencies or mental health issues such as depression and anxiety, says Blake, but the real reasons they do it are the money, and the fear of being caught.
‘They’re naturally paranoid,’ he says, and this fear isolates them from anyone who may have the will and capacity to stop them. ‘They know that when they’re caught, they’re screwed, so they do anything they can to separate themselves from their family.’
Their parents, says Blake, run the range from those living off Centrelink, to ordinary working people. Even if they find out about what’s going on, it doesn’t matter. By that point, each of those involved are dependent on their ‘brothers’ and operate on the idea that it’s ‘us against the world’.
Blake, who works two jobs, is very much his brother’s father. He says he’s been pushing his brother to find a new direction, to ‘close that gap’ and ‘bring him closer’. It’s the other kids who are the problem.
‘These kids won’t work,’ he says.
‘This generation will have no problem risking something. If you ask them “Why would you not want to work?” one or two of them might have a career goal, but most of them are, like, “Why the fuck would we work when we can get this shit for free and just sell it, make instant money? Why work like a slave in McDonald’s for minimum wage when I can make what those guys make in a week in two days and have everything I need?’’’
All of which does not bode well for a region experiencing higher than average unemployment. Across the country, Australia recorded a national unemployment rate of 6.1 per cent in September 2014. In South Australia, that figure was 6.5. Out in Adelaide’s north, those figures stood at 8.5 per cent, with youth unemployment coming in at 18 per cent.
And some families in Elizabeth have not worked in three generations, according to Anglicare’s CEO, Reverend Peter Sandeman, who says people are already hurting and things are only likely to get worse.
Sandeman explains that part of his organisation’s work has been trying to deal with existing issues of youth unemployment in Adelaide’s north by developing programs to get young people from particularly disadvantaged backgrounds into stable jobs. But often, this is harder than it sounds, as some employers can be reluctant to hire these young people.
‘There’s all sorts of stereotypes,’ he says. ‘Some were that these people didn’t want employment. That they were all on drugs. That they were all unreliable. So we had to break through that myth.’
The other issue is low self-worth. When someone has grown up in a world that defines them as a problem and sees any sign of resilience as another indicator of hardship, there’s little point in trying for something better. University is just too hard. Finishing school is pointless. Better to go find work. But then some jobs are just not worth applying for. They’re just going to go to someone else anyway. No one wants a kid from The North.
Break a person’s heart enough times, and they stop trying.
And the future only promises a lot more heartbreak as the Federal Government pushes ahead with welfare reform for those under 30 and on Newstart. This promises to create a six-month-on, six-month-off payment system, with a six-month first-time waiting period, for a 25-hour-a-week Work For The Dole program, already being trialled at Elizabeth.
All for about $220 a week payment. Give or take. That’s half the minimum wage.
‘Unfortunately, we’re a growth industry,’ says Sandeman, who believes that the danger with the end of the car industry is not so much what it means for the workforce, but for their children.
‘If you happen to be at a certain age or location, it’s going to be very hard to get out of the way. My kids, if they are unemployed, they have us to fall back on. If you come from a family where mum and dad and your grandparents have never worked, you have no support network.’
‘Unless we’re very careful, we may have the potential for a lost generation.’
Elizabeth is a young city.
Of the 80,748 people who call Elizabeth home, men and women are roughly equal in numbers, with 38.4 per cent of the city’s population aged below 30 and a fertility rate close to double that of areas skirting Adelaide. It is also mostly white, a throwback to how the place was built in the 60s by English migrants and post-WWII European refugees. Still, about three per cent of the population is Indigenous, triple the rate of some areas closer to Adelaide, and the city’s complexion is slowly changing as new migrants and refugees look to Adelaide’s north for cheap housing.
Not all of Elizabeth is doing it hard. But whatever their story, the make-up of the city is reflected most in those doing it tough.
Whoever they are, or wherever they come from, those who find themselves on hard times, tend to find their way to AnglicareSA’s Mission on Elizabeth Way, on the outskirts of Elizabeth’s administrative heart.
The Mission provides counselling and financial support services, but it’s the free lunch they are best known for. Selina Franke is one of the volunteers responsible for making it happen. Every Monday she drives in from Riverton, a small country town about an hour further north and with her team, she will serve lunch to anywhere from 90 to 140 people.
Today’s special is soup. All the chicken that went into the soup was Franke’s. Whatever food AnglicareSA gives her, she matches it with food she brings from home. If she didn’t double what she had to start with, she says, it just wouldn’t stretch.
Outside, there is a slight chill on the wind and the sky is overcast, but inside The Mission is alive and full of movement. Everyone is friendly and people are talking. No one swears.
Franke tells how a fortnight ago two pregnant women and a young boy came in looking for a meal just on the edge of cut-off time. By then, everything was gone and they were packing down the kitchen, leaving them no choice but to turn them away.
‘It really hurts us to say there’s nothing left,’ says Franke, ‘but then you get a tin of baked beans or offer them something – but that’s not what we want to offer them. We want to offer them a good, hot meal, you know?’
Franke herself is no stranger to hard times. For over 40 years Franke ran a string of hotels with her husband, starting with the Queenscliff on Kangaroo Island and ending with the Blake Motor Inn. Soon after the pair retired their son, Richard, passed away.
He was 36 when he ended his life and the subject is understandably hard for Franke to talk about. Around her neck she wears a lock of her son’s hair that she touches when she thinks about him.
‘It’s not right for parents to bury their kids,’ says Franke before she tells how at first she had trouble coping, so she got in touch with BeyondBlue. Afterwards, she learned that around Australia, suicide has hit a ten-year peak with an average of seven deaths by suicide a day, with men accounting for three of every five deaths. For Indigenous people, this rate is 2.5 times higher for men and 3.4 times higher for women.
Learning this is also what helped bring Franke to The Mission. She wanted to help in some way to keep people from making the same decision as her son. The people at BeyondBlue thought she might be able to do some good and suggested she get in touch with AnglicareSA.
Turns out, they were right. On one of the first Mondays volunteering, Franke found herself talking to a young man who was thinking of ending his life. He’s safe now, she says and he still comes in to see her.
For those who have hit bottom, or close to it, the kind of solidarity they find in the dining room at The Mission goes a long way in helping hold things together. That is why, Franke says, all the volunteers are terrified of what will happen when Holden falls over. They can barely keep up as it is.
My mechanic says a car must be kept running to stay alive. If not, then on a long enough time-line, it will rust away to nothing. It’s an old wisdom, he says, that it’s better to wear out, than rust out.
Which is something to think about as you drive through Elizabeth, watching through the windscreen as suburbia sweeps by. It would all look the same if you didn’t know the whole story. If you didn’t know how Elizabeth was once a bold, new vision for everything a young, post-World War II Australia wanted to be. A portent of the future. Still is, in its own way.
Things have been pretty tough for a while now. The boarded up houses and rubbish piled up on footpaths in some neighbourhoods speak to that. But there are still good people here. Ordinary people just getting on with it. Elizabeth may not always be pretty, but it gets by in that way, which is the main thing. The kind of sadness that tends to settle into a post-industrial landscape hasn’t really arrived yet. Hopefully it never will.
What the Holden announcement did was turn the engine off. With that began a brand new experiment in rapid deindustrialisation that will shred a projected 23,903 skilled jobs across South Australia in three years. Many of those jobs will be in communities that depend on manufacturing, in Adelaide’s working class north.
Elizabeth should be watched carefully. In good times and bad, it is the vanguard. And if it is left to rust back into the dirt, it may just be a sign of things to come.
This essay was produced as part of a Kill Your Darlings/Copyright Agency Investigative Journalism Mentorship.
The author is grateful for the contributions of all involved in the production of this story. Over 40 interviews were conducted during research. Those which have been relied upon have been named, but there are others whose contributions did not make it in for reasons of length, relevance or because they asked to remain anonymous.
Haigh, G., End of the Road (Penguin, 2008).
LeDuff, C., Detroit: An American Autopsy, (Penguin, 2013).
Marmo, M., De Lint, W. and Palmer, D., Crime and Justice: A guide to criminology, (Thomson Reuters Lawbook Co., 4th ed., 2012).
Peel, M., Good Times, Hard Times: the past and the future in Elizabeth (Melbourne University Press, 1995).
Schultz, J., Steel City Blues (Penguin, 1985).
McClelland, E. Nothing but blue skies (Bloomsbury Press 2013).
Official Reports, documents, policy papers
Allen Consulting Group, 2013 The Strategic Role of the Australian Automotive Manufacturing industry, Report to the Federal Chamber of Automotive Industries.
AMWU 2014, Final submission, prepared for The Productivity Commission Review into the Australian Automobile Industry.
Barbaro, B. and Spoehr, J., 2014 Closing the Motor Vehicle Industry: The Impact on Australia, The Australian Workplace innovation And Social Research Centre and the National Institute of Economic and Industry Research, University of Adelaide.
Brotherhood of Saint Laurance, February 2014, Youth Unemployment Snapshot.
Deloitte Access Economics, March 2014, Business Outlook: Eyes on China.
Department of Defence, July 2014, Defence Issues Paper, discussion paper to inform the 2015 White Paper.
Hausman R., et al., 2013 The ATLAS of economic complexity: Mapping Paths to Prosperity Part 1, Massachusetts Institute of Technology and Centre for International Development.
Hugo, G. and Harris, K., February 2013, Population Dynamics in Outer Suburbs 2006–2011, Australian Population and Migration Research Centre, Vol 1, No 2.
Productivity Commission, December 2013, Australia’s Automotive Manufacturing Industry, Preliminary Findings Report.
Productivity Commission, January 2014, Australia’s Automotive Manufacturing Industry, position paper.
Spoehr, J., 2014, Industrial Rejuvenation: Lessons from National and International Experience, WISeR working paper prepared for Department of Manufacturing, Innovation, Trade, Resources and Energy at the Stretton Centre.
Blandy, R., ‘Richard Blandy: Our Post-Industrial future is a rejection of bigness, centralisation and bureaucracy’, The Advertiser (Adelaide), 12 March 2014.
Bowe, W., ‘Poll Bludger: why the Coalition can afford to throw SA under the submarine’, Crikey (online), 11 September 2014.
Jean, P., ‘Prime Minister Tony Abbott says Future Submarines project will involve a ‘massive amount of work’ in Adelaide’’, The Advertiser (Adelaide), 22 August 2014.
Kendzior, S., ‘The peril of Hipster Economics: when urban decay becomes a set piece to be remodelled or romanticised’, Al Jazeera English (online), 28 May 2014.
LeDuff, C., ‘Hard times in Paul Ryan’s home town’, Mother Jones (online), September/October 2009 Issue.
Madden, D., ‘Gentrification doesn’t trickle down to help everyone,’ The Guardian (online), 10 October 2014.
Solnit, R., ‘Detroit Arcadia: Exploring the post-American Landscape,’ Harpers Magazine (online), July 2007.
Williamson, B., ‘A sleepless night in a contaminated home at Clovelly Park,’ The ABC, July 3, 2014.
‘GM has record sales in China in 2013,’ Autonews via Reuters (online), 7 January 2014.
Modelling, Data and Stats
Australian Bureau of Statistics, 2011, ‘Regional Profiles’:
City of Playford