Revolutionary thinking required for life after the fall of big car makers


Date February 15, 2014

Clare Kermond

  • Retooled: former Ford workers (from left) Syman Gill, Stephen Hook, Tony Josevski and Johnny Vitulic. Photo: Wayne Taylor

    When Tony Josevski left Ford after nearly 20 years, he spent a few months picking up bits and pieces of work. He did some security work, he did some cleaning. Looking back, he rates that time as “very ordinary”.

    As news of Toyota’s plans to pull out of Australia broke this week, it was a kind of grim ground-hog day for Josevski. It’s all too easy for him to identify with the thousands of workers looking down the barrel of two or three fast years until the end of their jobs. ”I’d be losing a lot of sleep,” he says. ”I’d be thinking, ‘Should I leave now and get out there before everyone else is looking?”’

    For Josevski, life after the car industry has had a happy ending. He now works at Carbon Revolution, a high-tech Geelong company that makes ultra-light carbon fibre car wheels, mostly for export. One of several ex-Ford workers at Carbon Revolution, Josevski, 45, says he was luckier than many when he left the car maker. Having paid off his mortgage, he chose to go early and had the luxury of time to look around for new work. He says if he had a home loan or more debt, he might still be hanging on at the car company.

    Of his friends who also left Ford, most have moved to Melbourne for work. ”There’s nothing much locally. You don’t want to move but at the end of the day you have to bite the bullet and go where the jobs are,” he says.

    Josevski story is living proof of what many industrial experts are saying in the wake of the Toyota announcement: the chances of the sacked car workers finding new jobs will vary enormously depending on their age and skills.

    In its recent report into the car industry, the Productivity Commission found that low-skilled and older workers would find weight loss capsules it hardest to get work after being retrenched.

    Tim Gooden, secretary of Geelong’s Trades Hall Council, agrees, warning that as well as the unskilled workers, it’s the middle-aged who will be hit hard. He says that while 20-year-olds are happier to chase jobs interstate and overseas, and many of those over 55 may be able to take early retirement, it’s those in the middle who will struggle most.

    ”The biggest problem over the next few years is that demographic aged 35 to 55; they can’t move easily because they’ve got kids at school and they’re the least likely to retrain.” Going from old-school sheet metal to futuristic, lightweight carbon fibre was a big change for Josevski, but not as tough as might be expected. Josevski says many of the skills and processes he learnt at Ford have served him well, and it’s a claim supported by Carbon Revolution’s chief executive, Jake Dingle.

    Dingle describes the skills and work ethic of the veterans of the local car industry as impressive and he’s happy to have them on staff. In fact, he hopes soon to be in a position to hire more.

    Carbon Revolution recently won a contract with a major car manufacturer overseas, which it will not yet name, and has started work on a new, larger facility, which it will move into later this year. As part of its expansion plans, Dingle estimates that the company will be employing about 150 people in another year, with this to grow to 300-plus in the next stage, another two to three years on.

    ”This kind of structural shift is possible, this sort of reskilling and retraining is entirely possible. Most of our people come from local industries and they are very motivated, very keen to be involved in something that is growing,” he says.

    The company aims to grow from making about 50,000 parts a year by the end of 2016, to making 250,000 parts a year in the two to three years after that. With the carbon-fibre wheels weighing 40 per cent to 50 per cent less than conventional wheels, the potential advantages include fuel savings, increased acceleration and better steering and handling. Dingle is hoping that once one or two car makers release the product onto the market, the demand will rapidly increase.

    Carbon Revolution has had state and federal government support, particularly for research and development, and gets huge benefit from having the $34 million Carbon Nexus research centre on its doorstep.

Carbon Nexus aims to boost Australia’s fledgling carbon-fibre industry and is backed by the state and federal governments and headed by Deakin University and the Victorian Centre for Advanced Materials Manufacturing.

Carbon Revolution isn’t the only company pinning its hopes on carbon fibre; other Australian businesses are working on ultra-lightweight pipes, as well as making wind turbines, sports goods and parts for the aviation industry.

Gooden is a big fan of carbon fibre and its potential to bring jobs into an area so hard hit by the shrinking of traditional manufacturing. But he warns that real jobs growth out of this emerging industry will only come with the right kind of government support.

”This technology is not fanciful, it’s not 20 years away, but without the proper investment it could go offshore. If we had factories mass producing carbon-fibre products, that could soak up tens of thousands of jobs,” he says.

But Gooden concedes that even with the best government support for research and development, business start-ups and other areas, the scale of jobs needed to soak up the car workers will not be coming out of carbon fibre in two or three years, as Toyota’s workers start walking out the door.

”There can be a three- or four-year delay while people sit on their super and redundancy, maybe move somewhere cheaper and hold out, trying to get bits and pieces of work. But we need a short-term plan from government,” he says.

Gooden also says that while many auto workers will be looking to the building industry for jobs, they need to be prepared for lower wages and less job security.

”There are jobs in the building industry but that’s less money, and you get sacked every six months because buildings finish. That’s a culture shock for people who’ve had long-term, secure employment.”

It’s a warning backed by Professor Andrew Beer, author of a study that tracked workers who lost their jobs when Mitsubishi closed in Adelaide in 2004. Beer followed 314 workers and found that while only 13.4 per cent of them were not employed about 18 months later, three-quarters of them were earning less.

”Very often the work that they found was unskilled. Even if they had previously been a skilled worker, a welder or whatever, they were now working as security guards or stacking shelves in a supermarket.”

Beer says a further factor acting against the Toyota workers would be having the Ford workers flood onto the jobs market before them. Toyota will, after all, be following Ford and Holden out of the country.

So if high-tech start-ups like Carbon Revolution can’t deliver the amount of jobs needed for the sacked car workers, at least in the short term, where will the new jobs come from?

Beer says the areas expected to fuel jobs growth in the short term include the service sector and aged care in particular, and trades such as plumbing and electrical. He notes, though, that the skilled trades were only an option for those with the time and funds to retrain.

”There is a future in metals manufacturing but in the long term that’s likely to be bespoke … so not a lot of jobs there. I’d be looking to building and construction, transport and storage and mining,” he says.

Others have also pointed to Victoria’s potential growth as a food exporter, particularly to China’s fast-growing middle class.

The Australian Industry Group is tipping that many of the ex-automotive workers will find work in the growth areas of mining, mining services, food, pharmaceuticals and residential construction.

Diverse thinker: Palm Products boss Robert Wilson.

AIG chief executive Innes Willox says: ”While this is a particularly hard and troubling time, there is also an element of retooling and regearing. A lot of this labour will get soaked up over time because it is highly skilled. We’re already hearing from companies that want to pick up some of these people.”

And while car components manufacturers will undoubtedly be hit hard, with estimates that as many as 33,000 jobs may go from this sector, this is also a slice of manufacturing that has the potential to diversify and chase new markets.

Industry experts have been quick to point out that with the car sector ailing for some time, many component makers have already started to chase new markets and look for new products to produce.

Professor Peter Gahan, of the Melbourne Business School, says that as well as chasing car makers overseas, a significant number of component makers would be using the next two or three years to diversify into new areas.

”There will be job losses, but not all the jobs have to go. Many of them are already thinking about how they can grow other sides of their business and diversify their production base. Many of these businesses already make other things,” he says.

One components business that has already had success in moving away from its dependency on the car industry is Melbourne’s Palm Products, maker of high-quality car instrument lenses, brake parts, and small mouldings, which 10 years ago also began producing plastic tableware and drink ware.

Speaking from the US, where he is on a scouting trip for new contracts, Palm Products owner Robert Wilson says automotive components still accounted for about 40 per cent of the business, but he is optimistic that the company can continue to move away from the sector and had a strong future.

Wilson says the company has had a good summer in Australia, with its drink ware sold at Coles, Big W and David Jones, and had recently won a contract with a US company, based in New York. While he has had some government support in searching for export opportunities and in research and development, Wilson says there is more that could be done to support businesses trying to diversify.

”It’s in the export area that we probably could do with some more help … to attend shows and establish ourselves. I’m going to this Miami show and I don’t know if I’ll even get an order. It’s a big effort and a big cost,” he says.

It’s a call echoed by the Australian Industry Group, which says there is a clear role for government in helping companies find new export opportunities.

With so many of the manufacturing job losses concentrated in regional centres, Gahan is among those calling for any government support to take into account local area profiles and needs. ”Localised economies are going to bear the brunt of this loss and governments need to think about these local economies and the host of issues that will arise for them as they begin this transition, from urban planning on,” he says.

Gahan says Geelong had huge potential, as a satellite to Melbourne, to grow in high technology areas, food and creative fields. He says there is a lot to be learnt from the successful transformation of Newcastle after the closure of BHP, its biggest employer, 15 years ago.

”The view was that this would be devastating for Newcastle, but a lot of resources went into planning that transition and as a result Newcastle today is a much more diverse, vibrant economy. It’s a better environment, a better place,” he says.

The role of government is not just to assist industry to make the transition but to support regions with the complex and ongoing issues of such a huge change, Gahan says.

”No doubt there were some destructive elements of that process of change … but the upside was a more vibrant, diverse economy and we have to look at these positive examples and learn how the process was managed so that we can support local economies and workers to make these transitions.”

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