Will Automotive Manufacturing Disappear from the United States Like It Has in Australia?

Automotive manufacturing has seen significant shifts in global economies, with notable differences in how the United States and Australia have navigated their industrial landscape.

John Button and the Australian Car Plan

In the late 20th century, Australia had a notable figure named John Button, a Labor statesman who championed the “Australian Car Plan.” This initiative utilized tariffs to ensure that imported cars were priced higher than domestically-produced vehicles. These vehicles were crafted using locally sourced materials, such as steel and aluminum, boosting manufacturing in states like Victoria and South Australia. This not only fostered job growth but also catered to the specific climatic and aesthetic conditions preferred by Australians.

The Liberal Government's Decision

However, the Liberal Government, with notable figures like Joe Hockey, made a decision that would drastically change the automotive landscape in Australia. They argued that the country could rely on imports from countries like Japan, Malaysia, and Thailand, compromising the necessity of a local automotive industry. This decision led to the decline of factories in states like Victoria and South Australia, resulting in significant job losses and changes to the local economy. The transition away from manufacturing contributed to the perception that the car industry was no longer essential for the nation's economic stability.

Toward Robotics and Exports

The move toward robotics and international manufacturing negatively impacted Australia's manufacturing sector, particularly in car manufacturing. As Japan and other countries invested in robotic technology and built factories in places where labor costs were lower, Australia struggled to compete. The reliance on imported cars and a diminished local industry meant that Australia had limited manufacturing capabilities. The challenge of exporting under protectionist trade measures further complicate the situation, as countries like Australia found it difficult to compete in the global market.

Advantages of the United States Compared to Australia

Looking at the United States, it has two key advantages in comparison to Australia: a significantly larger population and geographical proximity to other major economies in North America.

Larger Population Base

The US population is over ten times that of Australia, creating a vast domestic market for automotive manufacturers. This larger customer base can help car companies generate higher revenues, making it more financially viable to maintain an automotive manufacturing sector. A larger population also means more potential for innovation and diverse demand, which can drive the automotive industry forward.

Geographic Advantage

The United States is strategically positioned with two nearby partners: Mexico and Canada. This proximity allows for a comprehensive manufacturing network spanning North America, where multiple car parts and vehicles can be produced across numerous factories. Such a vertically integrated system can enhance efficiency and supply chain management, providing a competitive edge to US-based automotive companies.

Conclusion

While Australia’s experience shows that importing cars from other countries can be economically viable for consumers, it also highlights the risks of not having a robust automotive manufacturing sector. Given the United States' strong population base and strategic location, it appears unlikely that significant aspects of automotive manufacturing will disappear in the same manner as in Australia. However, ongoing political and economic factors, such as trade policies and technological advancements, will continue to shape the automotive industry in both countries.