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April 29, 2004
As Peter Costello, the Federal Treasurer pointed out the Mitsubishi crisis was a problem for the international car company not the South Australian plant. Mitsubishi's exit from South Australia will come from the decisions that will be made in Japan. I wouldn't expect too much by way of rescue of Mitsubishi Motor Corp though.
Mike Duffy, the Motoring Editor of The Advertiser, in an overview of the Mitsubishi crisis, says that we all should keep our opinions to ourselves:
"The best thing the so-called experts and the politicians can do is cease the debate until a decision is reached in Tokyo. Prolonged talk of doom at Mitsubishi can only be self-fulfilling."
The very opposite of closing down the debate should be what needs to happen. We should be debating the future of SA and the direction it's economy can and should go.
So what is going to happen?
Alan Mitchell, the economic editor of the Australian Financial Review, had an opinion piece in Wednesday's edition (subscription required). It addressed the economic modelling of the possible job loses from the closure of the local Mitsubishi plant. Alan rejected the input-output model with its 22,000 job losses used by John Spoehr as overstating the long term losses and for assuming that foreign car makers would capture Mitsubishi Australia's domestic and export markets. Mitchell argued that the Monash model was better than the Adelaide one. He went on to say that:
"....under the most pessimistic scenario in which the bulk of Mitsubishi's sales are lost to foreign producers, the Monash Model reduces Australian car industry output by about 7 per cent and cuts South Australia employment by 2 per cent or about 14,000 jobs."
As he observes, that would be a hefty blow to the South Australian economy. However, Mitchell goes on to say:
"...if it is assumed that Australian producers capture Mitsubishi's fleet sales, while imports take all its non-fleet sales, the initial loss of total can industry output is only 3 per cent, and this falls to less than 1 per cent after 10 years."
He acknowledges that even this would still be a significant set back for South Australia.
So what should be done here? Mitchell suggests the Commonwealth Employment Service setting up a centre inside the factory and special regional employment assistance package. However, his general point is a good one. The Howard Government should be generously pumping money into finding Mitsubishi worker's alternative jobs in the Adelaide area, rather than trying to keep the car plant going.
What we in South Australia should be discussing is not keeping the status quo going --but figuring how to start building on the initial step to a centre of excellence re manufacturing. We need to figure how how we can move away from being a branch office economy and having a vulnerable manufacturing sector. Moving away generally means developing "new age industries', such as IT, electronics defence, biotech and renewable energy.
As today's editorial in the Australian Financial Review (subscription required) said SA must drive its own future. If it does not then SA will continue to increasingly look like a retirement village in an industrial museum.
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"Commonwealth Employment Service"
Just a picky comment but is there such a thing anymore, Gary?