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Goodbye Mitsubishi, hello knowledge economy? « Previous | |Next »
February 5, 2008

It has finally happened. Mitsubishi has pulled the plug on manufacturing cars at its South Australia plant. They have been on life support from both the SA and federal governments for years. It was no longer viable. Politicians and business leaders reassure us that the states economy is strong enough to withstand the shock, that they have been shifting the economy away from its reliance on manufacturing, and that Adelaide is not destined to be a backwater.

South Australia's future depends on maximizing opportunities sin the the resources sector. The most promising development we are told is the multi billion dollar expansion of the Olympic Dam uranium mine.This will lead to a mini-resources boom. And an increasing focus on defence and education is also part of the strategy to diversity the states narrowly based economy.

This strategy is having some success as manufacturing and agriculture, the traditional lifeblood of the South Australian economy have been declining in importance (from 27% in 1990 to 20.8% in 2006).

However, few of the movers and shakers in South Australia talk in terms of the knowledge economy as a strategy of diversification, which the Organisation for Economic Cooperation and Development (OECD) defines as:

one that encourages its organisations and people to acquire, create, disseminate and use codified and tacit knowledge more effectively for greater economic and social development.

Doesn't globalization and a new knowledge-driven economy present South Australia with a major challenge in that digital technologies are transforming the old agricultural/industrial society into an information society?

We have to see, in any strong way what is so evident in Sydney: the tendency to privilege the kind of skills and expertise which can circulate easily and rapidly through global networks (finance and property), relatively unfettered by national regulations and easily absorbed by those in other cultures; coupled to the tendency to marginalize those types of knowledge which are more nationally bounded and/or relational and context dependent.

| Posted by Gary Sauer-Thompson at 5:34 PM | | Comments (6)


Daniel Bell (1973), is seen as an early another exponent of the knowledge society. He emphasized the role of universities in transmitting knowledge that would advance economic development and thus the growing importance of the symbolic analyst or the managers and controllers of information and knowledge systems.

In occupational terms this included both high tech industries and non-profit services, such as education, health and government.

So all the current talk about education, universities and the old talk about Adelaide being an education city refers to the knowledge economy.

The decision to close Mitsubishi's Adelaide care plant was long overdue. The company could not produce cars that consumers wanted to buy and it needed high levels of protection to keep it alive.

The free market economists argue that SA has to win itself from excessive dependence on heavily protected manufacturing industries. Well the white goods industry has all but gone; and the car industry has contracted. Hence the rustbelt image.

And, as you point out, SA is pinning some of its hopes on government supported defence industry (ship builders and weapons firms). What will the Rudd Government do about those?

Peter S Stock said
"The company could not produce cars that consumers wanted to buy"
The factory could have produced, and technologists designed cars that consumers wanted to buy if their executives had been able to predict where the market was going and give appropriate direction (but that would mean living up to their position description).

From what I can gather the car manufacturers survive by following the traditional path of adapting an overseas care for the local market.

Thus Mitsubishi 380 started off life as the US market Galant, a front wheel drive car, that was adapted and modified by the engineers in Adelaide, even though Australians prefer rear-wheel drive for the family sedans.It was dated as it came onto the market and was built down to a price.

The SA plant was always marginal and Mitsubishi in Tokyo was reeling from mechanical faults and failures to act on recall notices that it had covered up.

the key to survival is to develop local centres of excellence for design and innovation that can fit into global supply chains and to produce cares that consumers in Australia and overseas want. Mitsubishi was not able to do this as well as Holden or Toyoto.

Ford is in a similar position to Mitsubishi. Propping up the industry by offering more subsidies and delaying scheduled tariff cuts will just postpone the inevitable if the shift to excellence and innovation is not made.

I remember reading somewhere that education has replaced tourism ($11.5 billion) as Australia's biggest services export and the third overall, trailing only coal ($20.8 billion) and iron ore ($16 billion) production. So much for agriculture being the backbone of the country.

The $12.5 billion is generated from 450,000 international students who are treated poorly in terms of being customers who exist to be milked, are exploited in their part time jobs as they are paid below the minimum wage, and a third of whom struggle to make ends meet.