Thursday, 12 December 2013

Who Killed Holden?

10072011270With General Motors announcing the last Holden will roll off the line in Australia by 2016, there are a number of defendants who could be called to answer to the charge: Who Killed the Golden Goose That Used to Be Holden?

I’ll answer your first question first: It wasn’t General Motors Australia, who would happily continue making Holdens if the stars were aligned differently—or General Motors America who in those benevolent starry-eyed circumstances would be more than happy to let them.

So who’s responsible for shifting the stars?

First in line are Australians: Most fundamentally it was Australian consumers who killed Holden when they stopped buying their shitty cars. It might be an “iconic Australian company” according to sundry business and no-business journalists across the great sunburnt land, but Australians themselves stopped buying Holdens many years before the subsidy per car reached the tens of thousands it is now.

Whatever they tell surveyors holding clipboards, Australians in large numbers buy other cars instead of Holdens. So if they want someone to blame for Holden’s demise, they could start by looking at themselves.

Second in line is the Australian governments that Australians vote for in their droves: not because this one elected to stop subsidising this inveterate corporate bludger, but because for decades every Australian government has denuded by usurious taxes the capital this company and others needed to reinvest to keep it ahead of its competition (pouring this stolen money mostly into various welfare black holes instead of putting it to any productive purpose),1 and because for decades it gave Australian unions the right to terrorise this and every other Australian producer, disregarding that the golden goose they thought could be plucked forever could not.

In this respect Holden is every Australian producer writ large. (And this goes for NZ producers as well, take not.)

So third in line is the unions: It was Australian unions who helped kill Holden

…the unions and their enterprise bargaining over many years that has made their own members unemployed. The cost of wages is more than double what it should be.
    It was a great effort by the unions to achieve high pay rates, but now there are no jobs. Any Australian who does not recognise the truth is sadly deficient in reasoning ability.
    Australian car manufacturing labour costs are reportedly twice as high as in Europe and four times as high as in Asia. Nobody wants Australian workers earning Asian wages but productivity isn't just about wages.
    Maritime workers famously insisted Australia's waterfront could never match Singapore's best practice regarding container movements per hour - until the stevedores were all sacked, replaced with novices and eventually rehired with a refreshed commitment to the job.
    Better workplace processes lead to superior output and, therefore, increased productivity without sacrificing wages.

So between losing the capital to reinvest (stolen by government) and losing the ability to improve workplace processes (stolen from them by short-sighted trades union leaders pro-union legislation empowering unions to oppose them)

 What George Reisman wrote about parent company General Motors in America could be repeated virtually word for word about General Motors in Australia. So I will (for UAW just read AMWU, and divide gross numbers involved by the ratio of the different populations):

What the UAW has done, on the foundation of coercive, interventionist labour legislation, is bring a once-great company to its knees. It has done this by a process of forcing one obligation after another upon the company, while at the same time, through its work rules, featherbedding practices, hostility to labour-saving advances, and outlandish pay scales, doing practically everything in its power to make it impossible for the company to meet those obligations…
    First, the company would be without so-called Monday-morning automobiles. That is, automobiles poorly made for no other reason than because they happened to be made on a day when too few workers showed up, or too few showed up sober, to do the jobs they were paid to do. Without the UAW, General Motors would simply have fired such workers and replaced them with ones who would do the jobs they were paid to do. And so, without the UAW, GM would have produced more reliable, higher quality cars, had a better reputation for quality, and correspondingly greater sales volume to go with it. Why didn't they do this? Because with the UAW, such action by GM would merely have provoked work stoppages and strikes, with no prospect that the UAW would be displaced or that anything would be better after the strikes…
    Second, without the UAW, GM would have been free to produce in the most-efficient, lowest cost way and to introduce improvements in efficiency as rapidly as possible. Sometimes this would have meant simply having one or two workers on the spot do a variety of simple jobs that needed doing, without having to call in half a dozen different workers each belonging to a different union job classification and having to pay that much more to get the job done. At other times, it would have meant just going ahead and introducing an advance, such as the use of robots, without protracted negotiations with the UAW resulting in the need to create phony jobs for workers to do (and to be paid for doing) that were simply not necessary…
    Third, without the UAW, GM would have an average unit cost per automobile close to that of non-union Toyota…
    Fourth, without the UAW, [Holden workers would not need to be subsidised to the tune of $50,000 per worker], which is where it is today, according to [Grace Collier in
today’s Australian].
    Fifth, as a result of UAW coercion and extortion, GM has lost billions upon billions of dollars. For 2005 alone, it reported a loss in excess of $10 billion. Its bonds are now rated as "junk," that is, below, investment grade. Without the UAW, GM would not have lost these billions.
    Sixth, without the UAW, GM would not now be in process of attempting to pay a ransom to its UAW workers of up to $140,000 per man, just to get them to quit and take their hands out of its pockets…
    Eighth, without the UAW, GM would not now have pension obligations which, if entered on its balance sheet in accordance with the rule now being proposed by the Financial Accounting Standards Board, will leave it with a net worth of
minus $16 billion…
Ninth, without the UAW tens of thousands of workers — its own members — would not now be faced with the loss of pension and healthcare benefits that it is impossible for GM or any of the other auto companies to provide, and never was possible for them to provide. The UAW, the whole labor-union movement, and the left-"liberal" intellectual establishment, which is their father and mother, are responsible for foisting on the public and on the average working man and woman a fantasy land of imaginary Demons (big business and the rich) and of saintly Good Fairies (politicians, government officials, and union leaders). In this fantasy-land, the Good Fairies supposedly have the power to wring unlimited free benefits from the Demons.
    Tenth, Without the UAW and its fantasy-land mentality, autoworkers would have been motivated to save out of wages actually paid to them, and to provide for their future by means of by and large reasonable investments of those savings — investments with some measure of diversification. Instead, like small children, lured by the prospect of free candy from a stranger, they have been led to a very bad end. They thought they would receive endless free golden eggs from a goose they were doing everything possible to maim and finally kill, and now they're about to learn that the eggs just aren't there.
    It's very sad to watch an innocent human being suffer. It's dreadful to contemplate anyone's life being ruined. It's dreadful to contemplate even an imbecile's falling off a cliff or down a well. But the union members, their union leaders, the politicians who catered to them, the journalists, the writers, and the professors who provided the intellectual and cultural environment in which this calamity could take place — none of them were imbeciles. They all could have and should have known better.
    What is happening is cruel justice, imposed by a reality that wilfully ignorant people thought they could choose to ignore as long as it suited them: the reality that prosperity comes from the making of goods, not the making of work; that it comes from the doing of work, not from the shirking of it; that it comes from machines and methods of production that save labour, not the combating of those machines and methods; that it comes from the earning and reinvestment of profits not from seizure of those profits for the benefit of idlers, who do all they can to prevent the profits from being earned in the first place.

Now, it’s said that the government should nonetheless continue subsidising this losing proposition in order to “keep Australian jobs.” But the fact is, they’ve killed this golden goose and reincarnation on present lines is not possible.

The good news however is that all the capital now tied up in manufacturing and aftermarket work hasn’t disappeared. It’s all there and waiting for entrepreneurs and investors to put it to more productive use.

Just as long as governments and trade union leaders let them.

Here’s Tenpole Tudor.

1. On this point, the intelligent reader might like to enjoy George Reisman’s “Anti-Obamanomics: Why Everyone Should Be in Favor of Reducing Taxes on the "Rich"


  1. The british car industry, in the 1960s suffered the same fate for the same reasons

  2. Also people are not buying large sedans in Australia in the numbers they once did due to government interference in the market. The marketplace is distorted by all the government legislation and regulation. For a start, fuel cost is far higher than it ought to be. That discourages the traditional buyer of the Holden Commodore (a family man of moderate means) from being able to afford to run one. Hence he doesn't. He goes for a company vehicle (and demands one with a fashionable European badge) or he gets an SUV or 4X4 as those are compliant with what's socially acceptible and are middle-class trendy (also, being trucks they often have rattly smokey diesels which are cheaper to run (and as trucks do not have to meet such strict emissions, noise and safety regulation as do cars) and are hugely favoured by legislation (lower tax and far easier regulation). The other alternative is to get a front wheel drive hatchback or a quasi-sedan based on the hatchback floorpan and underpinnings. Not too bad until around three years down the road, then you'd better get out of one of those unless you are happy to chance the possibility of some surprises with your roadworthiness or your maintenance bugdget.

    Holden and Ford have become unfashionable in Australia as they also have the taint of westie bogan and taxi about them. That is, they are percieved as cars for commoners or peasants. Funny that many of the people who hold the view that the cars are blue collar shit drive SUVs and the like themselves. Nevertheless these are not shitty cars at all. In many ways they are superior to the prestigious European cars many tens of thousands of dollars more expensive. Commodore was exported to the USA and the UK where it was very well received.

    For many years the schools in Australia have inculcated in the children that large cars are bad and they are not environmental. This attitude has stuck. Commodores and Falcons were the big losers from this governmental propaganda. It is funny how Australians are able to justify their trucks as OK while a large sedan is not OK.

    Meanwhile, something else is stealthily happening. Cheap, available, economic and affordable sports cars are slowly being removed from the market. Forget about the expensive stuff. Notice how the affordable cars that are simply good to drive, fun and interesting are being phased out. Notice all the new intrusive technology that is coming on board. Central planning is wrecking the car.


  3. " In many ways they are superior to the prestigious European cars many tens of thousands of dollars more expensive."

    Sorry, they just aren't. People like to be smug and think that their cheap V8 sedan is just as good as Mr Snobby's German V8 sedan for twice the price, but they're deluded. I have driven both types extensively, and the expensive euro stuff is in a completely different league to the cheap and cheerful Aussie cars. That's why they are cheap.

  4. @Amit: This, by Jeffrey Tucker, seems relevant: "If you want to know why the world’s cars are so bland, boring and identically dull, look no further than the regulations cluttering up the world’s biggest car market..."
    'The Homogenization of the Car'

    @Don W.: Not exactly. That was more a combined assault by unionism, taxation and outright nationalisation. My own car, up there in the sidebar, got out just before it all turned to pooh.

  5. " In many ways they are superior to the prestigious European cars many tens of thousands of dollars more expensive."

    You would enjoy Eric Bana's film about his obsession with his Falcon, 'Love the Beast.' Especially pertinent is his conversation with Jeremy Clarkson about the merits, or otherwise, of Aussie muscle cars.

  6. TWR is correct. I drive a 2009 Audi A6 Diesel in Auckland & rented a brand new Holden Commodore V6 when in the Gold Coast last week. The Holden, to put it mildly, was a piece of crap. Plastic, plastic, plastic, poor ergonomics & weak engine. You wouldn't know it was a V6- the take-off was so sluggish, and the steering was poor so that the car drifted all over the road above 80ks. The construction was light weight, the door skins almost paper thin.
    My Audi is solid as a rock, the doors are Heavy and the construction is solid- yet I have plenty of power & the steering is superb. The car is not dominated by plastic and every thing the driver needs is in easy reach.

    The Holden is cheap and not very cheerful. There were few Holden's & Fords on the road (mostly taxis) this was very noticeable. The car fleet in the GC looks to be far younger than here in Auckland. Most cars on the road looked less than 5 years old, and the number of Hyundai's was very noticeable- every second car was a Hyundai & every 3rd car was a SUV. Finally, the speed limits are sensible there, with speed limits being 50k (hardly anywhere), 60, 70 (most common), 80,90,100 & 110. It looked to me that someone had done their homework & made the speed appropriate to the road, unlike here with the domination od 50k limit which is just too slow for modern cars.


  7. Hi Peter .I stand corrected. As an apprentice mechanic in the early seventies and worked on these cars, I saw the deterioration in the quality and the lack of innovation of these cars. The British unions were a law unto themselves and with the formation of British Leyland by the British Gov't and the crap cars they were producing, the end was inevitable.

  8. Hi Don, if you were an apprentice mechanic in the early seventies and worked on these cars, then you'd be far more use to me than most of the modern mechanics--most of whom have never even seen a carburettor or a distributor.

    And, yes, Government Leyland was the end. They took all the ability and genius of British car producers over eight decades, and turned it into the Leyland P76.

  9. ivan

    You compare your own Euro mid-liner with a base model rental car! You'd consider that fair basis for comparison? I like how you reckoned the renter was "brand new"! Sure it was. And you were the first driver. And no-one had had that renter prior to you. And no one treated it as people are prone to do with renters. It was never kerbed or pot-holed. Face it. You have absolutely no idea about the history or chassis condition of that particular car whatsoever.

    The Audi is a nice enough car with dull steering, understeer (lots), so-so dynamics and an tolerable ride. Having a diesel it has reasonable low rpm torque but the initial vigorous take up of throttle position flatters to decieve. The car runs out of power and has a mediocre top end. Throttle sensitivity is poor. On rough Australian road conditions the Audi will have issues holding wheel alignment and will need attention six monthly. Tyre shops, having become used to this nose heavy car's issues frequently resort to non-factory alignment settings in order to get the tyres to live and that will degrade the handling further (making the steering worse still). Over the course of ownership it will cost more in maintenance than an Aussie sedan. Eventually it will be a throw away because a computer will pack up or the Euro-trash electronics will fail and fixing any of that will cost more than the residual of the car to repair. Wait and see.

    Anyway, you're comments are naieve and come from someone with something to defend- in this case your existing purchase. That's understandable. But don't fool yourself into considering that what you are doing is expressing anything other than your own prejudices.

    Final point. The Australian speed limits are woefully low. Recently the Wheels magazine had a journalist drive at 130kph along the Hume Highway. The existing limits of 100 and 110 were demonstrated to be wrong headed. That's just the first example. I understand they have done plenty more and are liley to publish over the course of the year.

    Come over here and live here before you rush your foreigner prejudices into print!


  10. twr

    "...for twice the price."

    But that's just the point. In order to drive a better German car than a V8 Commodore or a Falcon T6 you are going to have to spend in the order of quarter of a million dollars. I'll certainly accept for that much money the German car will be more refined and have had more development. And so it ought to have. For that much money it had better be more refined and more developed. Still, you'd never be able to enjoy it to the extent that you can with the Aussie car. Try taking a Mercedes S63 along a gravel road at full noise one day- bet you'd never do it. If you did it wouldn't be for long! Or try towing your boat with the Merc. You could, but what about that 8-speed transmission- do you really want to risk it? These cars are nice to drive and good fun to drive hard (especially the S65 AMG Black but since thats a 12 and not an 8 it is sort of outside of the comparison today). Trouble is you have to be very pickie where you do it or you are going to cost yourself a lot of $ fast. The Aussie cars do not have this issue to contend with. If you hit a cattle grid at speed- no issue. If you hit an Epping pothole you are not going to lose two tyres and a pair of forged wheels. If you hit the dip outside of Curl Curl you won't have to worry about losing half the exhaust system and a transmission cooler.

    Sure they are not the same. But if you were to compare the cars on a price point basis, then the Euro stuff is well beaten in many areas- which is just as I reported.

    Meanwhile I like European cars and some American ones as well, but I am going to miss the Australian sedans.


  11. PC

    As charming as he is (and he is a nice chap indeed) Jeremy is an entertainer first and foremost. He is not a particularly good driver. He's not very good at evaluating cars (although you'd be forgiven for thinking that he is the way the BBC show portrays it). He is very good at playing to the prejduces of the small c British conservative and the pub-yob blow-hard. Fair enough. It's made him a good living.


  12. PC

    About the dullness of so many new cars- it is the regulations and also the imbecilics who can't be arsed learning about their car and what is good and bad about it (other than whether it has internet connectivity, a nice colour and a prestigious badge and is socially acceptable). Now I am worried. For it means that every car I buy will have to be rebuilt in order to have it approximate what it ought to have been had the dorkish nanny ninnies not kluged it up.

  13. I mostly agree with Amit on this, Holden made their reputation with big cars, and these have become unfashionable. It's still possible to reverse the downslide with good marketing (Harley Davidson & Ducati have managed to do this in the past), but they need to sort the union issues pronto.

    B Whitehead

  14. This is Very effective and useful post. All post is very informative and useful in this blog. People can get very useful news here. Thanks for posting. Keep posting.....
    Master Harley Davidson Technician
    Harley motorcycle repair shop
    two wheel mechanic shop
    motorcycle maintenance garage

  15. This comment has been removed by the author.

  16. Thank you for sharing valuable information. Nice post. I enjoyed reading this post. The whole blog is very nice found some good stuff and good information here Thanks..Also visit my page Rental Property Accountant Auckland There is great satisfaction in knowing we've done our job well and served our clients' interests. It gives us particular satisfaction when our clients take the time to acknowledge their satisfaction by providing Rental Accountants with their testimonials .

  17. Hi There, I just spent a little time reading through your posts,which I found entirely by mistake whilst researching one of my projects.
    To get new information visit here
    buying a new car


1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.