It was ironic. On the day that Toyota announced that its Australian manufacturing plants would close in 2017, Indonesia announced that its car and components industries are now ‘threatening’ to replace Thailand as the biggest manufacturer in the region with Toyota and GMH committing to increase their investment in our northern neighbour’s car industry.
Yet even five years ago, and still today, if you were to ask most Australians – including business people – to recall some words that they associate with Indonesia the answer is almost stereotyped: Bali holidays, asylum seekers and Schapelle Corby.
Ask a business person in Northern Asia, Singapore or Hong Kong and the words to describe our next door neighbour would probably be different: Opportunity; huge emerging middle class, partnerships in industry. Spot the difference?
Indonesia is just one of the nations in our region that not only have the ‘economies-of-scale’ to develop successful car and automotive components industries but they also have the location, labour, and distribution networks to access external markets.
What these countries didn’t have is what we, in Australia, are very good at: Design, planning, technological development, creative marketing, and component design and production plant development; the list goes on.
In developing partnerships in countries such as Indonesia, most of the ‘intellectual’ work could be done in Australia using internet technology, whilst the low-skilled work could be undertaken in the partner’s country, resulting in a win-win for both countries. Australia then builds increased work opportunities in the skilled area of car manufacturing in a partnership arrangement rather than trying to compete with these low cost Asian nations at the assembly level.
Australian SME’s have already made this model work. Here are two examples:
Fifteen years ago a company manufacturing display cabinets for shops and cafes was finding it difficult with such a small market in WA. By transferring their manufacturing to Indonesia in a partnership with a well-respected local company, they were able to not only expand their operations to include exports to some 25 countries, but were able to retain the highly skilled areas of their business in Perth. Sure, WA lost some low-skilled jobs initially due to the move to Indonesia, but then over the next ten years, as the business doubled in size, the demand for design, technical and administrative staff increased significantly.
And just ten years ago another Australian company who manufactures (high labour) fishing equipment also found it was unable to compete with countries such as China and was losing market share despite its good reputation and ‘Brand Australia’ respect.
The company established a business in Indonesia, on an island near Singapore. Today the company employs almost 100 staff and exports to over 30 countries. Initially this move to Indonesia caused pain for the employees and company as it was Australian’s who were losing their jobs. But like their ‘display cabinet’ friends, the company found itself increasing its skilled workforce including designers, creative specialists, marketing, advertising, and administration staff here in Australia. More skilled jobs for our country as their market share and volumes ‘exploded’ from its now competitive cost base. Another win-win of doing business in a Global Village.
Our manufacturing industries, and also our agricultural sector, are ideally placed to develop partnerships that use a combination of our highly skilled workforce with our neighbours’ cheap labour, location, economies-of-scale and access to markets to create highly successful businesses as we enter the Asian Century.
Australia is a smart, clever country but our dogma and ‘navel gazing’ has cost us dearly in terms of accessing opportunities in our region. Indonesia will add 80 million people to the ranks of ‘middle class’ in the next twenty-five years, with a population approaching 300 million. These people will want to drive cars, need better towns (town planning), better health and education and they will want to eat better and fresher food.
Yet people such as former Labor leader Mark Latham wrote recently in The Australian Financial Review, “Indonesia is only a two-bit player..and should be kept at arm’s length”. It is this type of ignorant and ill-informed comment that harms our national psychic and inhibits us from engaging in partnerships within our fast-growing region. And we now pay the terrible price for such small thinking.
So as the 2,500 workers from Toyota, and the thousands of people employed in the components industry, head-off to Centrelink to seek a new start in life, we should look to countries such as Indonesia that offer enormous opportunities for those who are far-sighted.
In the meantime, at least there is one consolation to ease the pain we all currently feel on behalf of our automotive workers:
At least we stopped the boats.
Ross is the President and founder of the Indonesia Institute.
No comments:
Post a Comment