How Corporate Arrogance Killed the Ford Falcon & Holden Commodore

Holden and Ford each spend an eight-figure sum every year refining and promoting their image to the public through advertising and below-the-line marketing. They are very effective at cloaking the dubious public policy that supports them in a mist of red-blooded Aussie virtue.

The unique Aussie-ness of Holden in particular is a veneer at best. You only need examine more deeply the hugely successful ‘Football, Meat Pies, Kangaroos & Holden Cars’ advertising campaign of the 1970s, with its catchy jingle and the golden tonsils of radio and TV voice legend Ken Sparkes it cemented Holden as an Aussie Icon. It was in fact a hasty rip-off of a US ad campaign for ‘Baseball, Hot Dogs, Apple Pie and Chevrolet’

In response to my post on the $275m taxpayer handout a Holden insider sent me the following, via Twitter (@cadoges, if you feel like bailing me up in 140 characters or less): “I don’t have a business degree but a $275 million investment for a $4bn return and 16,000 jobs sounds like a smart investment to me…”

It’s an example of the kind of institutionalized, conditioned arrogance at play in these US-based companies. For starters, the $275 million isn’t an investment – it’s a grant, a donation. We’re not getting it back. There isn’t a $4 billion return, and there never will be. That would be far too good to be true. The government isn’t handing over $275 million and waiting to see Holden hand it back $4 billion in 10 years’ time. The taxpayer is giving Holden $275 million, and Holden is investing about $1 billion in what it calls “two new cars” it’ll build here in Australia. (This is a semantically promiscuous way of saying ‘a new Commodore and a new Cruze, for when the use-by date expires on the ones we’ve got now’.) The $4 billion to which Holden refers is just ‘economic activity’ – spending, by any other name. That’s not a direct return on investment for the taxpayer or the government.

If Holden said - look, thanks for the handout. We think we'll make $12 billion in profit over the next decade, which is $4 billion in company tax revenue, but we need the $275 million now to make it happen. And if we fail, here's a guarantee that GM will pay $2 billion to Treasury in a decade's time. If that were the case, and it isn't, then I think most people would sign off on it. Using 'injection of funds into the economy' as a euphemism for 'return on investment' is a taxpayer-funded joke, however.

By this definition alone, a pimp, a drug dealer or (worse) McDonald's, could make the case for a government handout. The morality of propping up a US operation on Australian soil is something that warrants considerable debate.

Finally there’s the issue of the “16,000” jobs that have supposedly been ‘secured’ for the next decade. What utter hogwash. Only about 2500 people are employed at Holden’s manufacturing plant in SA; the other alleged 13,500 jobs are in the component supply industries – something over which Holden has no direct control.

And, in breaking news: it appears that now the ‘deal’ is done, the ‘investment’ is in place, and the caveats are secret. Reports today claim SA Premier Jay Weatherill appears to be aware of it, but won’t release Holden’s job cut details without Holden’s permission. Jeezus – it’s been less than a week. Cue The Godfather soundtrack.

If you have a business in a mafia-controlled area, you’re required to pay protection money if you want to keep the doors open. General Motors (Holden’s owner) and Ford comport themselves in exactly this way, with Australian Federal and State Government ministers (specifically Kim Carr and Jay Weatherill) playing the part of the shopkeepers.

Read Federal MP Jamie Briggs’ account of the latest Mafioso-esque state and federal funding fiasco, and see what you think.

The fact is, there are so many more morally defensible places the $12-$13 billion the Australian taxpayer has committed to propping up a failing local car industry could be used. Ask anyone stuck in gridlock on an increasingly third-rate road system, anyone mired in a health department waiting list, or anyone in a struggling small business if they think the outrageous commitment of public funds to these companies (it pays to remember they’re about as Australian as McDonald’s) is fair and proper use of their tax dollars…