Business 101: If consumers don’t buy your product, you’re doomed.

25 May

So this week’s news that Ford have announced they are planning to pack up shop for local Australian car manufacturing in 2016 has got the talk back lines abuzz, and the press spewing out a range of illogical suggestions.

Let’s just get this out on the table. Yes, mass job losses like this, and no doubt the flow on impact for the smaller component suppliers is incredibly sad. There will be families who have no idea how they will continue to put food on the table, petrol in their cars and generally provide the life that they’ve been accustomed to. This is especially sad for the middle aged workers who have little chance of re-employment despite whatever ‘up-skilling’ training they are provided. In no way am I trying to downplay this human impact.

However what I can not understand at all is how poorly the Australian automotive industry has been managed over the last decade, and primarily my major gripe is with all levels of government who have continually thrown more good money at bad investments to keep this industry alive, under the guise of ‘protecting our national interests’.

As most people in the Geelong area will tell you, Ford closing isn’t really a surprise. Ford in the US have been flagging this for years, but rather than allowing the inevitable to happen, like a guy who doesn’t want to lose his girl, we keep throwing more money at the problem, in the hope that somehow this will change the inevitable outcome and all will be rosy.

Now, with the decision finally made, and Ford having the decency to tell the government that no stimulus or rescue package will help, we can actually move on rather than living with the constant cloud over our head.

Despite this some today are still trying in vane to save a dead horse, claiming we should be reviewing the tariff model to protect Ford. Yep, let’s go back to the glory days of the 80’s and protectionism methods that not only make our industries unfairly competitive, but also penalise consumers at the same time through higher priced cars.

This for me is the central point, for not just Ford but any brand or company that goes belly up. If consumers are not buying your product, you will not have a production line to worry about. Just have a look around next time you are driving, and count the number of Fords on the road. Sure the soccer mums are cruising around in the Territory, but the lifeblood of the local operation being the Falcon is primarily reserved for the lowest form of car, the humble taxi. What’s even crazier for me, is given the Victorian government was looking for a dedicated, proprietary taxi design (a la the London Cab), but Ford rejected this, claiming they made a gas version of the Falcon. OK, just ignore the one life buoy that could actually provide a sustainable future for you.

With a country of just over 22M people, the idea of having 3 local manufacturers in Ford, Holden & Toyota is ludicrous. Not only are they still making products that no one wanted ten years ago, but the overall quality, safety and consumer benefit do not stack up to comparison. We live in a global democracy and if I want my Subaru as it provides all of the features and benefits I demand, then that’s what I’m going to do. I have no yearning to support local manufacturing when the overall quality is below standards, and a large chunk of my tax has already been used to prop up and protect an outdated and non sustainable industry.

So all these people so up in arms about Ford and other companies, need to start speaking with their wallets. Buy the products and get others to do the same, it’s that simple. Sure it’s easier to fill up news print, or get your head on the tele with your view (and then jump back in your Audi, Mercedes, et al) and head home.

So yes, clearly this is an emotional subject , especially for those who are actually impacted, but for the rest of us, and those elected to LEAD our country this is one of the most basic economic theories around: Make sure you’re making a product that consumers want and you can financially survive selling it. It’s that simple. Don’t look for handouts or intervention, just be bloody courageous making great products and continually refine the offer to make sure you are future proof for changes as they come.

 

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