Car Manufacturing Units in Australia and Japan - Essay Example

Topic:Compare the models of government-business relations in two OECD member countries. Discuss which model delivers better outcomes for citizens andwhy. The purpose of OECD or the Organisation For Economic Co-Operation And Development is to bring together the governments of the countries that are committed to market economy and democracy around the world. The purpose is to support sustainable growth, raise living standards, boost employment, assist other country's economic development, maintain financial stability and also contribute to the growth in world trade. The OECD countries share their expertise and exchange views with the highly developed as well as with the least developed countries. (About OECD, n.d.) The car manufacturing units of Australia and Japan, both member of OECD, are studied in respect of their government business relations, in order to find which government business relation is more effective for the citizens of that country. During the time of federation, Australian states were symbolised as highly integrated economies, with only a few barriers to trade, except tariff. As Forster puts it, there were free flow of labor and capital as there were no barriers, and the economic institutions operated across a number of economies. Federation removed the barrier in between the states in Australia, namely, tariffs. With time, both political and economic union mitigated the influence of other policies, which might have acted as the non tariff barriers in between the Australian states. Thus, the combined effect of reduced tariffs as well as the harmonised inter state standards drew the Australian state economies closer to one another. (Irwin D. A., December 2005) Holden was a popular name in the car manufacturing industry in Australia in the 1950s and in the early 1960s. By the middle of 1950, Holden cars were exported into Middle Asian territories and Asia-Pacific. With the expansion in the overseas, this 'all-Australian car' was the nation's pride; therefore, it dominated the car market in Australia. (General Motors Holden, (1948 - 1976). Along with Holden, Valiant was also an important car manufacturing company in Australia during 1950 - 1980. Much of their popularity can be attributed to their unique models, engines, pacer, utility and drifter that made it a truly Australian car. (Valiant, n.d.) In the year 1980, the protectionist policies were discarded and the government of Australia opened up trade and market in between Australian and Japan. DFAT or Department of Foreign Affairs and Trade declared that Australia and Japan would be partners in multinational cooperation. The new government also intensified microeconomic reforms to coastal shipping and port in Australia along with reforms in the labor market, transport, energy and communications. Australian Government also aimed at strengthening the key bilateral economic relationships with other countries, with Japan being the most important one. At that time, Japan was also undergoing major economic reforms, and Australia encouraged Japanese Government to accelerate the reforms. Right at that time, Australian exports were also shifting to manufactures and services from commodities. (Downer A, June 1996) Japan also got the contract for manufacturing the popular car - Holden, and therefore, Japan started manufacturing Holden for Australia. In the year 1987, United Australian Automotive Industries was created to control the Holden-Toyota joint venture; the GM arm of it was named as General Motors Holden's Automotive or simply, GMHA. In the year 1988, Holden continued to demonstrate its leadership with the introduction of exciting car models incorporating engineering techniques, significant design and safety innovations. However, the joint venture was dissolved in the year 1995. (Holden History, n.d.) However, the market shares of Holden reversed after the year 2000. The shares dropped significantly in the year 2006 and General Motors announced job slash along with cut back production in the South Australian Plant. Holden also failed to renew contracts. So, it was no longer in the number one sales position in Australia. Along with Holden, Valiant also missed its position in the global market place. (Cook T, October 2005) Postwar Japanese liberals rejected to present abstract and systematic account of the core concept of political liberties. They made an attempt to theorise what concrete political conduct or behavior in a particular historical context would best realise the political ideals as freedom or liberty. The postwar Japanese liberal model has succeeded in shifting the focus from individualization to autonomous determination. (Comparisons Beyond Concepts: A Postwar Japanese Liberal Perspective, n.d.) The liberal model emphasised on individual's human right in order to practice his or her culture privately. Public sphere was essentially a culture free zone, and the state wanted to maintain equal opportunity for all. Individuals were free to practice their own culture in the private sphere of their household. In the corporate multiculturalism, culture invaded in the public sphere and equality was viewed in terms of outcome rather than an opportunity. Thus, the state was expected to allow cultural freedom to the individuals, as well as provide support so that the ethnic groups can maintain public relations and their own festivals and also practice their own languages. Often, Japan maintained both liberal elements like the rights to government employment and corporatist elements like demands for indigenous autonomy. (Suzuki T. M., n.d.) It was mandatory for the residents in Japan to join The Public Social Welfare System, in one form or the other, and it was regardless of nationality. The premiums and schemes depended on income, employment status and the scope of operations. Benefits were offered to foreign nationals under the four schemes, namely, Public Pension, Worker's Accident Compensation Insurance, Health Insurance and Unemployment Insurance. (Public Social Welfare System, n.d.). Under Unemployment Insurance, which was officially known as Employment Insurance, allowance was provided to unemployed persons for their living expenses till they get stable employment. Employment required a person to work for twenty hours or more per week. (Unemployment Insurance, n.d.). Company Health Insurance was there for full time worker and National Health Insurance were also there for self employed and part time worker. (Health Insurance, n.d.) Japan had been deregulating its industries and spending money on research and development. It was privatising its state owned businesses along with stimulating the entrepreneurial culture. The profits of the large Japanese corporate have also rebounded and profitability was also at highest levels. Japanese economies expanded at a much faster pace since 1990. It was observed that it was much cheaper to produce Holden's car in Japan than in Australia. (Clarke M., December 2005) The name of Rodeo, one of the popular cars of Holden got replaced by Colorado, but the chassis and the engineering resembled with that of Rodeo, as Isuzu was producing it, under contract to Holden. There was very little difference in between Rodeo and Colorado, the only visible difference being the name. (Vermeulen S., August 2008) Japan has also other car companies, and it is quite successful in the business. Apart from Holden, Japan has also other car companies, and it is quite successful in the business. Along with producing cars, Japan is also trying to manufacture cars that are more environment friendly. Toyota's Tsusumi Assembly Plant situated in Nagoya, is the sensitive car industry. Large trees are planted and about twenty two thousand square meters of exterior walls are painted with photo-catalytic paint, which can absorb nitrous oxide and also process oxygen. (Monitor C. S., December 2008) Australia being a middle trading power, the Regional Trade Agreements (RTAs) provide opportunities for the participation and also significant risks for non participation. According to the authors of a report to WTO Director-General, the general principle of most of the favoured nation is no longer the rule but it is almost an exception, as Australia can gain very little and lose much, by departing from current international trend. But, there is scope for strengthening the already existing WTO rules and the institutional agreements that relate to RTA. Since the year 2003, Australia has concluded Free Trade Agreements with Thailand, Singapore, United States and was also negotiating with ASEAN, Malaysia, China, United Arab Emirates, Mexico and Japan. (Goh G., May 2006) It was thought that Japan would be left behind by regional trade proliferation but instead, it played a leading role in the regional trade. As Toshihiro Nikai, the minister of economy, trade and industry presented a proposal that would involve Australia, India, China, South Korea and New Zealand. There was also an economic partnership agreement in between Philippines and Japan, which was expected to create regional free trade system in Asia. It was also decided that Japan would start negotiations on East Asian EPA proposal in the year 2008, in order to reach agreement with relevant countries by the year 2010. (Kikuchi T., September 2006) Holden, the popular car company of Australia, is going bankrupt in Australia and the workers are becoming unemployed. They are dependent to the government for their employment status and state funded health provision. Recently, Holden has received a major blow that could be worth hundreds of millions as Pontiac, an US brand, cancelled the orders of Commodore Ute, as a response to global economic crisis. Even if Holden exported only ten thousand Utes to the United States, and if they were sold at twenty thousand Dollars, which is about half of the recommended retail price, then even, it would amount to two hundred million Dollars of lost export. (Spinks J., January 2009) Luxury Tax Surcharge happens to affect the automotive industry of Australia and this tax slug would also cost the jobs in car industry. The government has worsened the situation by putting together a number of contradictory amendments that had increased the tax of European made cars, while slugging the Australian made cars with extra tax. As a result, no Australian car would be cheaper; moreover, it would be on an average, one thousand Dollars more expensive. It is quite hard to believe that, the government that pretends to support the car industry of Australia is actually introducing tax that advantages European imports over the Australian made cars. The government would never be able to claim that it is actually interested towards the flourish of Australian automotive industry. (Black Day For Australia's Automotive Industry, (September 2008) The automotive industry in Australia happens to be the major employer in Australia. But the industry is facing both domestic and international competitive pressures that result into re-structuring, shaping and changing workplace practices. The automotive industry of Australia employed about sixty one thousand people in the year 2007, which is a drop of sixteen percent from 2006. Moreover, the drop is about twenty five percent from the year 2005. A number of closures have occurred during this period of time. There is actually no guarantee in employment in this industry at this time. Higher salaries in automotive industry also reflect higher skill level, particularly in the manufacturing of motor vehicles, where high end trade and engineering skills are absolute necessity. However, the relatively lower emphasis on skill development and job training could also constrain long term development, competitiveness and adaptability of the automotive sector. The automotive industry in Australia needs to be supported by workplace practices and workforce that can promote productivity, innovation, flexibility and up-skilling. This can lower the unit labor costs that in turn, help offset other factors like, rising exchange rate. The Australian government is providing support to assist the labor adjustment in automotive industry along with the regions, where the automotive industry is affected. Automotive workers are provided assistance to find alternative employment as there are downsizing and a number of plants are closing down. The rights and entitlements of an employee are transferred to the sale of business. But, these entitlement costs might prevent the sale of a struggling business and also result into loss of jobs in the automotive industry. (Employment, Skills and Workplace Relations, 2008) There has always been a continuous evolution in the Japan's car industry through its advancement of motorisation and its growth, multiphase globalisation along with its interdependence with the rest of world. The automobiles have also changed the lifestyle and culture of Japan. It has also created a variety of related industries for servicing and manufacturing motor vehicles. This way, automobile production has grown to be one of the leading industries in Japan. (Japan's Auto Industry - An Overview, n.d.) Japan also introduced TQC and JIT system in order to increase its productivity. Along with the automated production technology and reorganisation of office, 'kanban system' was also introduced along with the implementation of 'versatile worker system'. Enterprises that carried out these reformations showed great paces in their business results. The automobile industry also focused on electric cars in order to pay heed to environmental issues. As Japan is situated in the eastern tip in Asia, the air pollution of the Asia connects directly with acid rain in Japan. Not only the production of cars, the improvement of Asian environment polluted with smog is also inseparable from the plan of the car makers in Japan. (Dando Y., n.d.) The success of Japan can be attributed to the high level of government control that is inclusive of its closed nature trading with the rest of the world. Unemployment rate is much lower than that of Australia, as the automobile industry is flourishing in Japan. Though Japan experienced a decade of stagnant economic growth with the end of 'Japanese asset price bubble', in late 1980s, the car manufacturing industry is still competitive, it being number one in whole world. In the rest of the world, the shareholder influences the day to day operations, but it does not happen in Japan. It is not possible to fire the core employees in Japan. The Australian car market is comparatively small with those of Japan, the latter being one of the major automotive manufacturing regions of whole world. However, the Australian manufacturing industry has played an important role in the economical development of Australia. Though there was decline in the daily production in Japan, more than that of Australia in between 1993 and 2000, the average daily output of the Japanese plants was almost three times than that of Australia. In the year 2000, Japan Manufacturers surpassed all others in the productivity. Australia takes almost double time to manufacture a vehicle than that of Japan. While Japan maintained its hours of training the workers, it decreased substantially in Australia. (Bamber G. J., Lansbury R. D., Wright C. F. and Baird M., n.d.) From this study of car manufacturing units of Australia and Japan, it can be concluded that the model of government business relations in Japan is much more effective in delivering better outcomes for the people of Japan. List of References: About OECD, (no date), OECD, retrieved on February 10, 2009, from Bamber G. J., Lansbury R. D., Wright C. F. and Baird M., (no date), VI. Automobile Industry Council: Work Systems, Worker Representations, And Manufacturing Performance In The World Auto Industry - Work Systems and Employment Relations in the Australian Automotive Manufacturing Industry, Labor And Employment Relations Association Series - Proceedings of the 58th Annual Meeting, retrieved on February 10, 2009, from Black Day For Australia's Automotive Industry, (September 2008), Liberal Party of Australia, retrieved on February 10, 2009, from Clarke M., (December 2005), Land of the rising sums, thisismoney - companies and markets, retrieved on February 10, 2009, from Comparisons Beyond Concepts: A Postwar Japanese Liberal Perspective, (no date), allacademic research, retrieved on February 10, 2009, from Cook T., (October 2005), Australia: Jobs Decline Amid Signs Of Economic Downtown, World Socialist Website, retrieved on February 10, 2009, from Dando Y., Japan (no date), Research and Analysis Through Internet Information, retrieved on February 10, 2009, from Downer A, (June 1996), Australia and Japan: Cooperation In The Region, The Department of Foreign Affairs and Trade - Australia, retrieved on February 10, 2009, from Employment, Skills and Workplace Relations, (2008), Review Of Australia's Automotive Industry 2008, retrieved on February 10, 2009, from General Motors Holden, (1948 - 1976), Australian Screen, retrieved on February 10, 2009 , from Goh G., (May 2006), Regional Trade Agreements And Australia: A National Interest Perspective, Asia Pacific Economic Cooperation - The Australian APEC Study Centre - Monash University, retrieved on February 10, 2009, from Health Insurance, (no date), Public Social Welfare System, General Union, retrieved on February 10, 2009, from Holden History, (no date), retrieved on February 10, 2009, from Irwin D. A., (December 2005), Federation and Australia's Trade Flows, The Impact of Federation on Australia's Trade Flows, retrieved on February 10, 2009 from Japan's Auto Industry - An Overview, (no date), JAMA - Japan Automobile Manufacturers Association, retrieved on February 10, 2009, from < http://www.jama.org/about/industry.htm> Kikuchi T., (September 2006), Japan looks to play leading role in regional trade, Daily Yomiuri - Japan, from Monitor C. S., (December 2008), Christian Science Monitor: Japan as Ground Zero for No-waste Lifestyle, Yale center for Environmental Law and Policy, retrieved on February 10, 2009, from Public Social Welfare System, (no date), General Union, retrieved on February 10, 2009, from Spinks J., (January 2009), Blow to Holden as ute export axed, Business Day, retrieved on February 10, 2009, from Suzuki T. M., (no date), Re-inventing Japan, retrieved on February 10, 2009, from Unemployment Insurance, (no date), General Union, retrieved on February 10, 2009, from Valiant, (no date), retrieved on February 10, 2009, from Vermeulen S., (August 2008), Holden Colorado Car Review: New Name, Same Ute, retrieved on February 10, 2009, from Read More