Transcript - E&OE
13 July 2009
Joint Press Conference with Innovation Minister Kim Carr
Futuris Automotive Group, Wuhu, China
Subjects: Australia-China automative industry
MR CREAN: Soon we'll be going out to Chery, but today was a good example of not just the importance of trade between two countries, but the investment flows between two countries. This is the example of an automotive components supplier in Australia that had design capacity and significant leading edge technology - but not volume in the market - and took the strategic decision that they needed to get close to that volume, so invested here. And you can talk to them about the success of their story - the 100,000th set of seats, the exponential growth in the product line, the capacity for expansion, the fact that they're going to be talking and looking at strategic opportunities off the back of their strength here to go into other supply within not just the largest domestic market in the world but now the largest, in the last six months, the largest auto producer in the world and an industry that is producing, significantly, for the largest domestic market but also exporting.
Now what are we trying to do here is to demonstrate that the economic relationship between Australia and China isn't just developed in Beijing. The FTA etc will be resolved there but we need to develop the political relationship at the provincial level. That's why we're visiting some four regions on this visit, predominantly with a focus on the auto sector - because of the potential for growth and the commitment of the Australian industry to expand into a global market, because of the huge strength of the auto sector which I'll let Kim talk at greater length about.
In a simple wrap-up, we're here to establish the government-to-government relationships at the provincial, not just Beijing, level. We're here to try and demonstrate the ability of business, successful business-to-business relationships and then for us to join the dots in a way that expands the opportunity for Australia in the knowledge of what the direction and the future strategic direction of the Chinese in this case the auto industry but we want to take it further into other sectors. Kim?
SENATOR CARR: Well, look, we've announced a new car plan, a $6.2 billion new car plan which demonstrated our commitment, the Government's commitment to the future of the Australian automotive industry. We're one of fifteen countries in the world that can make a car from the point of an idea through to the showroom floor. And we have this extraordinary range of mature capability. We've got cutting edge technologies we have developed in the context of one of the most open markets in the world - there's some 50 odd brands operating in Australia, which has produced, I think, a very, very robust set of conditions for our suppliers. So we've got some of the best in the world, we produce a very, very high quality product. Now we think we've got a capacity to actually broaden that out, broaden that scope out. Now, in my visits internationally we've been to Nagoya, to Detroit, to Germany arguing the case for why Australia needs to integrate more effectively than we are. We want to diversify markets, we want to diversify our access to different supply chains. And we want to actually develop that capacity. The Australian Automotive Innovation Council is now developing a roadmap that will highlight the specific, the specialist skills that we've got which are of international significance. We've got some of the best research institutes in the world in terms of the universities and the CSIRO - which are at this time developing breakthrough technologies because the whole world now is moving to the new green car platforms. We were way ahead of the game on the green car front, miles ahead, and we are now saying that there are partnerships we could develop to enhance manufacturing in Australia, sustainability of the Australian manufacturing industry - by developing those new partnerships with the capacity to develop next generation automobiles for the world.
JOURNALIST: Can you give us an example of where we were miles ahead of the world on green cars?
SENATOR CARR: Well in terms of the Government policy, the framework, the Green Car Fund, we were way out there.
JOURNALIST: It's a matter of policy, but what's an example?
SENATOR CARR: Well, the example we've had is that we actually announced that policy before most other governments in the world did. And that provides a funding base for us to actually partner with companies. Now in terms of what it's meant in the short term - we've been in office all of 18 months - what's it meant? Well, it means we've turned around the engine plant for Ford in Geelong. We've turned around the decision on the Camry hybrid - the decision had been taken to build that vehicle in Thailand - now to have it built in Australia. We are seeing the General Motors' survival in Australia - the very fact that that company is now on the A-list of assets for General Motors is down to the policy framework which we've created. So we believe that the partnerships that we've established on the domestic front can be extended internationally. And by dealing directly with decision-makers in Detroit and Nagoya and other places - we're now following that pattern here - we believe that we can establish the partnerships for the future with the largest single automotive industry in the world - that is, the Chinese.
JOURNALIST: What opportunities are there for more reciprocal investment?
SENATOR CARR: There's a whole lot. We've seen with Geely in terms of DSI - which is the transmissions, the gear boxes, drive train - but there are other investments. Chery of course has got a new R&D centre. I'm expecting that there will be increased interest in the components section of the automotive industry. Not the OMEs, not the majors, but the components sector. That's likely to be quite an attractive area for future investment from the Chinese motor producers. They are looking for high quality developed technologies. They are looking for partnership arrangements. And they know, I believe there is increasing awareness, that Australia provides the capacity to produce good results in those areas. Now there are 11 companies operating here at the moment that have come out from Australia. I believe we can expand that quite substantially in a whole range of capacities and we are developing new capacities. That's the key for us, the new generation. So in terms of light metals, in terms of composite materials, in terms of fuel systems, there are huge opportunities opening up.
Now, not only have we got the Green Car Fund, not only have we got support through the rest of the automotive transformation programs, but also through the research budget which the Department of Innovation administers as well. We're actually putting substantial funds in terms of the university assistance, the Australian Research Council. We are in the business of building those collaborations. Our whole new innovation agenda is about building those collaborations at a domestic level, between public and private, and at an international level. And this is an example of how we're able to foster that.
MR CREAN: And it was the discussion at Dong Feng in Wuhan six weeks ago - where they, unsolicited, said they and the developers of their domestic brand wanted access to Australia's componentry - that in part resulted not just in the return visit to Dong Feng but expanding the focus of our interest into the other areas of potential. Our challenge is to join the dots, as I say. And that isn't going to happen unless what we get is an understanding at the political level about the importance of this commercial relationship, a realisation that there are really good Australian operations servicing the market here - Futuris is a great example of it, but there's PBR, there's the DSI type operation, all in different forms and convincing that in terms of an industry here that is growing in such a huge way that if they want to maintain world-class production they've got to team up with those people that can supply world-class componentry. The gap that fits for us is the size of their market.
JOURNALIST: What's special though about the Australian automotive industry vis-à-vis the massive capacities that, say, the Visteons of the world and Dana have got?
SENATOR CARR: Let's have a look at a few things. You've got an industry that's not necessarily tied in to one supply chain. We've actually got a view within the Australian automotive industry of the importance of going global. And that's been developed, a cultural change that's been developed since the first Button plants. Now we're actually seeing that put into place. And we're able to have independent producers go into an international market and supply an emerging capacity in this country. Now what's happening with Chery, what's happening with a range of other producers is that they are looking to develop an indigenous vehicle. They want to build on the experiences of other countries, they want the quality that comes from the experience that we've actually been able to develop. We have a mature industry that might well be small in volume but is high in reputation. That's why the Japanese went to Australia, that's why they've stayed in Australia, that's why the Americans stay here - we're top of the partnerships they've developed with the Australian Government. Now I think we can extend this experience to emerging opportunities such as this country provides.
JOURNALIST: Could I just ask about the macro relationship, I'm not going to mention…but is this really that we're demonstrating that we've got to get back to business as usual no matter what's going on at the high political level, because our economy's absolutely dependent on what's going on in China?
MR CREAN: The two economies are interdependent on each other and that interdependency has been demonstrated not just over the last decade but it has been put into sharp focus in the wake of the global financial crisis. They're still growing, we are performing the best of all developed countries, the opportunity for us to secure the future going forward in partnership is enormous. Now of course, any of these growing relationships is going to experience difficulties from time to time, but we've got to deal with those difficulties and not be deterred from the overall strategy of trying to build framework and commercial interest, that's what we're doing.
SENATOR CARR: And if you take the engine plant at Port Melbourne, I'm very concerned to ensure that that engine plant actually develops export markets. We've got five to six thousands coming in to this country at the moment, it's going to grow to twenty thousand within four years - that's a huge expansion. We see with Geely that the DSI purchase has meant that that gearbox will now go into ten models in this country. Now bear in mind that Geely bought that plant with cash - not bank loans, no liquidity problem, cash on the table. And that's something the Australian automotive industry is very interested in.
[ENDS]
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