Cars need their nourishing slice of pie

Melbourne Herald Sun, August 8, 2013.

"Guten tag", "guten nacht". Yes it's "g'day" and "g'night" from our friends at Opel. In less than a year the German brand made its debut into Australia with a modest advertising splash promoting a range of five models. But by the end of last week, they took their leave.

It seems the Australian public did not respond to the cars in terms of sales - just 1530 cars sold between 20 dealerships. They suffered a classic Australian marketing problem - too much competition in too small a market.

Our appetite for cars is immense - just last month Australians bought 88,000 cars. But we attract all the manufacturers from around the world. The British and Europeans, the Americans, Japanese, Koreans, Chinese, even Brazilians. Not to forget the Australians. Even the record highs in the dollar exchange rate could not stem the inflow.

But in the end, each vendor's slice of the pie left others severely undernourished. Such was Opel. Just a few months earlier, Hyundai Australia had dropped its i45 sedan, and models quietly slip off the pages of dealers' catalogues around the industry.

Much noisier is the departure of a manufacturer. We have too few of those. Ford has announced the longest farewell since Melba, telegraphing its departure in late 2016. But for all concerned it's better than a midnight flit and a note for the milkman.

Mike Devereux at Holden has also been making warning noises, about the consequences of a decline of government support. Industry Minister Kim Carr has come waving $200 million at them on top of current subsidies, but at the same time $800 million in fringe benefit tax breaks is being pulled out from under.

With the election now in swing, Opposition Leader Tony Abbott is talking tough, ready to slash the $500 million in existing industry subsidies, presumably also pocketing Senator Carr's $200 million - but leaving the tax breaks in place.

Six of one, half a dozen of the other, this shell game has been played in Australia since before you were born.

Of course, through much of last century the subsidies were not so obvious as they were provided by high tariff walls. A mixture of import taxes, incentives and barriers encouraged motor manufacturers to make or assemble cars here. It was a very cosy, if at times confusing, relationship. And it made cars in Australia extremely expensive.

But it was an industry. Ford Australia had five plants. Australian Motor Industries had Standard Motor Company and Mercedes Benz, Rambler, and Fiat tractors. BMC had Austin and Morris. There were Chrysler, Peugot, International Harvester, Leyland, Renault, Rootes, Pressed Metal Corporation - most of the Land Rover was made and assembled here. Volkswagen, Willys Motors, White Trucks - the list goes on. Car and truck making on an industrial scale.

No doubt some of you, or your mums or dads, worked for one of the names mentioned here. At some time, the whole country was involved.

Of course, General Motors is still manufacturing, still demanding subsidies, as is Toyota. Will they still be doing so at the end of the decade? A lot of decisions will be made, a lot of lobbying - and no political party is immune.

Car makers were huge factories that built cities around them - think of Detroit, Dagenham, Wolfsburg, Turin, Geelong. These days they have had to be nimbler, more strategic.

So it is with Opel. Try it in a market, measure the sales, pull out if the results don't come in. If you were one of the Opel buyers, you're safe. General Motors promises that service and guarantees will be met through Holden.

ray@ebeatty.com

Who's the Richest In the World?

Melbourne Herald Sun, Thursday August 1, 2013

I'm always fascinated by these "Richest Person in the World" lists. Let's face it, they are pretty meaningless - if someone has $1 billion or $40 billion, it does not make much difference from my perspective - or yours either, I imagine. It's still a hell of a lot more than we will ever possess.

But on the other side of the coin, imagine losing it - like Eike Batista, who lost $33 billion over the last year. Yup, this Brazilian entrepreneur was pushing towards the world's top last year, now he's down to 100 on the Forbes Richest 100 list.

Of course it's all figures in a computer, just how much anybody actually owns. Look at a character I've featured before, Ingvar Kamprad (add an E and an A to those initials and you'll know who I mean). He passed from the top of the list to the - well - lower middle. Then he was worth $42 billion and is now a mere $3.3 billion. Not that the money has gone - it is now tied up in complex trust arrangements in Luxembourg and legally not his, though I'm sure they'd provide him a room if he ever needed it.

These rich do enjoy giving their money away - and seem to end up with more than they started with. Take Bill Gates, the world's most generous philanthropist. His world-girdling Bill Gates Foundation has now given out more than $28 billion, yet Forbes reports him as the world's second-richest person at $67 billion. So you can't even throw it away.

By the way I'm quoting US dollars here because with such stellar figures, a few cents in the exchange rate won't really matter to you or me.

The richest man once again is a Mexican, Carlos Slim Helu. At a net worth of around $73 billion he has held top spot for three years and his communications empire, based in Latin America, is rapidly expanding into Europe and the United States, so expect to be hearing more of him.

In retail, do you make money out of lots of low-cost sales, or less high-cost items? Well looking at the rich list, both are true. Number three is Amancio Ortega, the Spanish grandee of Zara. His fashionable, timely, but affordable stock has generated phenomenal sales around the world. From New York to Tokyo, Sao Paolo to Sydney, it seems every smartly-dressed woman has contributed to Ortega's billions, even some well-known royals.

But the higher-priced items can also make you rich. Liliane Bettencourt stared as an apprentice mixing perfumes in her father's factory at the age of 15; now at 91 she ranks as richest woman in the world, with some $30 billion.

Her empire, L'Oreal, is the biggest cosmetics company in the world and controls brands like Yves Saint Laurent, Armani, Lancome, The Body Shop, Ralph Lauren - far from the cheap end of the market.

The truly luxurious brands also come from France. Bernard Arnault is boss of LVMH, which you have to roll out with a rich French accent: Louis Vuitton Moet Hennessy. There is a little dispute about whether his wealth is $30 or $40 billion - no-one is readily offering a ledger for outside scrutiny.

The richest person in Asia is Li Ka-shing of Hong Kong. Worth $31 billion, he is the world's largest operator of container terminals.

Americans round off the list - oil and engineering brothers Charles and David Koch of Kansas; Larry Ellison of Oracle; and of course Warren Buffett, the magician who can seem to make any upward or downward stockmarket trend create him ever more billions.

ray@ebeatty.com