Abbott is manufacturing a jobs disaster

Productivity in the digital age is destroying many manufacturing jobs, including in the auto industry. Governments must have a plan to mitigate the rising fallout.

Ten years ago, when I was editor of The Age, hundreds of people gathered in the basement of the old Age building in Spencer Street, in the empty space that was once filled with presses and linotype machines and hundreds of bales of paper, to celebrate the opening of the paper’s new $220 million printing plant at Tullamarine.

Federal and state politicians were there as well as most of Melbourne’s business elite. This was a big day for The Age and for Melbourne. The new printing plant – a five-storey, architect-designed, ribbed-steel building was a sign of confidence in Victoria’s future in manufacturing. Not to mention in newspapers.

The premier, Steve Bracks, made a speech in which he said how proud he was to open the plant, which he described as “one of the most advanced printing plants in the world”. It was, he said, a day that made all Victorians proud because the plant pointed to a bright future for the state.

The plant at Tullamarine will now soon close. The digital revolution has rendered it an industrial dinosaur. The plant was built because the old presses in Spencer Street couldn’t cope with the huge Saturday paper, stuffed full with classifieds. It was built essentially for that Saturday paper on which The Age’s prosperity had been based for 100 years.

The classifieds have gone digital and the plant, which seemed so cutting edge a decade ago – so technologically revolutionary – is now a symbol of a bygone time. There are some people who are now saying that they always thought the plant was a bad idea because they knew big classified-stuffed newspapers had no future, but I can’t recall them being all that vocal at the time.

Who could really foresee a decade ago that the digital revolution would sweep away what had been – and still was in 2003 – among the most profitable industries in Australia? The digital revolution, which is really just beginning, did not just destroy the business model for newspapers. It destroyed a whole branch of manufacturing and with it went the jobs – and small businesses – of thousands of people.

Journalists are very well exercised about the future of journalism and it’s true that thousands of jobs in journalism have gone in the past few years. But no one is saying that journalism has no future in the digital age, though it is entirely unclear what that future will be like.

The jobs that have gone in newspaper manufacturing are gone forever. There is no future for the hundreds of printers who have lost their jobs across the country. Those who remain – well, the best that can be said is that they may remain employed a little longer if newspaper companies make the right decisions about the sort of print newspaper that might survive another decade or so.

The newsagencies that have closed, their owners out of business, will never return. The days when every shopping strip had a newsagent are over. The thousands of truckies who deliver newspapers to the newsagents from the printing plants, they are on borrowed time. Their jobs too will shortly disappear.

All this is happening in book publishing as well – jobs lost forever and small businesses in the form of bookshops closing – and more or less the same thing is happening in the recording industry. There’s a process of deindustrialisation going on which is irreversible and will most probably gather speed. It is going on in every industry and in every business. The effects have been profound and will become more so over time.

It’s in that context that the future of car manufacturing in Australia should be considered. That and the issue raised by Alan Kohler in his column (Terminating Jobs: the rise of the machines, December 4). Digitalisation and automation, including stunning developments in robotics, are rendering labour increasingly expensive and increasingly redundant.

It may well be that there is no future for car manufacturing in Australia, not just because of economy of scale issues and because Australia can’t compete with low labour-cost manufacturing plants in Asia. The car industry may have no future in Australia as a major employer of labour because automation and digitalisation will eventually mean that the manufacture and assembly of cars will require only a small fraction of the workers currently employed in building cars.

And even the low-cost manufacturers in Asia, including China, will inevitably face the same issue. What happens to those people who will lose their jobs because they are no longer needed – no matter how low wages go – to manufacture cars or newspapers or almost anything?

Those who argue that the demise of the car industry in Australia is all down to high wages and low productivity may have a point, but it seems to this non-economist that what increased productivity means is the replacement of labour by the processes of automation and digitalisation.

The causes of the growing inequality in liberal democracies may be due to many factors, but a major one must be that it is increasingly possible in most industries – and more profitable – to employ fewer workers and on relatively low wages than it was in the recent past.

In the United States, productivity increases based on the shedding of jobs has meant that real wages have been falling in America for several decades and that the fall has accelerated in the past few years (The West is losing faith in its own future, December 10). The minimum wage in the US is just over $7 an hour which means that tens of thousands of American workers are living on wages that are below the poverty line.

Australia may be a few years behind the US but we are surely heading in the same direction. The Australian Bureau of Statistics reported this week that in the last financial year the average retirement age was 53.8. And people were retiring, according to the report, earlier than they had intended.

What this suggests is that increasing numbers of people in their fifties and early sixties are being forced into ‘retirement’ because there are no jobs for them. They are victims of the revolution – and to an extent, victims of ageism – and it could be argued that all the talk of people having to work longer is just a lot of hot air.

Tony Abbott might be right and there may be no point in propping up the car industry for another decade before its inevitable closure. Some recognition though of the consequences of the revolution that we are living through would be good.

So would a sense of how the Abbott government thinks it might mitigate the fallout from that revolution and the fallout specifically from the end of car manufacturing in Australia.

These are big and complex issues and so far no government anywhere – not in the US and not in Europe – has adequately and honestly addressed the fallout of the changes we are living through.

That’s no reason for Tony Abbott to join the list of leaders with their heads in the sand.