Subsidies can't save local cars Ford Australia will close its manufacturing plants at Broadmeadows and Geelong. About $10 billion over seven years. That's how much has been pumped into the car industry by federal and state governments. But has it been a case of throwing good money after bad, especially after Ford Australia's announcement today that it was going to halt its local manufacturing operations in 2016? Ford Australia president Bob Graziano said for every $1 the governments gave to his company, it returned $6 back to the economy. But at the same time, he said the firm's cost structures in Australia were uncompetitive. "Our costs are double that of Europe, and nearly four times Ford in Asia," Mr Graziano said, adding that the company made a net loss of $141 million in the past financial year and had a total of $600 million over the last five years. The local automotive industry has struggled in recent times as consumers switched to smaller, fuel-efficient cars and following the financial crisis, market research firm IBIS World said in a February report. Car industry analyst Dr Danny Samson said the governments had been getting value for their subsidies to the sector. "The subsidies have kept the industry here in my opinion for 30 years longer than the industry otherwise would have been here," said Dr Samson, a management professor specialising in manufacturing and business competition at the University of Melbourne. If not for those subsidies, the industry would have completely evaporated decades ago. Every country that has a car industry has government subsidies. It's not like the only one. It's just the way it works to keep those jobs. In contrast, economics researcher Simon Cowan at the Centre for Independent Studies said the government aid to the sector was short-term and "was clearly not working," as the industry has continued to shed jobs each year. Last month, Holden said it would cut 500 jobs - just five months after it laid off 170 workers. We need to take a different approach. We [should] look at supportive efficient industries by removing the restrictions on them and we let the consumers and the marketplace determine what goods we want," Mr Cowan said. There is a significant over-investment in the automotive industry globally. Production capacity is too high and as a result, what we could be doing instead of trying to fight battles with countries that are much more effective than us ... we could be liberalising our markets and using this to push for freer trade in industries like the cattle industry. Richard Johns, a consultant with Australian Automotive Intelligence, said it was important to note the net assistance to the auto sector has gone down considerably. Tariffs in 1985 were 57.5 per cent and there were quotas on imports of passenger motor vehicles. Tariffs now are only 5 per cent," he said. The government is spending some money on the industry, but a fair proportion of that money is for the refund of tariff duties that would be on components that the car companies bring in. He said the automotive industry was undergoing global structural changes and the government subsidies had "ensured that the industry has gone as far as it has and have sent the basis on which it could go further." Times have changed. Instead of every country and every car having its own platforms, there are fewer and fewer platforms being created," Mr Johns said. It's not just rationalisation in the sector, it's rationalisation within companies.