2nd June 2012: Fairfax, Quality Media, & Journalist Strikes

Fairfax Media Share Price 28th May - 1st June 2012

 

New Matilda‘s Ben Eltham on Fairfax journalist strikes:

 

No matter how much the journalists protest about “quality”, the hard facts remain. Fairfax’s newspapers will have to be slimmed down even more quickly than they already are, while new revenue sources in the digital space will have to be conjured up. Under Greg Hywood, there seems every sign that at last management “gets” this, and is moving aggressively to implement the necessary changes.

This is the unmistakeable logic behind the decision to remove 66 sub-editors from newspapers in Newcastle and Woollongong, to be replaced by staff in New Zealand, where presumably they will work for less. Call it outsourcing, call it offshoring — call it common sense. Hywood and his team are doing what most listed corporations would do when faced with a high-cost part of their business with rapidly declining revenues. They’re slashing costs. They’re looking for ways to deliver the same product more cheaply.

 

Offshoring sub-editorial jobs has been on the cards for a decade. John Hagel III and John Seely Brown’s book The Only Sustainable Edge (Boston: Harvard Business School Press, 2005) situated offshoring as a cost-cutting option amidst the “accelerated capability building” that would underpin sustainable competitive advantage. For Hagel III and Brown, offshoring helped firms to engage in “dynamic specialization”: “the commitment to eliminate resources and activities that no longer differentiate the firm and to concentrate on accelerating growth from the capabilities that truly distinguish the firm in the marketplace” (p. 54, emphasis added). This argument resonated with a broader debate about disruptive innovation and also with the 2003-07 growth of emerging markets and exchange traded funds for international investors.

 

Eltham’s arguments also do not contradict a 2009 study that I co-wrote with Barry Saunders on journalists as ‘investigators’ and ‘quality media’ reputation. Saunders and I studied a cohort of 20 journalists who differentiated themselves with investigative skills from other domains. For example, Bethany McLean who broke the Enron scandal had Wall Street investment bank experience. Media outlets like The New Yorker and The New York Times built their ‘quality media’ reputation also through fact-checking, editorial, and legal processes, and through a Classical Hollywood-style star system of journalists. NYT journalists are often featured on PBS Frontline documentaries, for instance. Finally, our study coincided with a debate about philanthropic foundations and grant-making as a funding model for quality journalism.

 

Fairfax has not followed the study’s advice.

 

Neither have the striking Fairfax journalists.

 

Regrettably, many of New Matilda‘s readers also missed Eltham’s insights about Fairfax’s market valuation. It’s vital to understand the role of structural economic factors, debt/equity ratios, and labour market bargaining in assessing the possible futures of newspapers. Institutional investors also influence Fairfax’s management. Fred Hilmer’s memoir The Fairfax Experience: What The Management Texts Didn’t Teach Me (Milton: John Wiley & Sons Australia, 2007) reveals that he spent almost half his day at Fairfax dealing with financial issues and meeting with institutional investors. The same week as the Fairfax journalists’ strike, investor Gina Rinehart continued her bid to control Fairfax’s board. Rinehart’s tactics reflect Carl Icahn‘s ‘activist investor’ strategy (presentation). However, these insights are often taught more in mergers and acquisitions courses than in journalism school.

 

Fairfax’s share price was range-bound on 30th and 31st May before dropping on 1st June. It’s difficult to show that the Fairfax journalist strike was a causal factor that convinced investors to sell Fairfax’s stock. The strike may have created an opportunity for short-sellers and event arbitrageurs. Macroeconomic uncertainty in China, India and the United States broadly affected the Australian financial markets. The month’s end also meant portfolio rebalancing by fund managers.

 

What could striking Fairfax journalists do? Visit SalaryTutor.com. Read The Lean Startup and The Startup of You. Develop a personal competitive advantage, and several back-up plans. You will face a more lean newsroom environment.

30th April 2012 Films As Alternative Investments

Film Freezer

 

New York Times journalist Paul Sullivan examines film as an alternative investment: budget control, non-completion guarantees, state tax credits, portfolio approaches, and direct marketing.

 

I was once keenly interested in film as an alternative investment class. In the early 1990s, I looked at Australia’s Film Finance Corporation as a government-run investment bank. I worked for and invested in straight-to-video films by Bendigo’s Fatal Impact Productions, which in 2010 became embroiled in a controversy about The Book of Eli‘s origination. The same year, Ben Eltham and I looked at Australia’s film industry and international tax arbitrage. But my undergraduate studies in film were just on the cusp of digital film and editing innovations. I went into freelance journalism rather than finish the feature film scripts I was working on.

 

Today, I am more likely to read about films as alternative investments in a CFA Institute exam question.

 

Photo: Agfapan-25/Flickr.

11th April 2012: How Academia Kills Writing

I recently had some productive exchanges with Roy Christopher and Axel Bruns on academic writing strategies. Christopher wrote-up his insights:

 

I am sympathetic to all of these conditions, but I have found it important to cultivate the ability to write at any time, in any circumstance — even if it’s just collecting thoughts about something. I keep a pen and paper in my pocket at all times, pen and pad by my bed, notebook(s) in my backpack and all over the house. I do find that I need large chunks of uninterrupted time to surmount larger writing tasks, but the ubiquity of computers, portable or otherwise, makes writing anywhere a much more viable option. [emphasis added]

 

Christopher’s insight led to an email exchange on the barriers that academia poses for writers. I think about this a lot in my current university gig as a developmental editor. I also work with a talented copy-editor. Here are six ways that academia kills writing:

 

1. Perverse incentive structures. Christopher and I are both intrinsically motivated writers who approach it as a craft. We blog, write journal articles and in-progress PhD dissertations, and Christopher has several book projects. In contrast, some academics I know write only for performance-based incentives. They play games such as writing fake conference papers, sending book manuscripts to vanity publishers, and publishing in obscure international journals. This leads the university research administrators to change the incentives structures. It also introduces scoping problems into competitive grants: the journal article(s) only get written if the money is awarded. It’s very rare that I find an intrinsically motivated writer: maybe an Early Career Researcher who has just finished their PhD, or a senior academic intent on making a contribution to their field or discipline. I wish academics had a more hip-hop or punk sensibility and just did the work, regardless of the institutional incentives.

 

2. Misuse of university research metrics. The Australian Research Council‘s Excellence for Research in Australia shifted the research conversation to performance and quality-based outputs. This also lead to games such as poaching academics who had ERA publishing track records. However, it also sometimes led to a narrow focus on A* and A-level journals without changes to the workload models or training investment for academic skills and robust research designs. Not everyone is Group of 8, Harvard or Stanford material, or at least not at their career stage. Metrics use must be counter-balanced with an understanding of intellectual capital and development strategies. To-date the use of ERA and Field of Research metrics is relatively unsophisticated, and it can often actually de-value academic work and publishing track records.

 

3. A failure to understand and create the conditions for the creative process. The current academic debate about knowledge creation swings between two extremes. On the one hand, budget-driven cost-cutting similar to GE’s Work-Out under Jack Welch or private equity turnarounds. On the other, a desire to return to a mythical Golden Age where academics are left alone with little accountability. Both views are value destructive. The middle ground is to learn from Hollywood studios, music producers, and academic superstars about the creative process, and to create the conditions for it. This means allowing time for insights to emerge or for academics to become familiar with new areas. It means not relying on conferences and being pro-active in forming collaborative networks. It means treating academic publications as an event and leveraging them for maximum public impact and visibility. Counterintuitively, it can also mean setting limits, stage gates, and ‘no go’ or ‘abandon’ criteria (real options theory can be a useful tool). This is one reason why Christopher and I sometimes exchange stories of the strategies that artists use: to learn from them. This is a different mentality to some university administrators who expect research publications to emerge from out of nowhere (a view often related to the two barriers above).

 

4. Mystifing the blind peer review process. What differentiates academic research from other writing? Apart from the research design, many academics hold up the blind peer review process to be a central difference. Usually, a competitive grant or a journal article goes to between two and five reviewers, who are often subject matter experts. The identities of both the author(s) and the reviewers are kept secret from each-other. Supposedly, this enhances the quality of the review process and the candour of the feedback provided. Having studied the feedback of 80 journal articles and 50 competitive grants, I disagree. The feedback quality is highly reviewer dependent. Blind peer review provides a lack of transparency that allows reviewers to engage in uber-critical reviews (without constructive or developmental feedback), disciplinary in-fighting, or screeds on what the reviewer wished had been written. Many academic journals have no rejoinder process for authors to respond. These are problems of secrecy and can be avoided through more open systems (a lesson from post-mortems on intelligence ‘failures’).

 

5. Being set up to fail through the competitive grants process. A greater emphasis on research output metrics has prioritised success in competitive grants. Promotions committees now look for a track record in external grants for Associate Professor and Professor roles. Australian universities do not often have endowed chairs or institutional investment portfolios — so they are more reliant on grant income. Collectively, these trends translate into more pressure on academics to apply for competitive grants. However, success is often a matter of paying close attention to the funding rules, carefully scoping the specific research project and budget, developing a collaborative team that can execute on the project, and having the necessary track record in place. These criteria are very similar to those which venture capitalists use to evaluate start-ups. Opportunity evaluation, timing, and preparatory work is essential. Not meeting this criteria means the application will probably fail and the grant-writing time may be wasted: most competitive grants have a 10-20% success rate. Some universities have internal grant schemes that enable new academics to interact with these dynamics before applying to an external agency. In all cases, the competitive grant operates as a career screening mechanism. For institutions, these grants are ‘rain-making’ activities: they bring money in, rather than to the individual academic.

 

6. A narrow focus on A* and A-level journals at the expense of all other forms of academic writing. The ARC’s ERA and similar schemes prioritise peer reviewed journals over other forms of writing. (This de-valued large parts of my 18-year publishing history.) The 2009 and 2010 versions of ERA had a  journal ranking list which led many university administrators I know to focus on A* and A-level journals. I liked the journal ranking list but I also saw it had some perverse effects over its 18 months of use. It led to on-the-fly decisions made because of cumulative metrics in a publishing track record. It destroyed some of the ‘tacit’ knowledge that academics had about how and why to publish in particular journals. It de-valued B-ranked journals that are often sub-discipline leaders. It helped to create two groups of academics: those with the skills and training to publish in A* and A-level journals, and those who did not. It led to unrealistic expectations of what was needed to get into an A* journal like MIT’s International Security: a failure to understand creative and publishing processes. The narrow emphasis on journals ignored academic book publishers, CRC reports, academic internet blogs, media coverage, and other research outputs. Good writers, editors and publishers know differently: a high-impact publication can emerge from the unlikeliest of places. As of April 2012, my most internationally cited research output is a 2009 conference paper, rejected from the peer review stream due to controversy, that I co-wrote with Ben Eltham on Twitter and Iran’s 2009 election crisis. It would be excluded from the above criteria, although Eltham and I have since written several articles for the A-level journal Media International Australia.

 

Awareness of these six barriers is essential to academic success and to not becoming co-dependent on your institution.

25th February 2012: Mailroom Jobs & Superstar Economics

The Operator: David Geffen Builds, Buys and Sells the New Hollywood (2000)

 

For the past week I’ve been writing about academic entrepreneurs and superstar economics. Now, NPR’s Adam Davidson has a great New York Times article on why many careers are becoming lotteries in which a small group has a ‘winner-takes-all’ or ‘success to the successful‘ dynamic and others can miss out. Davidson’s key insight:

 

Hollywood is, in some ways, the model lottery industry. For most companies in the business, it doesn’t make economic sense to, as Google does, put promising young applicants through a series of tests and then hire only the small number who pass. Instead, it’s cheaper for talent agencies and studios to hire a lot of young workers and run them through a few years of low-paying drudgery. (Actors are another story altogether. Many never get steady jobs in the first place.) This occupational centrifuge allows workers to effectively sort themselves out based on skill and drive. Over time, some will lose their commitment; others will realize that they don’t have the right talent set; others will find that they’re better at something else. [emphasis added]

 

Davidson’s thesis is that this “economic lottery system” pushes talent to the top. He cites Hollywood actors and directors, and Big Four accountants who survive the ‘up or out’ system to make partner (William D. Cohan has interviewed the Wall Street losers). Davidson connects tournament theory — the study of individuals who have relative advantages in salary and wage negotiations — to disruptive innovation (PDF), globalisation, technology and other mega-trends that are creating a ‘race to the bottom’ dynamic. How can individuals cope with these changes? “In a lottery-based economy, you need some luck, too; now, perhaps, more than ever,” Davidson advises. “People should be prepared to enter a few different lotteries, because the new Plan B is just going to be another long shot in a different field.”

 

For Davidson the “economic lottery system” model is the New Hollywood. The reality is a little more complex. Classical Hollywood’s studio production system flourished from the 1930s until the ‘go go’ Sixties when the modern conglomerates collapsed. For a brief period from 1968-73, independent producers flourished before the studios fought back with the blockbuster film, new marketing, distribution, and control of ancillary revenue streams. A similar pattern occurred in the 1995-2000 dotcom period (PDF) in Los Angeles, New York, Austin, and London. Ben Eltham and I found in a 2010 academic paper that Australia’s film industry fluctuated depending on a mixture of Australian Government intervention, available labour, and international tax arbitrage. Eltham and I both read Nikki Finke’s influential blog Deadline Hollywood.

 

History also differs on the New Hollywood exemplars that Davidson selects. “Barry Diller and David Geffen each started his career in the William Morris mailroom,” Davidson observes. Tom King’s biography The Operator: David Geffen Builds, Buys, and Sells the New Hollywood (New York: Random House, 2000) details what actually happened over this six month period in late 1964-early 1965 before Geffen became secretary to television agent Ben Griefer (pp. 46-52). Geffen lied to WM’s Howard Portnoy that he was Phil Spector’s cousin. Geffen lied about having a college education and persuaded his brother Mitchell to write a letter and cover this up. When they met, Diller “thought Geffen was a rather odd duck for using his vacation time to work in the company’s other office” (p. 50). Geffen networked with agent Herb Gart, “stalked” New York office head Nat Lefkowitz, and got his break from Scott Shukat. Geffen relied on chutzpah, hard work, networking, and having a career goal: “signing actors.” No wonder that Geffen hated King’s biography.

 

These qualities are essential to Davidson’s “occupational centrifuge.” When academics ask me about their Dean’s budget and resource allocative controls, and why universities are now like Davidson’s “economic lottery system”, I suggest they invest time in watching the film Moneyball (a film in part about tournament theory), and understanding the performance and value creation goals of private equity firms (the mental model of consultants who possibly advise the Dean).

 

I haven’t finished the academic journal articles on those ideas yet . . .

18th February 2012: Human Capital & Superstar Economics

We Are All Witnesses (Nike)

 

Crikey‘s Ben Eltham has caused a debate with his insightful analysis on Michael Brand, the new director of the Art Gallery of New South Wales:

 

The sheer amount of money washing around global art markets helps us to understand how a gallery director such as Brand can be worth nearly half a million dollars a year. There is in fact an international market for top curators, many of which can all expect to earn comfortably more than the rates Australian galleries pay.

 

Eltham and I did a similar analysis in 2010 of Australia’s film industry. Successful fund managers also have a similar dynamic due to the 2 and 20 norm: 2% of total asset value (management fee) and 20% of any profits.

 

I read Eltham’s analysis the same day as sections of the late Fischer Black‘s book Exploring General Equilibrium (Boston: MIT Press, 2010). Two relevant sections stood out immediately on human capital:

 

What is special about human capital is that people mostly own their own human capital, with all of its specific risks. They could diversify or hedge out some of these risks by trading in shares of physical capital, but as Baxter and Jermann (1993) note, they generally don’t. (p. 69).

 

The normal career path involves many job changes — some within a single firm, and some between firms . . . Careers advance faster in good times than in bad, as investments in human capital, particularly through learning by doing, pay off. (p. 102).

 

Black’s macroeconomic analysis provides some context for Eltham’s critique of Brand’s salary. In two paragraphs, Eltham summarises Brand’s “first-class academic credentials” and “stellar career path.” Brand’s career advanced quickly because he made a series of excellent choices about selecting and delivering on projects, changing galleries, and building a significant body of exhibition work. In doing so, Brand diversified his human capital in a similar fashion to the professors I know who have changed universities in order to get promoted.

 

For Eltham, global art markets provide the context for “a top international director like Brand” to command a premium. The reason, Black suggested, was that “Uncertainty in both tastes and technology makes investments risky, and gives us a frontier of choices among different combinations of expected payoff and risk” (p. 126). The Art Gallery of New South Wales is willing to pay Brand a premium to lock-in his expertise and make the optimal choices for future art exhibitions.

 

Brand’s situation contrasts with university academics who lack the benefits of superstar economics. Academic contracts are defined by a university’s minimum standards for academic levels (MSALs) and by promotion committees. Academics rarely have control of their intellectual property or a share in future revenues from their work: they are forced to assign these rights to global publishing conglomerates. The market for competitive grants is a government-controlled oligopoly that requires a substantive publication track record. Academics who don’t build this cannot hedge their own human capital risk (or exposure to disruptive innovations). Collectively, these conditions place a cap on academic contracts in contrast to Brand and fund managers. The exception is professors who gain in a ‘winner-takes-all’ environment whilst their colleagues are on short-term contracts.

 

Things may change if International Creative Management, Creative Artists Agency or WME work out how to extract greater value in human capital from academic superstars.

16th February 2012: Academic Blogging

fred and academic blogging

 

The Lowy Institute’s Sam Roggeveen contends that Australian academics would benefit from blogging their research (in response to The Australian‘s Stephen Matchett on public policy academics).

 

I see this debate from several perspectives. In a former life I edited the US-based alternative news site Disinformation (see the 1998-2002 archives). I also work at Victoria University as a research administrator. I’ve blogged in various forums since 2003 (such as an old LiveJournal blog). In contrast, my PhD committee in Monash’s School of Political and Social Inquiry are more likely to talk about book projects, journal articles, and media interviews.

 

As Roggeveen notes, a major uptake barrier is the structure of institutional research incentives. The Australian Research Council’s Excellence for Research in Australia (ERA) initiative emphasises blind peer reviewed journal articles over other forms. Online blogging is not included as an assessable category of research outputs although it might fit under ‘original creative works’. Nor is blogging included in a university’s annual Higher Education Research Data Collection (HERDC) outputs. University incentives for research closely follow ERA and HERDC guidelines. The ARC’s approach is conservative (in my view) and focuses on bibliometrics.

 

I know very few academics who blog. Many academics are not ‘intrinsic’ writers and are unused to dealing with developmental editors and journals. University websites often do not have blog publishing systems and I’ve seen several failed attempts to do so. Younger academics who might blog or who do use social media are often on casual or short-term contracts. The ones who do blog like Ben Eltham have a journalism background, are policy-focused, and are self-branded academic entrepreneurs.

 

Roggeveen is correct that blogging can potentially benefit academics — if approached in a mindful way. I met people like Richard Metzger and Howard Bloom during my publishing stint. I am regularly confused with QUT social media maven Axel Bruns — and we can now easily clarify potential queries. Blogging has helped me to keep abreast of sub-field developments; to build networks; to draft ideas for potential journal articles and my PhD on strategic culture; and has influenced the academic citations of my work and downloads from institutional repositories.

 

Problem is, HERDC or ERA have no scope for soft measures or ‘tacit’ knowledge creation — so blogging won’t count to many universities.

 

That Roggeveen needs to make this point at all highlights how much the internet has shifted from its original purpose to become an online marketing environment. Tim Berners-Lee’s proposal HyperText and CERN (1989) envisioned the nascent internet as a space for collaborative academic research. The internet I first encountered in 1993-94 had Gopher and .alt newsgroups, and later, web-pages by individual academics. Regularly visited example for PhD research: University of Notre Dame’s political scientist Michael C. Desch and his collection of easily accessible publications.  It’s a long way from that free environment to today’s “unlocking academic expertise” with The Conversation.

 

Photo: davidsilver/Flickr.

2nd February 2012: Gina Rinehart’s FXJ Move

On 31st January 2012, mining magnate Gina Rinehart bought nearly 8% of Fairfax (FXJ) through Morgan Stanley.

 

New Matilda‘s Ben Eltham observed:

 

Precisely why Gina Rinehart is buying a stake in Fairfax remains a mystery. Neither Rinehart nor her company, Hancock Prospecting, have issued any comment on the move. Rinehart simply issued instructions to her broker, and bought up stock worth about $180 million. . . . It’s simply not necessary to buy a stake in a media company to get your message across.

 

Eltham and Jason Wilson each suggest Rinehart’s bid is to gain control of Fairfax and to promote her political views.

 

Examining the pattern of FXJ trading suggests other possibilities. FXJ jumped from $0.74 close on 2nd February to open at $0.82 on 3rd February. There were major sell-offs that day: during a 14-minute rally period from the market open 10:04am (4.27 million shares), 10:16am (1977.69k shares), to 10:18am (1523.01k shares); during the trader lunch period at 1:22pm (2779.19k shares); at 2:24pm (2185.33k shares); and an end of day sell-off (5.25 million shares) which ensured FXJ shares would open lower the following day.

 

The sell-offs fit a well-known strategy used amongst institutional trading desks: the ‘market squeeze’ trade. In late 2011, I watched J.P. Morgan and Japan’s Mitsubishi UFJ bank use this strategy with several other Australian shares. I found out the details from two sources: ASX regulatory filings made on behalf of offshore hedge funds, and from ThomsonReuters’ SIRCA database which has tick data of individual trades.

 

Here’s one way how the ‘market squeeze’ trade works:

 

1. The trading desk buys up huge amounts of a target share: enough to move the share price. This creates a volume spike that will initially move the share upwards: a stochastic market dynamic used in jump diffusion models of mathematics and option pricing.

 

2. The volume spike creates a red alert which attracts other, different traders. Day traders who use technical analysis, charting, or momentum/rally signals now focus on the share. Exchange trade funds and institutional money managers who must rebalance their portfolios are now also interested. This creates a market for the trading desk to sell to. The share also shows up on the daily volume indicators of the major share trading platforms. The financial media becomes interested.

 

3. The trading desk then dumps a large volume of the share at strategic times during the day. This locks-in a short-term or daily profit for the trading desk. It also influences the upper and lower bounds of the share price. Monte Carlo Markov Chain simulation can predict the share price pathways. The trading desk can then adjust its order book and its market execution costs.

 

4. Meanwhile, the trading desk sells off smaller blocks of shares over a 3-4 week period. This tactic influences high-frequency trading systems. It usually means that the share price trends downward as the trading desk has market-maker control — or several trading desks at different firms create a market equilibrium.

 

5. The trading desk can make profits in several ways. It can dump a large amount of shares at the market open which usually means the share price will fall during the day. This tactic will create cyclical and volume-based effects. It can force other traders to sell once their stop-loss levels are breached. Finally, it can sell shares at the peak of a volatility spike and then buy them back at a much cheaper price when the market trends lower. The trading desk’s volume, its order size, and its lower execution and transaction costs means that it can make a profit from spreads of several cents.

 

FXJ’s trading after Rinehart fits the ‘market squeeze’ pattern. It’s possible that Rinehart will pursue the ownership agenda that Eltham and Wilson emphasise: Michael Milken financed Sir James Goldsmith and others to do so in the 1980s era of leveraged buyout deals. But it’s also possible that Rinehart is using value investment criteria to make a quick profit from market volatility. Or, that Rinehart’s announcement enabled Morgan Stanley and/or other trading desks to use a combination of long/short, paired, and event arbitrage strategies. Someone made a killing on trading FXJ on 1st February 2012.

 

Eltham is right: you don’t need an ownership stake for a media company . . . if you pursue other agendas.

16th January 2012: Australia’s Car Industry & Lost Lean Opportunities

New Matilda’s Ben Eltham writes about Australia’s car industry:

 

All this sounds like a hymn to the efficiency of the open market, and to some extent it is. There is an unavoidably difficult truth to face when we discuss local manufacturing, which is that the high Australian dollar and the small size of our local market makes many aspects of Australian manufacturing uncompetitive. Fairfax’s Ian Verrender outlined the uncomfortable verities last week when he pointed out the obvious: making cars in Australia was never particularly sustainable, and has only been so in the long-term with massive government subsidies. “While we’re at it,” Verrender continued, “let’s be brutally honest. There is no such thing as an Australian car industry. It is an American and Japanese car industry with a couple of plants here.”

 

In the early, 1990s, the International Motor Vehicle Program (IMVP) at the Massachusetts Institute of Technology reached a similar conclusion on Australia’s car industry and the trade-offs of the ‘make or buy’ decision. In their book The Machine That Changed The World: The Story of Lean Production (New York: HarperPerenniel, 1991), authors James Womack, Daniel Jones and Daniel Roos examined Australia’s car industry (pp. 270-272): the role of foreign producers, the $US/$A currency cross-rates, attempts to follow South Korea’s manufacturing model, and an export focus on North America and Europe.

 

Womack, Jones and Roos suggested that Australia’s car industry follow a different strategy:

 

The logical path for Australia would be to reorient its industry toward the Oceanic regional market including Indonesia, Singapore, and the Philippines. Each country within this region might balance its motor-vehicle trade, but, collectively, by permitting cross-shipment of finished units and parts, they could gain the scale needed to reduce costs and let lean production flourish. Australia, as the most advanced country in the region, presumably could concentrate its own production on complex luxury vehicles, while Indonesia at the other extreme, would make cheap, entry-level products. (p. 271).

 

Womack, Jones and Roos observed that this realignment was unlikely for Australia due to two reasons: (1) its focus on northern hemisphere export markets; and (2) cultural and foreign policy barriers to greater involvement in the Association of Southeast Asian Nations (ASEAN).

 

Eltham notes that Australia’s tariffs policy has played a detrimental role in preventing the transition to a lean industry:

 

You need not be a rabid libertarian to note the negative economic impacts associated with car industry assistance. Tariffs are a device to transfer wealth from consumers, who pay more, to producers, who receive direct and indirect subsidies. Those subsidies support local jobs in the manufacturing industry, but at a price. The Productivity Commission estimates the total subsidy is something like $23,500 per worker. Yes, you can take issue with modelling and the econometrics and quibble with the numbers and so on. But there’s no doubt that, in the end, we all pay for the pleasure of sustaining a local car industry.

 

University of Wollongong’s Henry Ergas observes in The Conversation:

 

This is an industry that was born from very high levels of protection and has depended throughout its existence on the continuation of high levels of assistance. None of that makes me hopeful for the long-term prospects of the industry.

 

What lean manufacturing opportunities have Australian policymakers missed? For several decades the GM/Toyota joint collaboration New United Motor Manufacturing, Inc (NUMMI) was highlighted as a success story of United States-led lean manufacturing. But NUMMI closed in 2010. Tesla Motors reopened the former NUMMI factory in 2011 as the Tesla Factory to manufacture the Tesla S sedan car. Meanwhile, Honda plans to increase its United States production. Once again, Australia’s policies on car industry assistance appear to leave it behind global innovation and lean manufacturing.

5th December 2011: Buy Ben Eltham Lunch

Ben Eltham (New Matilda; Crikey)

Ben Eltham is a prolific Australian writer and commentator on national affairs, arts and politics for New Matilda, Crikeyand other online publications.

You can support Eltham’s writing here — I urge you to do so.

Eltham and I have co-written a number of academic journal articles and conference papers, on Twitter and Iran’s 2009 election (PDF and presentation PDF); Australia’s Film Finance corporation and international tax arbitrage (PDF); and on the 2009 Victorian bushfires and journalism (PDF). Our joint paper on Twitter and Iran remains our most academically cited article. Along with his New Matilda and Crikey work, this should convey Eltham’s talent.

Twitterati can follow Eltham here whilst his Google Scholar profile is here.

23rd November 2011: Google Scholar Personal Profiles

Google Scholar has announced open citations and personal profiles.

The service is popular with academics for citation analysis and publication track records. Google Scholar’s data collection is messy: it trawls the internet and gathers citations from a range of websites and sources. It does not yet have the rigour of Elsevier’s Scopus database, for example. However, it is likely to outrank such proprietary services, due to Google’s accessibility and popularity.

My Google Scholar profile is here. For now, it is a highly selective collection — academic journal articles and conference papers, some postgraduate and undergraduate essays, and old Disinformation dossiers (see archives). I was surprised that some long-forgotten articles had been internationally cited. I have a more complete publications profile which gets updated as new academic research is published (PDF).

Several past collaborators — Axel Bruns, Ben Eltham & Jose Ramos — have their own profiles, and you should check out their personal research programs.