Tyre magnate Bob Jane holds grave fears for the Australian car industry. He believes between 40 and 50 per cent of the nation’s car dealers will close their doors during the next six months after floor plan financiers GE Money and GMAC Finance recently announced they would withdraw from the Australian industry.
“Car dealers in Australia will run out of cash,” Jane says, unless other financiers or governments fill the void left by GE Money and GMAC. Both companies offer wholesale finance to car dealerships and jointly provide billions of dollars in loans for new and used car sales.
Jane says failing car dealerships spells disaster for Australian jobs as the “knock-on effect” will flow to component makers and suppliers. The Federal Government’s $6.2 billion assistance package is welcome relief, but it won’t stop dealers and component makers going to the wall in what Jane describes as the worst global car crisis in history.
He is more than qualified to talk about the car industry. The former car racer, car dealer and prostate cancer survivor founded a tyre empire that now has 133 T-Mart outlets scattered across Australia after starting with one in the early 1960s. Jane says T-mart sales exceed $300 million a year from a 19 per cent share of the total market. Bob Jane T-Marts sell about 2 million tyres a year, 500,000 wheels and employ more than 300 staff in fully owned and franchised outlets.
The 78-year old says the Bob Jane Corporation owns between 30 or 40 commercial properties, including mostly T-Mart outlets, the Calder Park race tracks (NASCAR, touring car and drag racing) set on about 120 acres of land about 40 kilometres north of Melbourne, the Adelaide International Raceway, several head offices and two residential properties.
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“I invest in properties I can use,” Jane says.
It appears so, as he plans to build an 18-hole public golf course on his spectacular residential property to complement the pool and tennis court. But, he says, his golf course will operate 24/7 under lights.
He says he has talked to the local council about the golf course, zoning, lights and believes he can get the necessary approvals to build a successful business. “I want to build something that people can enjoy day and night,” Jane says, as he drives me around his vast property, outlining the potential layout, first tee and club house.
Another asset that Jane holds dear is his vintage car collection worth millions of dollars. Among the cars include a 1926 Chevrolet, a 1969 Chevrolet Camaro (ZL1), an Indianapolis race car, a BMW race car, a BMW (six series), Jaguar (Mark II), a 1962 Ford Falcon (Pursuit), a Mercedes Benz 220 (SEB) and a 1965 Brabham.
On the highway, he drives a two-year old S500 Mercedes Benz that sold new for $330,000.
“I have been driving Benzs since 1972,” Jane says. “My latest car even has a TV, satellite navigation system, anti-this and anti-that. Benzs are the best cars in the world.” Away from the office, Jane likes to cruise Port Phillip Bay in his 100-foot motor boat equipped with beds and cooking facilities.
He owns ConnectEast Group shares and bought Telstra for his children, but rarely trades equities, saying his business interests chews up most of his time. He says he still works seven days a week as chairman and has no plans to retire. His 36-year-old son Rodney is the company chief executive and responsible for running the day-to-day business.
Jane says General Motors, Ford and Chrysler LLC in the US are now paying the price for years of mismanagement, lack of vision and poor planning. While the global credit crunch is clearly behind the economic slowdown, Ford, GM and Chrysler management have to share some of the blame for taking their companies to the brink of collapse.
“I don’t know whether Ford, GM or Chrysler are going to survive the crisis,” Jane says. “Like the banks, they may be too big to fail.”
So where did the car giants go wrong?
Jane says: “In the US, Ford and GM built the wrong cars – gas guzzling, poor quality cars without factoring in the possibility of higher crude oil prices. America is making cars with a two-year life cycle as new ones are often leased then traded for another. US car makers are not fussed about the quality. Ford and GM ignored the need for a fuel-efficient car. Honda is the most reliable car in the US.”
November US vehicle sales figures paint a grim picture for the industry. GM and Chrysler LLC sales plunged by more than 40 per cent on the same month last year, while Ford sales fell 31 per cent.
Jane says US car maker losses partially stem from generous employee health and pension entitlements that carry a built-in cost of at least $US1000 a car. But rewarding executives with outrageous multi-million dollar salaries for poor performance, combined with car company bosses travelling on private jets to Washington to plead for a US$25 billion taxpayer-funded industry rescue package, shows just how much they are out of touch with the real world.
On December 2, Ford, GM and Chrysler LLC submitted another plan to lawmakers, pleading for a total package of at least US$28 billion.
Jane says: “The three big car makers in the US have clearly lost their way. Henry Ford would be turning in his grave over what has happened at Ford. The business fundamentals Henry Ford created have been discarded. Henry Ford hated to borrow money from banks. He made money from perfecting the assembly line. I have read his book, ‘My Life and Work’ many times. I live by his message of working hard and thinking smart, but it’s been lost on US car makers.”
Jane suggests Ford in Australia should reduce the Falcon’s engine capacity from 4 litres to 3.2 litres. He expects sales of V8s and Sports Utility Vehicles to fall in favour of fuel-efficient cars.
“I would stop building V8 cars – people have stopped buying them,” he says. “But if I was Ford, I would keep building the straight six cylinder engine. But think fuel efficiency.”
He is hopeful that Australia can avoid a recession and applauds the Reserve Bank’s decision to cut interest rates again on December 2, taking the official cash rate to 4.25 per cent. He says official interest rates need to fall to at least 3 per cent to keep households spending in a slowing economy. The Australian car industry needs to restructure fast to save as many jobs as possible.
Today’s car industry problems paint a stark contrast to when Jane owned car dealerships, including one of the Melbourne’s biggest, Southern Motors between 1969 and 1985. Although in a different era, his figures would be the envy of today’s ailing car industry. He says Southern Motors used to sell 600 new cars and 100 used cars from six car yards each month. After getting out of car dealerships in 1985, he made millions of dollars from selling the properties. Car yards he bought for a combined $900,000 in 1969 sold for $9 million in 1985. At one stage, Jane had 38 companies in his corporation, which has since been cut back to six in response to changes in tax and corporation laws.
Jane maintains the key to business success is offering a necessary, low-cost, good quality and affordable product.
“Everything’s a numbers game,” he insists.
Since leaving school at 13, he has amassed a personal fortune that he won’t disclose, but has been long been estimated to be about $50 million prior to his latest divorce in April. Earlier in his life, Jane and his brother Bill were partners in a leather goods business, which led to a successful seat cover firm. He says his T-Mart business began out of necessity, when he started importing tyres to solve a problem with Jaguars.
Today, the father of six children is clearly proud of what he has achieved and thanks God for a great life. He says he thought he would only live a year or two after being diagnosed with prostate cancer in the mid 1990s. “I am hoping to die with it (prostate cancer), not from it,” Jane says. He even moved a chapel to his beloved Calder Park.
Jane says: “I am a Christian. The bible says you live three score and ten. Well, I’m almost three score and 19. You have to be happy with that.”