Holden has ended weeks of speculation about its future by confirming it will join fellow American giant Ford in terminating Australian manufacturing by 2017.
While politicians from both sides of the House and trade unions have been lecturing Holden for weeks and no doubt will continue to claim a ‘position’ one way or the other, the fact is the decision was taken purely by General Motors for business reasons and business reasons alone.
GM continues to streamline its global operations following the end of the U.S. Government’s day-to-day involvement (which came courtesy of the Government-funded bailout during the GFC). Prior to the Holden announcement, GM announced the end of the Chevrolet brand in Europe and this hardline modus operandi is crucial for GM’s survival.
“The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the continued strength of the Australia dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world,” revealed GM Chairman and CEO Dan Akerson.
Beyond 2017, Holden’s operations in Australia will comprise a sales company to handle a revised lineup of products imported from GM plants throughout the world, a global design studio and a national parts distribution centre.
Approximately 2900 jobs will be lost at Holden – 1600 from the manufacturing plant in Elizabeth, South Australia and 1300 from the Victorian workforce (engine plant, sales/marketing and engineering).
With so many Holden vehicles on the road, the ongoing national parts operation will be massive and Holden says warranty, service and spare parts availability will be unaffected.
Toyota responded late today with a statement which pointed-out Holden’s withdrawal will place unprecedented pressure on the local component suppliers and therefore its ability to continue manufacturing cars here. This makes life especially tough for Toyota as it fights to slash more than $3,000 from the cost of every car it makes here.
So let’s be crystal clear here: As was always going to be the case, Holden’s decision had nothing to do with taxpayer assistance to the automotive industry, nor the quality of the vehicles it produces here (which are excellent and world-class) nor Government policy.
The fact is, for Holden to continue making cars in Australia, there is no chance of making a profit so to do so just makes no sense whatsoever. With something like 61 automotive brands competing for sales, there is no chance of benefits of scale and labour and component costs mean locally-made cars are too expensive.
If Toyota follows and also becomes a full-line importer, which will mean the end of new car manufacturing in Australia, the flow-on effects are substantial. Component suppliers will obviously be under threat, but so too will a myriad of other industries which benefit from skilled labour trained under the auspices of the automotive industry’s excellent apprentice and other schemes.
It will also mean the end of local ANCAP barrier testing as its very existence was justified by the unique, local Australian-made cars which were not subjected to NCAP-standard barrier testing in other countries. Going forward, as a full import market, Australia will be able to reply on NCAP data obtained in the countries from which we source new vehicles.
