Holden will cease manufacturing cars in Australia in 2017

[Jessica Berry]

HOLDEN has confirmed it will cease manufacturing cars in Australia in 2017.

 

Victorian Premier Denis Napthine made the announcement in State Parliament this afternoon.

 

The announcement comes only one day after Holden chief executive Mike Devereux said that no final decision had been made about the company's future in Australia.

 

Dr Napthine said it was an irreversible decision made at GM Holden's US headquarters and he was only told this afternoon. He told Parliament it was a "sad day".

 

Acting Prime Minister Warren Truss said Holden boss Mike Deveraux told him around 1.50pm the decision had been "made in Detroit" that the company would be "closing a significant part of their operation" in Australia and New Zealand by the end of 2017.

 

"We regret the fact that GM is to phase down its operations in this country," Mr Truss told Parliament.

 

"Holden has been an iconic national brand for Australians, a part of our heritage. It has meant a great deal to Australians over several generations. Many of us have had the pleasure of travelling and owning Australian built Holdens and it is a pity that will not continue into the future."

 

Amid uproar in Parliament from Labor MPs, Mr Truss said the Government "wanted Holden to remain manufacturing cars in Australia".

 

Mr Truss said the government stood ready to assist sacked workers and to support dealers and employees.

 

GM released a statement this afternoon.

 

"We are completely dedicated to strengthening our global operations while meeting the needs of our customers," said GM Chairman and CEO Dan Akerson.

 

"The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world."

The statement outlined the expected job losses, with 2,900 Aussie jobs to go.

 

The closure will mean 1,600 jobs from the Elizabeth vehicle manufacturing plant and 1,300 from Holden's Victorian workforce.

 

"Holden will continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution centre and a global design studio," the statement reads.

 

"This has been a difficult decision given Holden's long and proud history of building vehicles in Australia. We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people," Mr Devereux said.

 

The sale and service of Holden vehicles will be unaffected, the statement said, warranty terms and spare parts availability will remain unchanged.

 

Acting Labor leader Tanya Plibersek said the Federal Government had "got what it wanted" and workers "will pay the price".

 

Labor frontbencher Tony Burke said the Government had "dared the company to leave".

 

Federal Industry Minister Ian Macfarlane blamed Labor for Holden closing, saying they created the problem over the past six years.

 

"They are the ones who laid the foundation for this closure," he said.

 

Mr Macfarlane said six years ago there were 335,000 cars being made in Australia but after Labor's time in power it had fallen to 221,000. He blamed Labor's poor policy.

Mr Macfarlane said it was "an extraordinary traumatic time" for Holden workers.

 

Treasurer Joe Hockey, who yesterday called on Holden to "come clean" and say "either you're here or you're not", said the Abbott Government would work with the Victorian and South Australian governments and unions "to ensure this does not lead to a significant economic downturn".

 

"We will do everything we can to assist during this transition," Mr Hockey told Parliament.

 

"It is not a surprise this should have happened."

 

Earlier, Treasurer Joe Hockey told 3AW it was "wrong" to say Victoria faced a recession if Holden pulled out.

 

And the Treasurer predicted job losses were"greatly exaggerated".

 

Mr Hockey said only 2000 jobs were directly related to making cars - 1760 in South Australia and 200 in Melbourne.

 

The announcement will be made to the workforce later today.

 

Mr Devereux said emphatically yesterday that no decision had been made to close the company's assembly plants despite growing speculation production would stop as early as 2016.

But he also declined to outline any timetable for a decision and warned that ongoing government support was vital for the company to continue to invest in local production.

"We need a public/private partnership over the long term to be able to be relatively competitive," Mr Devereux told a Productivity Commission inquiry into the automotive industry.

The company agreed to a $275 million assistance package with the previous federal government in 2012 and was also promised more cash before the September election amid suggestions it needed as much as $500 million to commit to building two new model cars from 2016.

 

Following the election, the coalition reaffirmed its plans to cut $500 million from overall auto industry assistance and says no further cash is on the table for Holden.

Mr Devereux told the Productivity Commission the company was doing everything it could to cut the $3750 cost gap between building cars in Australia and building them in other countries.

 

"We do need to close the gap," he told the hearing.

 

"I don't suggest that we are asking to close that gap to zero."

 

He said the submission the company had made to the federal government clearly stated General Motors' threshold for doing business, but the details would remain confidential.

Holden said it generated $32.7 billion in economic activity in Australia from 2001 to 2012 and received $1.8 billion in assistance over the same period, a result it considered a good return on government investment.

 

More to come ...(from news.com.au)

[zebedee]

Bad news for the region and for Australia, especially as Toyota will follow (from what the news article says).

[Ktee]

A very sad day for Adelaide and for the number of people who will be out of work.

[Tamara (Homes Down Under)]

This is terrible news that wil affect thousands of people.

My OH works with a couple of people who worked at the Tonsley Mitsubishi. They struggled to find work when Mitsubishi closed down over 5 years ago.

Many workers will have been there for years and reskilling is not at all easy.

 

Tamara

[Toni]

I agree it is terrible news. All the other "add on" businesses that get business from Holden will also suffer. I think the impact will be wider spread than what people think. I had a friend who worked in a foundry and they lost a lot of business when Mitsubishi closed down. I didn't realise myself but on one of the current affairs program they stated that it is common for countries to subsidise their car manufacturers. Many countries subsidise their car manufacturers from between $90 to $200 per capital and Australian only subsidises $18 per capita. I think that the politicians both Federal and State have let this state down.

[scooterdan]

Tax payers money shouldn't be used to bailout private owned companies..... They did they're own grave!

 

Adelaide didn't self implode when Mitsi closed and it will survive this!

 

It's sad about pols jobs but life goes on....

[Diane]

It will have a knock-on effect on all kinds of industries - people will not spend as much money in shops, restaurants, travel etc, if they have no long term job security - this could be the final straw that pushes SA into recession in a big way. As for not subsidising a private company, it's more about subsidising an industry, and if Australia do not do this, then they are competing with countries that do. I saw it described by someone as the quivalent of "working for the dole" if the government subsidises the industry - far better to have people working, learning skills, using them, than not surely? Who wins in the end by the government almost challenging Holden to like it or lump it? If the industry closes, as is happening, then the government have to subsidise those workers who have lost their jobs, either in the form of retraining or unemployment benefits which has a lot less knock-on income effect than the same money spent to subsidise an industry would have. Apart from wine and education, the motor industry in South Australia was up there with mining in terms of an income provider and employer in this state. And with the Olympic Damn extension postponed, mining is going to struggle to fill the gap.

[TonyD]

sad day for all those SA workers affected. Did unions, with their ever-increasing demands, help or hinder the decision? who knows but gutted for the guys/girls affected, its a difficult issue for the big corporations, wages are so much cheaper elsewhere so if it was your money what would you do? The socialst in me says keep pushing for aussie subsidies but the other side of me says the Aus nation shouldnt subsidise a failing industry. sh*t times but unfortunately the UK has been there before, hope Aus can come through it

[Guest sithewindows]

When you look at the figures per unit rather than per capita they tell a different story.

I agree it is terrible news. All the other "add on" businesses that get business from Holden will also suffer. I think the impact will be wider spread than what people think. I had a friend who worked in a foundry and they lost a lot of business when Mitsubishi closed down. I didn't realise myself but on one of the current affairs program they stated that it is common for countries to subsidise their car manufacturers. Many countries subsidise their car manufacturers from between $90 to $200 per capital and Australian only subsidises $18 per capita. I think that the politicians both Federal and State have let this state down.

[Anne B]

It's easy to blame the unions but a lot of the problem lies with the high Aussie dollar, which many of us recent immigrants have had to suffer. Tim Colebatch in The Age wrote the other day

 

" Holden, like Qantas, is a victim of the high dollar. In 2002, the Australian dollar averaged 54 US cents. For businesses in the global market, such as car makers, Australia was almost as competitive as South Korea.

 

But by 2012, Australia’s dollar had risen 91 per cent, to average $US1.035. In global markets, that made it 91 per cent more expensive to produce goods and services here.

 

 

It is not the only reason the car industry is in trouble, but it is the main reason… Australia’s currency has risen more than that of any other developed country. Our economic culture allowed our currency to escalate so high as to make our producers uncompetitive, and neither the government nor the Reserve Bank did anything about it.

 

While our dollar soared 91 per cent, the Koreans let the won edge up just 6 per cent. While Australia’s cost base more than doubled between 2002 and 2012, Korea’s cost base held its ground. Is it any wonder that by 2012, manufacturing production had almost doubled in Korea, yet was back to 2002 levels in Australia?"

 

So maybe a lot of the blame lies with the previous government (who allowed the dollar to soar so high) and the Reserve Bank.

[jim and adel]

Hard to keep politics out of car manufacturing, with entry barriers, tariffs, free trade agreements actually resulting in anything but free trade, the case for subsidies and the equally strong case for not subsidising one industry while ignoring others etc. Got to say, though, that it's predictably hard faced of Weatherill to blame everything on a federal government that's been in place for three months.

 

Back in April this year when Holden announced it was axing 400 jobs in SA, Weatherill claimed Holden had broken an agreement (Holden had previously made 100 workers redundant, so the SA gov had offered $50m dollars to guarantee minimum employment levels). It then transpired that there had been no signed contract, only an 'exchange of correspondence'. Holden's chief said at the time 'we do not have a contract with the South Australian government ... so I find it puzzling that I could be in breach of something that I haven't actually agreed to yet.'

 

For a premier – and Weatherill is a lawyer by trade – to be willing to hand over $50m of tax payers money without the necessary paperwork being in order is staggering. If such an amount still meant a fifth of the Adelaide workforce faced the axe, throwing more money at it hardly seems the answer.

 

From 2006 to this year (with Labor in gov at both state and federal level), the number of cars sold by Holden halved and yet the money they received from tax payers increased. The high dollar has certainly been a big factor; the same with Australian wages generally (you can't hold car workers' wages down artificially when others are earning well), but quite apart from these factors, many of Holden's current models look like their competitors' previous models. For what they are, they're overpriced and under specced. (Not meant to be a dig at Holden drivers or workers – both of us adults in our house drive Holdens, although ours aren't current models.)

 

GM's long term business model doesn't include Australia as a manufacturing base; that much is clear regardless of subsidies. It was announced two months ago that Holden's CEO would be moving on, to a new GM role in Shanghai. As he's been the only senior GM person making the case to stay in Australia, this was a clear sign of winding things down; it recently announced it was pulling the Chevrolet brand out of Europe, and the gap this creates means those plants can absorb the Holden work.

 

A very challenging time for many people.

[Rabeah]

The domino effect on other industries on one side. On the other hand this stupid government, have they ever considered the taxes they will loose beside providing many soon-to-be ex-Holden employees with costly unemployment and rental benefits in the future...

 

What Anne B wrote is absolutely right, too. The 'old' government had done nothing to prevent the sky rise of the Aussie Dollar which made Australia really uncompetitive in a global sense of economics and we recent migrants got a bad exchange rate as well. Seems to me, all governments only look onto short-term goals and not long term benefits/achievments for Australia.

 

Many member of this forum would be a better government with a deeper understand how economics works!

[AussieRob]

Tax payers money shouldn't be used to bailout private owned companies.....

 

.

 

An employee in the Automotive industry I do actually agree with this statement, but the world is not a fair playing field. One of our sister companies in the US recently paid $1 for a $14,000,000 paint facility, the local government put the rest in to keep the company in Michigan.

 

Another example is for Ford Australia, one of the only (maybe the only ) export countries for the Ford Territory is Thailand, with the free trade agreement and similar car legislation it seems a reasonable fit, but the Territory is $100,000 in Thailand, whilst it is only $40,000 here. Somehow, some way Thailand manage to claw back the import taxes and make the vehicle unattainable, yet we do no such thing with imported cars to Australia.

 

I am also part of the problem, i don't have an Australian made car, but if the car I purchased was 10 - 15% more expensive due to some extra taxes or duties, and we didn't pay stamp duty or GST on an Australian made car, it may have tipped the balance of my judgement, but at least then the government would have generated domestic demand to keep an automotive industry here without the constant demand for government subsidies.

 

I don't know how this will affect Adelaide, I just watched the news about an american town where GM was the predominant employer, and they pulled out, and slowly it became a ghost town with 1/3 of the population departed for other cities and towns, the balance became run down. Whilst we aren't a 1 company city, it is by and far the largest employer here and it's effects will be felt by everyone, indirectly or directly.

[Diane]

What I still don't understand is why government departments here don't buy locally made cars as their fleet vehicles. With all the layers of government we have (Local, State, and Federal), making it an across the board policy that government vehicles have to be either Ford, Holden or Toyota would surely go a long way to boost sales? I think I heard some of them actually have BMWs ffs!!!

[jim and adel]

What I still don't understand is why government departments here don't buy locally made cars as their fleet vehicles. With all the layers of government we have (Local, State, and Federal), making it an across the board policy that government vehicles have to be either Ford, Holden or Toyota would surely go a long way to boost sales? I think I heard some of them actually have BMWs ffs!!!

 

In terms of senior federal (modified for security), Holden didn't submit a tender this time around - the only companies that did were foreign.

[Trickyshel]

as a ex car- industry employee from the uk!! (and not worked in the car industry for 12 years)

I have spoke to a Holden worker here.. who had just taken VR.... $160,000 pay out for 19 years service.. that a lot of profit off a car to cover that... and that was one person.

and some of the rates of pay etc this chap was getting.... they have had it easy. but that is not a reason to close it! there are lots of problems with the world car industry and exchange rates. Adelaide will not be a better place after they have closed it.

 

look at Detroit, they are having major problems.. another problem GM are having is covering the ex-employees pensions and medical costs in America.

 

in simplistic terms .... I have noticed the world is in two half's,,, one half can live a great life on a bowl of rice for a days work .... and the other half that can eat a bowl of rice but still needs to pay for ..rego... child care... CSA.... mortgage/ rent... water... electric... speeding fines... etc,etc. if you want to buy a car,,, tv or telly sales.... banking etc.. you can go to the world market for these services.. but if you want a sandwich at lunch time or a care home for your parents,, service on the car... insurance.. medical help ,,, its at your home market prices!!

 

The thing that made me smile while in the uk was the blank look on a farmers face..... when I questioned him about his "buy British Beef" sticker in the window of his Mercedes!

[Jessica Berry]

The announcement can't have come as a shock to many people in SA. I have just found the news article below dated February 2008 when Mitsubishi closed and you could probably recycle the same news article (apart from the bit about the vibrant state of the SA economy!!!!) almost 6 years later and just replace the word 'Mitsubishi' with 'Holden'.

 

http://www.adelaidenow.com.au/news/our-decision-to-close/story-e6freo8c-1111115472177

 

I have worked with a couple of people that worked with Mitsubishi as it was closing. One contracted in their HR Dept and their quote was 'they were paying people $70k for a job that anywhere else in a factory environment would earn $40k'. The other person worked as part of the team that went into Mitsubishi as a job provider, offering reskilling and training opportunities to the soon to be made redundant workforce. Mitsubishi workers were offered the opportunity to retrain as bus drivers and all training would be paid for, with a guaranteed job, of the people they dealt with only 1 person took up the offer. TAFE undertook a big RPL (recognition of prior learning) project to ensure as many workers as possible received a qualification.

 

I am sure the same things will happen at Holden, people will be offered reskilling, retraining, financial incentives, all of which will cost a small fortune. In the past if you employed someone from Holden the new employer received a 'thank you' payment. I suspect the focus will be on the Holden workers as they will be the high profile media cases. A colleagues OH works for one of the smaller suppliers, they feel that while Holden workers will get the big pay outs (I know of someone who has received in excess of $300k as their redundancy payout from Holden), they will get forgot about, along with all the other invisible people/businesses that relied on Holden.

Edited December 13, 2013 by Jessica Berry

[acescribe]

There does seem to be an awful lot of glass half empty going on in Adelaide - and beyond - given that Holden's engine factory is in Melbourne. I was told outright by a friend in Adelaide today "not to bother" even thinking about moving there.

 

That OTT, or not? I will not deny it has got me worried. Kirsty is the main applicant and does and (hopefully) will do a job where the skills are in demand, and on a higher salary than she earns in England presently (where we live in the very expensive southeast and have found ourselves financially squeezed and own a property we are finding hard to sell, despite the so called upturn) However, as for myself, I am multi skilled but not qualified per se (if that makes sense) I am in the media by profession, writing presenting and I do discos and I make up what is not always a full time job by taking other jobs in various industries (at the moment admin/accounts in a small engineering firm) My thoughts are that I may now be up against 30,000 others that might not have otherwise been on the jobs market...

[TheHarrisonFamily]

Tax payers money shouldn't be used to bailout private owned companies..... They did they're own grave!

 

Adelaide didn't self implode when Mitsi closed and it will survive this!

 

It's sad about pols jobs but life goes on....

 

 

Scooterdan that sort of response is why the UK car industry ended up on its knees. The German government has subsided BMW and Mercedes for many years, they employ thousands and are both successful car manufactures.

I worked at Landrover in the UK for 15yrs and at one point the government helped LR out with financial support. This helped to keep the company going and now it’s thriving with a 24hr production line.

 

I'm afraid you’re not looking at the bigger picture; it’s not just the workers. The local shops were the workers pick up their paper and snacks for work. They won’t be getting a payout or help from the government they will just close. Already Elizabeth has one of the highest un-employment rates in Oz it will end up like a ghost town and broke a bit like Detroit

[minty]

It's a shame that Holden workers and there unions didn't look at the bigger picture. Unions always pushing for way above rate pay increases and benefits for a company that was already paying far above industry rates. Why should government money subsidies this?

 

Yes to put them on a global level but that means Holden employees also need to be paid at a global level rate, not far above that rate. It works both ways.

 

Governments should not subsidies peoples lifestyles.

[Guest sithewindows]

Nothing to do with the fact that Land Rover have been owned by Tata since 2008 then?

Scooterdan that sort of response is why the UK car industry ended up on its knees. The German government has subsided BMW and Mercedes for many years, they employ thousands and are both successful car manufactures.

I worked at Landrover in the UK for 15yrs and at one point the government helped LR out with financial support. This helped to keep the company going and now it’s thriving with a 24hr production line.

 

I'm afraid you’re not looking at the bigger picture; it’s not just the workers. The local shops were the workers pick up their paper and snacks for work. They won’t be getting a payout or help from the government they will just close. Already Elizabeth has one of the highest un-employment rates in Oz it will end up like a ghost town and broke a bit like Detroit

[Trickyshel]

Nothing to do with the fact that Land Rover have been owned by Tata since 2008 then?

 

no actually.......

[Jessica Berry]

Holden receives the publicity on a grand scale because of many factors, but there are examples of people losing their jobs, having to retrain, hours being cut, businesses closing down due to the high dollar that occur on a daily basis and the majority of these people just have to get on with it and fend for themselves. They do not receive large payouts, thousands being spent on them to retrain or gain qualifications, employers coming into their workplaces offering them jobs or new employers being offered incentives to employ them. I know of people that worked at Mitsubishi, got a payout there when it closed, then went to Holden and got a payout from them too.

 

I worked in an industry in Adelaide that has struggled in recent times and several companies in this sector closed down and again there would have been the added invisible businesses that suffered as a result of these closures. There was no big fanfare, it wasn't reported in the newspapers or on tv. Half of our company were casual workers (including me) so we received no payout or any kind of assistance.

 

Another person I know of recently was one of 30 workers that were finished due to a downturn in work.

 

I know of a company that has requested employees take all of January off due to a downturn in work.

 

Another person had a manufacturing business and 95% of their product was exported. Due to the increase in the $ the person shut their business as it was no longer viable, leaving several people out of work. The government didn't come and 'rescue' this persons business. This is often the criticism I hear directed towards Holden from small business owners, if their business is struggling or goes under, no one bails them out.

 

While the numbers may be smaller than Holden, collectively they will all add up.

[nomorehashbrowns]

Tax payers money shouldn't be used to bailout private owned companies..... They did they're own grave!

 

Adelaide didn't self implode when Mitsi closed and it will survive this!

 

It's sad about pols jobs but life goes on....

 

Yep, all that tax payers money will now go towards dole money, and the crime rate will soar

[Guest Flo]

The domino effect on other industries on one side. On the other hand this stupid government, have they ever considered the taxes they will loose beside providing many soon-to-be ex-Holden employees with costly unemployment and rental benefits in the future...

 

What Anne B wrote is absolutely right, too. The 'old' government had done nothing to prevent the sky rise of the Aussie Dollar which made Australia really uncompetitive in a global sense of economics and we recent migrants got a bad exchange rate as well. Seems to me, all governments only look onto short-term goals and not long term benefits/achievments for Australia.

 

Many member of this forum would be a better government with a deeper understand how economics works!

 

 

sorry, but no.

 

The government can't really do much about the rise of the exchange rate (unless it tells the RBA to explode inflation....), the main domestic driver for that rise was the mining boom (foreign buyers need $'s to buy Australian stuff, increasing the demand and driving up the exchange rate), and while the increase hurt people migrating it did help not only those emigrating but importantly all of those in Australia (who can now purchase goods from abroad for less...)

 

And given the way the EU is going after state subsidies in Europe I doubt strongly (though don't know for certain) that European car manufacturers get much in that regard. Most programs are incentives for purchases, which don't differ based on manufacturing location. Actually when Opel, GM's European subsidiary, was close to defaulting the German state was offering loans (and not straight out subsidies) and even those were heavily criticized by the EU. GM ended up trying to save Opel themselves and didn't get anything...