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General Motors Holden’s Gone Baby Gone

Posted: December 12th, 2013 | Author: | Filed under: Auto Maker, Auto News, General Motors, Holden | Tags: , , , , , , , , | Comments Off on General Motors Holden’s Gone Baby Gone

General Motors Holden's Gone Baby GoneGeneral Motors has made it’s decision – it’s pulling out of Australia as early as 2016 – Australia’s entire car making industry and tens of thousands of jobs have been thrown into doubt by Holden’s decision to close down.

Almost 3,000 Holden workers are set to lose their jobs – over the next three to four years – as the auto-maker winds down its Australian manufacturing operations.

The decision has prompted Toyota – the only other car manufacturer left in Australia to warn – that Holden’s withdrawal – puts “unprecedented pressure” on the Japanese based manufacturers ability to build cars in the country too.

Mike Devereaux – Holden’s boss – cited a range of economic factors, however he wouldn’t be drawn on the possibility that the government’s move to rule out financial assistance had played any role, the announcement ends a 65 year history of building cars in Australia, and raises a truckload of questions about this nations future in manufacturing.

The decision has been met with regret by the premiers of South Australia and Victoria. General Motors decision means the loss of 2,900 immediate jobs – 1,600 from it’s South Australia plant 1,300 in Victoria – the question on everyone’s lips is, how many more will be affected, The Prime Minister called it a dark day ::::

General Motors Holden's Gone Baby Gone

“This is a dark day but there will be better days ahead,” Prime Minister Tony Abbott told Parliament “It is my determination to work with the people of Australia to ensure that the strengths of our society continue to be built on.”

The Prime Ministered assure parliament that in the coming days his Government would be announcing measures that would build on the strengths that we have, and which would offer hope for the people impacted.

“It will be a considered package of measures designed to rebuild confidence in the long-term economic future of those regions, in the long-term future of manufacturing in this country,” he said.

Holden general manager Mike Devereux delivered the news to workers in Adelaide’s Elizabeth plant.

“This is an incredibly difficult day for everybody at Holden, given our long and proud history of building cars in Australia,” he told a packed media conference. “But make no mistake, we have looked at every possible option to build our next generation cars here in this country to replace our existing models.”

Victorian Premier Denis Napthine described Holden’s decision as “terrible news” and is due to meet Mr Abbott in Canberra on Thursday. He says he will be asking the Government for a substantial assistance package to re-train workers at Holden.

South Australian Premier Jay Weatherill described the closure as a “body blow” to his state, “not just economically but socially”.

The Holden boss cited a range of economic factors, but would not speculate on whether the government’s move to rule out financial assistance had played any role.

“Australia’s automotive industry is up against a perfect storm of negative influences, including the sustained strength of the Aussie dollar against almost all major trading currencies, the relatively high cost of production and the relatively small scale of the local domestic market,” Mr Devereux said. “Building cars in this country is just not sustainable.”

General Motors Holden's Gone Baby Gone
Holden Closure Might Cripple the Australian Automotive Industry

Research released last month suggested that Holden’s closure would cost the South Australian economy $AU1.25 billion and 13,200 jobs. The Australian Manufacturing Workers Union – AMWU – says Toyota ise likely to follow suit, meaning the end of the Australian automotive industry.

If Toyota does withdraw from manufacturing cars in Australia, up to 50,000 jobs would be lost, with second and third-tier suppliers also forced to close their operations. In May this year Ford announced it would close its Australian operations by late 2016.

View in Google Docs

Car production in Australia

Car production in Australia

Year

Output

1950 58,000
1960 204,000
1970 475,000
1980 361,000
2000 347,122
2005 388,985
2006 326,960
2007 334,772
2008 324,118
2009 223,354
2010 239,443
2011 224,193

 Mr Devereux has been promoted to a position with General Motors in China and was meant to finish up in Australia this month. A General Motors spokesperson says the process to find Mr Devereux’s replacement to head Australia’s operations is taking time and he will now remain managing director well into the new year.

Independent Senator Nick Xenophon says the nation needs to rally behind the car industry.

“This is shocking news just before Christmas,” the South Australian senator said. “I’m still hoping against hope that General Motors will reconsider. If they don’t, as a nation we need to rally behind this industry to make sure it can survive, any job losses are minimised and we can look to the future without General Motors.”

Senator Xenophon says there will be political recriminations.

“I think a mistake has been made by this Government for not committing the money the former government did,” he said. “Right now we need to work together as a nation to save not just the precious jobs at Holden, but 50,000 jobs across the country relying on manufacturing.”

Holden revealed in April that it had received $2.17 billion in Federal Government assistance in the past 12 years.

The History of Holden

Look back on the history of the manufacturer, since its early beginnings more than 150 years ago. The history of Holden dates back to 1856, when James Alexander Holden started as a saddlery business in Adelaide, South Australia. The firm evolved over the years, progressing from repairing car upholstery to the full-scale production of vehicle body shells.

In 1924, the company became the exclusive supplier of American car manufacturer General Motors in Australia. Throughout the 1920s Holden also supplied tramcars for Melbourne.

In 1931, the two companies merged to become General Motors-Holden’s Limited (GM-H). In 1936, Holden opened a new HQ and assembly plant at Fishermans Bend in Port Melbourne.

During the war years, Holden’s car production was diverted to the construction of vehicle bodies, weapons, aircraft and engines. After the war, Holden returned to producing vehicle bodies for several car brands including Buick, Chevrolet and Vauxhall.

In 1948, the company finally achieved its long-term goal of manufacturing the first all-Australian motor vehicle. On November 29, Prime Minister Ben Chifley unveiled the first Holden 48-215, which became affectionately known as the “FX”. The FX, was a robust and economical family sedan, designed for the Australian environment. The price was set at $733 (including tax), which represented a staggering 94 weeks wages for the average worker at the time.

Despite this, the car was an immediate success and Holden couldn’t satisfy demand quickly enough. 18,000 people had signed up and paid their deposit without even having seen the vehicle.

During the 1950s, Holden dominated the Australian car market with steady production of the utility and sedan models. By 1958 sales accounted for over 40 per cent of total car sales in Australia.

The FJ Holden was introduced in 1953, with upgrades to engine power and a chrome face-lift. It went on to become an iconic Australian car. Holden also started exporting vehicles to New Zealand, starting with the utility.

In 1960, Holden introduced its third major new model, the FB, inspired by 1950s Chevrolets. The FB was the first model for which left hand export versions were produced. By the early 1960s, Holden was exporting cars to Africa, the Middle East, South-East Asia, the Pacific Islands, and the Caribbean. By 1962, Holden had sold a million vehicles. An additional million were sold over the next six years.

In 1964, Holden employee numbers peak at 23,914 across seven facilities in Queensland, NSW, Victoria and South Australia. Major competitors, including the Ford Falcon and Japanese cars, arrive in Australia, but Holden’s six- and eight-cylinder cars remain top sellers. In 1966, Holden became the first local manufacturer to fit seat belts on all models.

In 1975, Holden celebrates 25 years of continuous sales leadership. In 1978, the company introduces its most popular car to date, the Commodore. A $300 million Holden expansion program is announced in 1977, including a new engine plant for Fishermans Bend.

Holden faced some challenges in the 1980s, along with the entire automotive industry. The Falcon eclipsed sales of the Holden Commodore and began its six-year stint as the best selling Australian car. But despite slipping behind in sales, by the end of 1982 Holden had released three versions of the Commodore.

The New VL Commodore controversially used a Nissan engine in 1986. By the end of the decade, Holden had reclaimed its number one spot as Australia’s top car manufacturer.

In 1990 the last Australian boss of Holden, John Bagshaw, left the company in 1990.

In 1991, Japanese car-maker Toyota beats Holden and Ford to market leadership for the first time in Australia. The company’s Australian market share rises from 21 percent in 1991 to 28.2 percent in 1999.

In 2003, a new $400 million V6 engine plant is opened in Port Melbourne and Holden begins exporting to Korea, China and Mexico. The plant is GM’s single largest investment in Australia for more than 20 years.

Toyota overtakes Holden as top-selling brand, a position it has held ever since. Holden’s market share falls to 15.2 percent in 2006.

Large car sales peak at 203,524, accounting for 34.6 per cent of all new-vehicle sales. The total number of factory workers that year is 7,350.

After 15 years as the top selling vehicle, the Commodore was outsold by the Mazda3 from Japan. It was the first time an imported car has topped the local sales charts.

Holden continued to manufacture motor vehicles in Australia as a subsidiary of General Motors, as well as exporting vehicles and engines to other countries.

Its headquarters are still in Port Melbourne, with an engine manufacturing plant on-site and vehicle manufacturing operations in the northern Adelaide suburb of Elizabeth. Holden is represented by more than 300 dealerships nationwide.

Nearly 3,000 Holden workers are set to lose their jobs over the next four years as the iconic car maker winds down its Australian operations.

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The Future, Skills The Key

An academic who studied the closure of Adelaide’s Mitsubishi operations has warned the exit of Holden from Australia will be felt for generations.

Professor Andrew Beer, from the University of Adelaide, has urged governments to move quickly to ensure workers are given the opportunity to learn new skills before the plants close.

Holden today announced it would cease making cars in Australia in 2017, a move that has sparked fears of the end of automotive manufacturing in Australia.

Professor Beer co-authored a Flinders University study into the closure of the Lonsdale Mitsubishi plant in 2004. He said the closure had a devastating impact on the lives of many Mitsubishi workers and the southern Adelaide region, and says it is important for decision makers to keep that in mind when considering Holden workers’ futures.

“Often you hear relatively dry economics arguments around ‘well this is just a process of structural adjustment’, but in fact these are real people having their lives affected in a very real way,” he said.

Professor Beer said of those workers made redundant from the Lonsdale plant, a third never worked again.

“The outcomes for most workers were really quite challenging, so roughly a third of the workers moved into full time paid employment, a third of the workers moved into what we think of as casual or contract employment, and a third of the workers left the workforce entirely,” Professor Beer said. “So effectively you saw a loss of skills over the South Australian workforce, and also diminished earnings for those affected individuals.”

Professor Beer says workers with diverse skills will fare better but it is crucial that governments move quickly to capitalise on this. He says the Government should also move to help the industries associated with Holden to diversify their supply chains.

“If you look at workers made redundant from Mitsubishi in 2004, those who had formal qualifications were far more likely to find employment after one or two years than those who had very few qualifications,” Professor Beer said. “Taking action earlier rather that later is one of the key messages that come from international experience.”

Professor Beer said the Government should look to the 2005 closure of MG-Rover in the UK for lessons on how to manage the exit of manufacturers from the community.

“When they did see MG-Rover close, overnight in particularly spectacular circumstances, they were actually able to save more jobs in the region, and get more workers into full-time employment than would otherwise have been the case,” Professor Beer said. “A year after MG-Rover closed they had 90 per cent of the former employees in full-time employment.”

He said the MG-Rover experience proved that strengthening skills and helping suppliers diversify could help to lessen the impact of closures.

“They worked with the supply chain. They created other opportunities for firms working with MG-Rover to work with other industries, including Leyland and the defence industry,” Professor Beer said. “They also provided subsidies to encourage workers to commute to new places of work, so that they would relocate and find employment after a period of time, rather than sit within the region and not find work. They also provided incentives for firms to take up workers who’d been made redundant by the closure of MG-Rover, and guaranteed training to workers made redundant by the closure of MG-Rover.”

But Professor Beer said no matter what measures were taken to ease the transition, the impact on workers would be severe.

“We shouldn’t take the decision to allow a significant industry to disappear without really thinking about the consequences,” Professor Beer said. “Because a lot of those people won’t adjust, the economists say, ‘Oh yeah, it’s a process of industry adjustment’, but the reality is a lot of people adjust by leaving the workforce and remaining unemployed for the rest of their working lives. I think for a lot of the people that we were talking to in the earlier study, you didn’t worry about their future, you worried about the future of their kids and their grandkids – that’s how significant it is.”

Professor Beer says the areas impacted by the Mitsubishi closures were still feeling the impact almost a decade later.

“If you look at the southern region of Adelaide, which saw first the loss of the Mitsubishi plant at Lonsdale, and then the Mitsubishi manufacturing plant at Tonsley Park in 2008, what you saw is a significant economic shock. You saw a rise in unemployment rates and youth unemployment rates that really hasn’t been overcome since 2008,” Professor Beer.

Toyota’s Next Step

Toyota, which employs 4,200 people in Australia, has flagged the difficulties Holden’s departure will cause.

“This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia,” Toyota said in a statement. “We will now work with our suppliers, key stakeholders and the Government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia.”

Car parts manufacturers are also likely to fall victim to the Holden shutdown with its peak representative body, the Federation of Automotive Product Manufacturers, warning that up to 40,000 jobs are at stake. President Jim Griffin says MPs need to understand the “downstream” impact of the demise of the big car manufacturers.

“If you cut the trunk down, the branches come down with it,” Mr Griffin said. “This is about small companies all around Australia that employ 20, 30, 40, 50 people that are all going to disappear in two or three years time if this industry does not continue.”

Senator Nick Xenophon says the closure will trigger an “economic tsunami”

The Federal Government says it will consult Holden, unions and all other stakeholders to help workers find new jobs.

“We will do what we can with General Motors to achieve the very best possible outcomes for these people,” Deputy Prime Minister Warren Truss told Parliament. “This is a difficult day for Australians, a difficult day particularly for the Holden employees, and we will stand with them to work constructively to make sure that they can transition into good jobs in other parts of our industry.”

The demise of Holden has intensified the political debate about taxpayer support for the manufacturing industry. General Motors says “action or inaction” on the part of the Australian Government is not to blame. Holden will retain its sales unit, a parts distribution centre and a design studio in Australia.

Prime Minister Tony Abbott says the Federal Government is holding talks with Toyota aimed at keeping the car maker in Australia, amid union claims the company is seeking to use Holden’s closure to reduce pay and conditions for thousands of workers.

Toyota has warned that Holden’s decision to stop manufacturing by 2017 puts “unprecedented pressure” on its ability to continue building cars in Australia. Mr Abbott has revealed that he spoke to Toyota’s Australian boss Max Yasuda last night. Many analysts are questioning the power of local heads, many believing the decisions are coming from head offices in Detroit and Tokyo.

“Obviously the Government will be talking to Toyota,” Mr Abbott said this morning. “We want Toyota to continue. They are in a slightly different position to Holden,” he added. “Much more of their local production has been for export. Toyota locally have been much more integrated into the global operations of the company, it seems, than with Holden.”

The Australian Council of Trade Unions – ACTU – has advised Toyota workers not to accept poorer work conditions. ACTU secretary Dave Oliver says Toyota is putting unfair pressure on workers.

“The problem with Toyota is that they’ve approached their workers to reduce wages and conditions without any plan of future investment,” Mr Oliver said. “It’s not the wages and conditions that are going to decide the future of Toyota, it’s going to be the knock-on effect of what happens in the auto components sector and what kind of support the Government is going to do.”

Victorian Premier Denis Napthine says it is vital Toyota does not close its Altona factory.

“It is important in terms of jobs, but its also vital for manufacturing capacity, for skills capacity, for the future of these areas in our economy in Victoria,” Mr Napthine said. “I’ll seize that opportunity to talk to Mr Abbott about the future of Toyota and how the Federal Government can work with the State Government and Toyota and the entire automotive supply chain industry to secure the future of Toyota.”

Toyota worker Phil Hird, who has been employed with the carmaker for 25 years, says he is not confident that his job is safe and that he will be looking for work elsewhere.

“If it’s got to happen, it’s got to happen. [I’m] just seeing what’s out there now and finding out what’s going on,” Mr Hird said. “Very shocked and gutted, I’ve been here 25 years and the feeling is very empty. It’s been a very very bad 24 hours.”

Pointy End of Protectionism

Rob Burgess from Business Spectator has an interesting take on GM’s exit, “The significance of this shutdown for the workers involved, for the last manufacturer Toyota, and for the SMEs making up the 50,000-strong parts industry, is huge – though it is largely irrelevant to the supply of quality cars to Australian drivers, broken hearts of Holden fans notwithstanding.” Mr Burgess said in his regular column. “However, as a turning point in Australian history it should not be underestimated. The vision of the Abbott government is clearer than ever. Dead wood will be cut out. Uncompetitive work practices must end. Capital must flow to sectors in which we have a genuine global competitive advantage, not just a comparative advantage.”

There are two glaring observations to be made about this turning point.

First it is a bold gamble. The reasserted dominance of the ‘drys’ within the Coalition, if they are consistent and able to maintain party-room power, will bring a period of structural change in which Australian lives are painfully reshaped forever – but which if successful will leave the country able to compete globally in the long term. Like the Keating reforms of the early 1990s, a lot of eggs will be cracked to make a new omelette.

Secondly, the Holden decision is utterly at odds with the Coalition’s decision to block the takeover of GrainCorp. There, a natural area of global competitiveness – agribusiness – was protected against the free flow of capital hunting for profits. That’s what capital is supposed to do.

GrainCorp suitor Archer Daniels Midland wanted to invest money in an undercapitalised sector, and one in which rigid competition provisions (port access) are already in place. No need to subsidise that business. Only block it for purely political reasons.

The demise of Holden as a manufacturer will linger in the Australian psyche, whether rationally so or not. But the longer lasting effect will be if it is the first of many protected species to be allowed to die off.

If it is, the Coalition damn well better allow the industries that can flourish on their own to attract capital. Lots of capital. And that won’t happen if the short-sighted nationalism and protectionism of the GrainCorp decision is repeated.

At the same time as shutting off Holden’s fuel supply, the Coalition has pressed the start button on something big. Steering it will be a mammoth task.

Even if Holden Had Stayed, Employment Outlook Was Bleak For Manufacturing

Even if Holden had stayed in Australia, the car union sees a future for robots rather than people. The AMWU says governments need to start preparing a plan-B for manufacturing in Australia.

At the request of unions, and with Holden’s agreement, manufacturing expert Goran Roos has been drawing up contingency plans. Professor Roos’ plan operates on an assumption that, at best, the car maker would have only continued building cars at Elizabeth in northern Adelaide for the next decade.

A former automotive manufacturing worker has spoken about the anger and uncertainty facing current Holden employees as speculation runs rife over the future of the company in Australia. Mike Etherington, who took the last round of Holden redundancies in July, says friends in the industry are in a state of panic over whether or not their jobs are safe.

“I’ve got mates who still work at Holden and they’re all panicking,” Mr Etherington said. “It’s coming up to Christmas and they’re thinking – is there going to be an announcement? What do I look to do in the future?”

He says the constant focus on the auto industry is having a huge impact on the health of workers.

“One of my mates I spoke to last night, he’s just hoping the axe will drop, he made the comment that he just feels like the chicken on the block, and he’s just hoping to be put out of his misery – he said: ‘I’m over it I really don’t care any more’.”

Mr Etherington says the spectre of closure is a constant presence that intrudes on every aspect of the workers’ lives.

“Even when you’re outside of work, you’re not getting any release or any respite, because it doesn’t matter where you go someone’s already prejudged you,” Mr Etherington said. “I remember somebody showing me a photo of a village in France, underneath this massive overhang and it looks like this overhang is about to collapse and apparently the village has been there for hundreds of years, so people after a while have gone ‘when it happens it happens’, I’ll deal with it then. And I think in some respects that’s the same thing in the vehicle industry – you expect it to come, you’re just not sure when.”

Nobody Questions $4.5 Billion in Financial Assistance to the Mining Industry

Mr Etherington says the media contributes to this focus, unfairly targeting subsidies on the auto industry, while ignoring those that support mining and agriculture, and that translates to how Holden workers are viewed by the public.

“Nobody ever questions $4.5 billion for the mining industry, but the second any form of subsidy is talked about for the car industry it becomes a handout,” Mr Etherington said.  said. “It’s the rank unfairness of the whole thing, the vehicle industry is singled out, I mean in the case of the mining industry they’re making big profits, why is there is a fuel excise?”

And it was this constant pressure that led to him making the decision to leave the company after a decade.

“And after a while you’ve just had enough, you would go down to the shops you’d be wearing your Holden uniform, someone would have a go at you, and I thought I’ve done 10 years of this, I’ve had enough,” Mr Etherington said. “It wears you down mentally … I would be on afternoon shift, as soon as smoko would come if there’d been some sort of media announcement and everybody’s phone would be going off – it would be partners, friends, mates ‘oh this was just on the news, what going on’, and you’d go ‘I don’t know, I’ve just been at work building cars’.”

Despite leaving Holden to set up a baby supplies business with his wife, Mr Etherington remains a staunch advocate of the car industry in Australia, and says the wider public needs to understand all car manufacturing is subsidised by governments globally.

“Everyone who works in the vehicles industry or knows some who works in the industry all understand that car manufacturing is subsidised all over the world, but the second you step out of the community you get ‘oh yeah, Holden will pay all that back’,” he said. And he says across Adelaide businesses are already feeling the impact of the uncertainty.

“There are a lot of small businesses that are seeing the downturn from the uncertainty over Holden’s future,” Mr Etherington said.  said. “I went to a meeting of small and medium businesses owners a couple of nights ago and we’re scattered across Adelaide …. and we were all saying the same thing – turnovers are down, there is no real Christmas boom, it all seems to have suddenly dropped in a hole in the last two weeks.”

Cars to Cornflakes

Making STUFF in Australia is it seems a costly affair, cereal maker Kellogg’s Australia has announced the closure of its Charmhaven snack plant on the NSW Central Coast. On Tuesday morning employees were told of the closure, expected to be complete by the end of next year.

Kellogg’s estimates the closure will result in the loss of around 100 jobs. In a statement, managing director Andrew Towle said it was a difficult decision, and acknowledged the impact it would have on those losing their jobs.

The mayor of Wyong has criticised Kellogg’s over the timing of the decision. He said it was poorly done, coming just weeks before Christmas.

“They could have shown a bit more sympathy, I think,” Doug Eaton said. “A month or two probably in the scheme of things doesn’t make any difference.”

The plant was opened in 2000, and expanded significantly four years later. Kellogg’s announced last month it would be cutting seven per cent of its global workforce as part of a major restructuring program. Kellogg’s has also this week announced the closure of a Canadian plant which will result in the loss of 550 jobs.

Bleak Times For Adelaide

Manufacturing at Adelaide’s Elizabeth plant will end in 2017, however Holden boss Mike Devereux says he expects the factory to remain busy up-until the end.

Welfare agencies don’t share Mr Devereux’s optimism, saying the Holden factory closure in northern Adelaide will bring social disaster.

“We will do this (closure) in as orderly a fashion as we can and and we will be very aggressive in marketing our cars so we can continue to produce them in our Elizabeth facility as at high a rate of production as possible right until the last car rolls off the assembly line,” Mr Devereux said.

The CEO of welfare agency Anglicare, Peter Sandeman, says the knock-on effect of Holden’s closure will be immense for the families of northern Adelaide.

“We believe families are going to be under great pressures, there’ll be family breakdowns, more domestic violence, more homelessness, more truancy, drug abuse and unfortunately people will turn to gambling and things like that to take their minds off their situation,” Mr Sandeman said.

He is urging people to think now about what they can do to help avert future hardship, whether they be workers or those whose businesses rely on the people of the northern suburbs.

“If they’ve got any debt they should be paying that down immediately,” Mr Sandeman said. “If they’re in any doubt they should see a financial counsellor, now is the time to act, now is the time to plan. The silver lining in all this is we now have certainty into what’s going to happen.”

Everyone knows someone who will be affected, and there’s only one topic on the minds of people in the northern suburbs since Wednesday’s announcement by Holden. Greg McCarthy worked at Holden for 47 years until he took a redundancy package in July.

He thinks the northern region faces bleak times.

“For the young ones well what future do they have the workforce in here is highly skilled and highly trained?” Mr McCarthy said. “A lot of industries in here depend on it. You’ve got a lot of your contractors up here, you’ve got a lot of your supply chain, everything else and I feel sorry for all the component people.”

South Australia’s jobless rate for November was 6.8 per cent, a full 1 percent above the national figure. Northern Adelaide has one of the highest unemployment rates in the nation and pockets of severe disadvantage.

 Unions Call For More Openness

The ACTU’s Dave Oliver said that it was now more important than ever that the Government be open with workers about their plans as many questions were being raised about their ability and commitment to protect and create jobs in key areas.

“If Mr Abbott wants to be seen as a builder and not a wrecker then he must explain how he will protect jobs and most importantly create jobs in the industries that are currently being hurt. For example, will they move quickly to announce the manufacturing of submarines in Adelaide which will help to offset hardship.” Mr Oliver said. “The Government is nailing the coffin on the Clean Energy Finance Corporation, which encourages private sector investment in renewable energy and will create thousands of jobs.”

However, Rob Burgess says there is no ‘blame game’ as such to be had in the demise of Holden.” It’s now clear that a deliberate choice was made by the Abbott government this week to end its relationship with General Motors and to allow its local subsidiary Holden to become a sales company, with the direct loss of around 3,000 manufacturing jobs.”

Most media  coverage of this week’s events featured a suspenseful “will GM or won’t they?” theme, in retrospect there is little mystery to the auto giant’s decision, the exit has been forewarned for several years, the only real question was ‘when’.

Burgess says “GM was playing a waiting game”, and Australia’s Treasurer, Joe Hockey was the man sent into parliament to say, “don’t bother waiting any more”. Although the Coalition took cuts to auto subsidies to the last election, in GM’s calculations there was always the hope that the government would buckle to pressure.

General Motors was looking for the government to chip in $AU2,000 – of the extra $3,750 it costs  – for each Holden Cruz it makes in Australia. On top of the existing package of subsidies, the extra $150 million a year GM was asking for was chump change. But the debate raging in the Government’s party room was a matter of principle. Why make things in Australia that we don’t want to buy ourselves, and have no hope of exporting?

“The economic ‘drys’ won the day, and sent the message to GM in the clearest possible terms,” Mr Burgess said. 

Union boss Dave Oliver believes however that Australian business is government is missing the point.

“Around the world clean energy is one of the biggest areas of jobs growth but Australia will now struggle to benefit from these new industries or home-grow expertise and clean energy innovation.” Mr Oliver said. “Australia is bucking global trends both where Governments protect their car manufacturing industries and in clean energy innovation so we have to ask what is the plan?”

Mr Oliver said it was obvious that the Government had yet to grasp the importance of protecting our industries and people’s livelihoods.

“Leaving things to the free market while committing to slashing jobs will take Australia down a path we don’t want to go,” he said. “Pre-election, Tony Abbott was only too happy to don a hard-hat and high-vis-vest, standing alongside some of the same workers who are now wondering what their future will hold.”

Component Suppliers Hit Hard

The shock of Holden’s closure plan is sinking in on the factory floors of components suppliers, where there is now urgency to diversify.

“It’ll be devastation for South Australia for sure, Victoria you know I don’t think will be any easier,” Darrin Spinks, General Manager of parts maker Precision Components, which is heavily reliant on Holden for work. “Seventy per cent of our business is with GM Holden and the remainder is with Toyota and Ford and after-market components. A lot of these industry suppliers have got equipment that is dedicated to automotive and dedicated to higher volume.”

Precision has a factory at Beverley in Adelaide’s north-west suburbs and has been operating for more than a decade. Mr Spinks says it has invested $18 million over recent times on infrastructure based on new global car platforms such as the Cruze, which is made at the Holden plant at Elizabeth in northern Adelaide.

He says it has also entered joint ventures to keep the firm competitive and its workforce employed as Holden’s market fortunes have fluctuated.

“Our employees have sacrificed up and above, and the road’s been up and down all the way. We’ve had to take leave, work four days out of five, you know when it gets busy we have to work overtime, there’s extra requirements, we come in on Saturday and Sunday, work night, we do all sorts of things,” he said.

Parts Supplier Worried For Workers

Mr Spinks says, despite speculation over a long period about Holden’s future in Australia, the closure news was still a shock when it came.

“It’s hard for our employees to swallow,” he said, expressing fears for blue collar workers as the components industry faced a now-urgent need to change,” Mr Spinks said. “What happens to the blue collar worker? We’ve got our Christmas dinner coming up and what do I tell the families?”

He however expressed hope, saying “our employees are resilient”.

Precision Components will be putting its own foot on the accelerator now that Holden’s grim news has hit, but Mr Spinks concedes the bleak outlook preys on workers’ minds.

“They’re worried you know. I think we’ve got four years ahead of us which gives us time to transition and it’s going to be a huge task to transition all those skills we have developed over here,” he said. “We’ve already started some diversification but that needs to be accelerated.”

Mr Spinks says it is costly for firms such as his to change direction and find new markets.

“Every components maker is going to be looking to diversify and it’s been a real focus area over the last 12 months,” he said. “I feel for the other suppliers, some aren’t going to be able to diversify as easy as what Precision can.”

He thinks some are likely to pack up and leave because they have been operating in Australia solely to supply Holden. As for how to survive that uncertain future? “You’ve got to be specialised, you’ve got to be unique and if it’s got anything to do with a high content of labour then it’s going to be very hard to compete against the imports,” he said.

Bigger Picture

General Motors is focused, seriously focused. It’s on a bender to reinvent itself, become a leaner more competitive business. As the company announced it’s withdrawal from Australia, it also pulled out it’s 7 percent stake in French auto-giant PSA Peugeot, and intends to be rid of it’s entire holding in the company.

“Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed,” GM Vice Chairman Steve Girsky said in a press release. “The alliance remains strong with our focus on joint vehicle programs, cross manufacturing, purchasing, and logistics. We’re making good progress while remaining open to new opportunities.”

And not for nothing, General Motors has seen it’s share price rise 40 percent year to date, it’s sales are looking solid, some argue it’s helping prop up the entire US retail market.

Ditching it’s Australian carmaker is a small part of a huge divestment program the company has underway.

General Motors also announced it had completed the sale of its 8.5percent stake in Ally Financial, a move is valued at $AU1 billion. The company also announced it would pull its Chevrolet brand almost entirely out of Europe by the end of 2016, gaining the company another of billion in savings.

The company has high – and immediate – ambitions to shore up its bottom line by the end of this financial year, it aims to become the leanest manufacturer it can be. Great news for GM investors and possibly the right direction for the car market allround.

Commodore Won’t Make 40

October 25, 2013 marked the 35th anniversary of the Holden Commodore. First introduced in 1978, the VB Commodore marked a new era for Holden as hunted down that elusive vehicle that might carry the company into the 21st century.

General Motors not only attempted to drag Australian drivers into a new era, it put in a solid effort at driving manufacturing toward a more economically viable process.

Over the years, Commodore introduced advances in safety technology such as driver, passenger, side impact airbags, computer optimised restraint systems, ABS brakes, Electronic Stability Program as standard fitment were all “firsts” for an Australian-manufactured car, it’s a little ironic that Commodore might just be the last car that Australia makes, a sad day is on the horizon…

UPDATE! PM Says No More Money for Toyota

Prime Minister Tony Abbott has ruled out giving Toyota extra government assistance to remain in Australia. Toyota warned this week that Holden’s decision to close its operations in Australia in 2017 would place “unprecedented pressure” on its ability to continue.

But Mr Abbott has told Fairfax newspapers that providing additional money is “not the right way to go”. Mr Abbott believes Toyota will stay put and the Government is working with the company to secure its future.

Australia’s motor industry envoy, former Victorian premier Steve Bracks, has urged Mr Abbott to travel to Japan to convince the company’s executives to commit to Australia. There are concerns the Japanese company will shut its Australian plants once General Motors ceases production for Holden in 2017.

Mr Bracks said the federal government should make keeping Toyota in Australia its number one policy objective.

“I’d urge the Prime Minister with his industry minister to go straight over to Japan almost tomorrow to take a delegation of the components parts companies and sit down with Toyota executives as part of the immediate action to try and see what we need to keep the company in Australia.” Mr Bracks said.

Mr Bracks also says Holden’s decision to stop making cars in Australia was avoidable.

General Motors’ announcement came as the Productivity Commission was reviewing the scale of government financial support for the industry.

Mr Bracks says the review had led to uncertainty and may have played a crucial role in the decision.

“And I know from my experience in dealing in Detroit nothing replaces representation from the Head of State to know what the certain future in that country will be and what the conditions will be.” he said. “And they were the signs they weren’t getting. And it was probably enough to tip the scale and say, well, if they don’t want us we should probably go.”

Mr Abbott met with Toyota’s Australian boss Max Yasuda last week, saying that Toyota’s local operation differed from that of Holden or Ford in that it was not solely focused on the domestic market.

The Federal Government announced it would be providing targeted financial assistance to communities affected by car industry job losses.

Following the Council of Australian Governments – COAG – meeting, Mr Abbott said: “We will make an announcement early next week that I think will help to restore confidence in the areas most impacted by the impending departure of Ford and Holden.”

The mid-year budget update is also due early next week but it is not clear if those figures will be included. Meanwhile, the Federal Court on Thursday ruled Toyota cannot go ahead with a vote on reduced working conditions by staff at its Altona workshop in Victoria.

@m_dangerfield

RELATED! Honda RC-E First Electric Sports Bike

Honda RC-E

At long last, the world’s largest and arguably most influential motorcycle manufacturer is getting in on the electric motorcycles show. Honda has announced it will be showing an electric supersports motobike concept at the Tokyo Motor Show next month. Fresh on the heels of the , Honda has an electric concept of its own: the Honda RC-E.

Styling draws heavily on the best period of the firm’s hallowed racing past, its lines uninterrupted by the LED projector headlight mounted in the nose intake. If this is a test of public interest in an electric Honda sportsbike, they’re pushing ALL the right buttons :: Read the full article »»»»

RELATED! Motorings NEXT Big Thing?

Elio

Three wheel motoring has been around for a bunch of time, from the extreme Davis D-2 Divan, to the pedestrian Reliant Robin. The most successful incarnation to date has been in the guise of  scooters –like Piaggio’s MP3, and Peugeot’s clever HYbrid3 – agile, quick and just a little sexy, in an offbeat kinda way. Indeed, the very first motor-car was a 3 wheeler, the 1860s Benz Patent Motorwagen, still history isn’t ever a great reason to repeat something, unless of course you’ve come-up with something as nifty as this! PS: I want mine in black please :: Read the full article »»»»

RELATED! Have You Meat Hiriko?

Have You Met Hiriko CityCarThose crazy Europeans love green! seriously, they’re into it . . . while the rest of the galaxy ponders the thought of green, the Europeans are splashing out. The European Commission’s President, José Manuel Durao Barroso, unvieled the ubercool electric vehicle – HIRIKO – in late January. The superneat four-wheel traction and direction, haptic steering wheel and folds up when parking, electric micro-car is according to President José Barroso “… an answer to the crisis”.

Unlike their North American counterparts, European auto-makers have long been associated with smart, small, simple runabouts. In urban centers with narrow winding lanes, small has always made perfect sense. Most Europeans rarely drive the vast distances where a car the size of Texas comes into it’s own.

A consortium of seven companies from Spain’s Basque country have teamed up with the Massachusetts Institute of Technology – MIT – Media Lab, and have taken small, smart and  simple to extremes.

The prototype of this electric wiz was unveiled on January 24th by José Manuel Barroso, the president of the European Commssion, who climbed into the car, gave a thumbs-up, and called it a “systematic solution to major societal challenges”. The two-door Hiriko, whose name derives from the Basque word for “city” or “urban”, was designed by MIT engineers, but built by Basques. Starting next year, a trial manufacturing run is set to begin at Vitoria Gasteiz, outside Bilbao :: Read the full article »»»»

General Motors Holden Gone Baby Gone

source: gm/mr
source: businessspectator
source: oica
source: amwu
source: aph
source: abc
source: actu
image source: abc
image source: abc
image source: gm
video source: youtube


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