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General Motors Holden Sheds More Than 10 Percent of it’s Workforce

Posted: April 8th, 2013 | Author: | Filed under: Auto News | Tags: , , , , , , , , | Comments Off on General Motors Holden Sheds More Than 10 Percent of it’s Workforce

General Morors Australia Cuts 500 JobsGeneral Motors Holden – the Australian subsidiary of General Motors – has shaken the ever shrinking Australian Manufacturing Sector announcing it intends to lay off another 500 workers in response to falling demand and the high Australian dollar. The company says it needs to cut production from 400 to 335 cars a day to meet falling demand, with cheaper imports drawing customers away from the auto-maker’s locally made Cruze and Commodore models.

Staff were told this afternoon that production workers in South Australia and vehicle development employees in Victoria would be the target of the job cuts. Holden’s managing director, Mike Devereux, told a media briefing that 400 of the redundancies would be from its factories in Adelaide, with another 100 in Victoria. Mr Devereux said the redundancies would be voluntary and were a last resort after trialling non-production days to cut output, and increased advertising, lower pricing and new models to boost sales.

Last Month, General Motors Holden revealed that it had received $AU2.17 billion in Australian Government assistance over the past 12 years, 50 per cent more government assistance than previous estimates. many are now asking if local auto manufacture is a viable notion in such a sparcely populated nation ::::

In November last year the company announced  it was shedding 170 Adelaide workers because of dwindling sales. The Australian based auto-maker offered voluntary redundancies in an effort to reduces production to 400 vehicles per day. Holden said it in a statement it would work with its employees and their representatives to help them make informed decisions. It said it was confident the full cuts could be achieved by the voluntary separations.

These latest cuts to the auto-makers workforce have many asking exactly what the $2 Billion dollars in government assistance has paid for.  Holden has consistently claimed that the high Australian dollar was predominantly to blame, Mr Devearaux said many of the reasons for the layoffs where due to factors beyond the company’s control. Unfortunately none of the government’s financial assistance packages included minimum employment levels.

“Many of the issues driving today’s announcement are things that are beyond the control of the people that work here, they’re beyond the control of Holden’s leadership or, even more broadly, manufacturing in this country,” Mr Devereux said. “The Australian automotive industry is heavily trade exposed, that is no secret – the appreciation of the Australian currency means that making things in this country is 60 per cent more expensive than it was 10 years ago.”

Mr Devereux lays the blame for much of the Australian dollar’s appreciation squarely at the feet of nations, such as the US and Japan, that have been deliberately devaluing their currencies.

“Importantly, the currency plays being made by other countries mean that were are not competing on a level playing field, not even in our own backyard,” Mr Devereux said. “Not only are we challenged to compete locally, but high volume export markets are largely unattainable due to the value of the Aussie dollar and the measures that other countries take to fiercely protect their own automotive industry.”

When quizzed about the future survival of Holden’s Australian production and design operations, Mr Devereux said the company was committed to staying in Australia but could offer no guarantees.

“I am not a fortune teller. I cannot predict the future. I do focus on building world-class products… but there are no guarantees in life or, frankly, in the automotive business,” Mr Devereux said.

He says staff will be offered financial counselling and out-placing services.

“This is a voluntary separation program, and I have to tell you it is not a decision we have taken lightly,” he said.

Holden cut its workforce by about 170 late last year citing a strong Australian dollar and slow car sales. The carmaker was last year granted a $275 million State and Federal government assistance package after concerns it would withdraw its Australian manufacturing bases.

General Motors Holden employs more than 4,000 workers in Australia.

Both slowdowns in production and layoffs have had devastating effects on related industries, auto parts manufacturers have had little stability over the last half decade.  At the same time General Motors Holden shed 170 job in 2012, parts makers Autodom shed 400 jobs.

Autodom CEO Calvin Stead said times were tough for the industry, Mr Stead said the car industry in Australia had more than halved its production in less than four years.

“Unfortunately we have no choice but to make this very difficult decision whilst we work together with all stakeholders in the hope that a solution can be found,” Mr Stead said of the 2012 layoffs.

The harsher reality of industries such as auto making is that developed economies can’t really live without them, even on the small scale we have in Australia. Tax payers in this country contribute $18 a per person – per year, via government assistance – for this we get much more than simply employment.

By comparison, the United States and Germany, who both have similar government assistance plans, manage to entice their citizens to contribute $90 per person (a year) WHY, because as an industry, auto-manufacture has a huge skill, and supply  flow-on to the rest of industry.

Flow-on Effect

Unions have slammed Holden in the wake of yesterday’s announcement to slash 500 jobs, labelling the carmaker a ‘shocking corporate citizen.’ Holden will cut production of its Cruze vehicle at its Elizabeth plant in South Australia with the loss of 400 jobs. A further 100 jobs will be lost in Victoria and the carmaker has not ruled out forced redundancies if workers do not volunteer for the packages by August. The carmaker says a drop in demand for locally built cars and high Australian dollar have prompted its decision.

Holden’s Elizabeth production line in Adelaide’s northern suburbs employs about 2000 workers in one of the most economically disadvantaged areas in the state.

Census socio-economic data released two weeks ago listed the suburb as the least well-off in Adelaide in terms of income and housing. The job losses have also cast doubt on the plant’s long-term future.

SA Unions Secretary Janet Giles called the company a ‘shocking corporate citizen’, accusing it of breaching an agreement with the State Government to maintain its Australian operations for at least ten years.

“Within six months they have reneged on that agreement so we don’t think that’s good corporate citizen behaviour,” Ms Giles said. “More than ever we need to focus on creating a different manufacturing base so we’re not so heavily reliant on the car industry. We need to invest in high-end manufacturing and clever manufacturing for the future, otherwise we’ll be held to ransom by companies like Holden.”

A workplace innovation researcher says more than a thousand jobs could be lost in Adelaide as a result of the company reducing its workforce. John Spoehr from the University of Adelaide says it will result in near-immediate losses in the components sector.

“The flow on impacts of that will probably be around 800 to 1000 more jobs,” Mr Spoehr said. “The components suppliers will be the most affected in the short-term but once jobs are lost in the components suppliers that tends to flow throughout the rest of the economy. The providers to those components suppliers and GMH as a whole will lose out over the next few years so the net impact might be anywhere up to 1200, 1500 jobs.”

He says Holden contributes to $1 billion a year to the state economy. “So the losses associated with a closure of Holden would be devastating for South Australia but particularly for northern Adelaide where unemployment is twice the state average.”

John Camillo from the Manufacturing Workers’ Union says it is not yet clear if the company will be able to attract enough workers to volunteer for redundancy packages. He says the union has already informed the company it is opposed to forced redundancies and is preparing to meet with Holden again on Friday.

“We’re going to sit down with the company. By then we’ll get feedback from our members with regards to how many people do want to take the voluntary separation,” Mr Camillo said. “I’m aware of some people who have been around for many, many years at Holden who are prepared to take the voluntary separation but at this stage we don’t know the numbers. We’ve said to Holden quite clearly we will not accept any forced redundancies. We will work with Holden as we have in the past but we will not accept any forced redundancies.”

Mr Camillo says despite multi-million-dollar assistance packages, Australia subsidises its car industry far less than other nations.

“Look at Sweden. The Governments over there spend roughly about $360 per person per year in the automotive industry. You come to Australia it’s only roughly $17 per worker per year in regards to subsidies by the Government,” Mr Camillo said. “You look at the United States of America, you’re looking at $300 per worker per year.

“Australia are the only ones who want to indicate to the car makers they should stand on their own two feet but the situation is there are many other countries around the world that want to build car industries and are prepared to build infrastructure.”

Playford Mayor Glenn Docherty says the job losses will hurt his already disadvantaged region.

“If there is not a long-term future for the plant, the Government needs to be investing significantly in new and emerging industries and also supporting other businesses, particularly in the northern suburbs,” he said “There are long, sustainable employment opportunities here in the north. Playford is one of the fastest growing communities in South Australia.”

Premier Jay Weatherill says he was only informed of the carmakers’ decision hours before it was announced. State Opposition Leader Steven Marshall wants the Government to release details of the financial assistance package it struck with Holden.

“We’ve trying to find out details of precisely what is in this contract that the Government negotiated a year ago with the Holden company,” Mr Weatherill said. “What is it that they actually agreed to when they committed to handing over $275 million to the company?”

Calls For an End to Government Handouts

There are calls for governments to stop giving money to car manufacturer Holden after it axed 500 jobs in South Australia and Victoria. Simon Cowan from the Centre of Independent Studies says thinning 500 more workers from Holden just means taxpayers are paying thousands of dollars more per head for those workers left.

“If you take about 4,000 employees, which is where they are now roughly, that’s about $45,000 an employee,” Mr Cowan said. “After the loss of these 400 to 500 staff that then rises to more than $50,000 of subsidy per employee. It’s quite a large sum of money.”

Mr Cowan says that kind of funding assistance is unsustainable.

“We’re talking about a volatile market. We’re looking at a trend where all the indicators are saying that the market in Australia is declining despite the level of subsidy,” Mr Cowan said. “If I was a worker in that industry I’d be very concerned, because from my perspective it looks like the entire industry is falling over.”

Last year’s funding deal between Holden and the Victorian, South Australian and federal governments came amid fears the company would close its Australian manufacturing bases. In return for the assistance, Holden committed to investing $1 billion to make two new car models at its Adelaide plant, with a guarantee the carmaker would maintain its Australian operations for at least the next decade.

The deal also guaranteed minimum employment levels.

South Australian Premier Jay Weatherill told the ABC’s 7.30 that today’s cutbacks mean Holden has breached its agreement. Mr Weatherill says his Government could now choose not to provide Holden with the funding.

“We need to reflect on what we’ve heard today. We want Holden to proceed with its $1 billion investment. This was to secure the period between 2016 and 2022. That remains very important,” Mr Weatherill said. “This is an incredibly important employer in the north of South Australia so we now have to reflect on what this means for the whole agreement.”

Mr Weatherill says the South Australian Government has been let down by Holden.

“I think we deserve better. There are a range of important undertakings in that agreement that I want to ensure are delivered to South Australians and now we need to have some serious discussions with the company,” Mr Weatherill said.

But Holden’s chairman Mike Devereux denies they have broken the deal.

“We don’t get any money [from the governments] until we start to bring that $1 billion to the table. And that doesn’t begin to happen until the second half of this decade. That is still our plan,” Mr Devereux said.

Australia’s automotive industry

  • The Government’s New Car Plan involves $3.4 billion in support for the industry
  • The Government also provides grants to Ford and Holden to encourage innovation
  • More than 1 million new vehicles are sold annually
  • Toyota has the lion’s share of the market, selling 18 per cent of new vehicles hitting the road.
  • Next is Holden with 12.5 per cent, with Ford on 9 per cent.
  • In the passenger car market, imports outsell locally-produced vehicles by nearly 4 to 1.
  • Australia’s vehicle and components exports are worth $3.25 billion annually.
  • The Middle East (44 per cent) is Australia’s biggest automotive export market.

All figures as of 2011. Read more here.

Meanwhile, Australian Manufacturing Workers Union president Andrew Dettmer says extra Government support is warranted.

“There are no viable vehicle industries in any country that are not subject to significant levels of support by government, and on world standard the Australian vehicle industry is supported much, much less than for instance the United States, much less than Japan, and much less than the European industry,” he said.

The acting Minister for Climate Change, Industry and Innovation, Gary Gray, says the Federal Government remains committed to the industry.

“We will work with the industry to ensure it is sustainable in a period where the Australian dollar is very strong, for example trading at parity or higher with the US dollar,” he said.

Mr Gray has defended multi-million-dollar assistance packages given to the company.

“That’s where we believe the economic opportunities and jobs will be,” he said.

The Victorian Government says it has been assured Holden will continue to manufacture cars in Australia until at least 2022. Holden hopes enough people will volunteer for redundancies or retire by the August 1 to avoid the need for forced job losses.

 

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