AUSTRALIA: Government demands GM Holden clarify plans

By Graeme Roberts | 10 December 2013

General Motors said on Tuesday it had not decided to stop making cars in Australia after 2016, provoking an angry reaction from the federal government which demanded that it clarify its plans.

Speaking before a government appointed panel looking into the future of Australia's beleaguered car industry, Mike Devereux, head of GM's local Holden unit, also said GM would need more assistance from the Australian government to survive long term, Reuters reported.

"We need a public-private partnership over the long term to be relatively competitive," he said in closely watched comments amid debate that GM could follow other automakers in pulling the plug on Australian manufacturing.

The auto industry in Australia has depended on government support for years due to soaring costs, a strong Australian dollar, cheap imports and weak exports.

Mitsubishi Motors exited in 2008 and Ford announced in May it would close its Australian car and engine plants in October 2016.

It has been widely speculated Toyota would follow when the current Camry life cycle ends in 2017 as, by then, the parts supply chain likely would be failing.

Toyota's exit would cause a collapse of the entire domestic industry, supporting more than 40,000 workers and 150 supplier companies.

Acting prime minister Warren Truss criticised the lack of commitment from Holden.

"Your comments merely confirmed that a decision to end manufacturing in Australia remains a live option and has not been ruled out," he said in a letter to Devereux that was released to the media.

"It is the Australian government's view that GM Holden must immediately provide a clear explanation of its future intentions and explain what its plans are for its Australian manufacturing operations."

Truss said the federal government had provided more than A$1bn in support to the industry in recent years and had committed to a further A$1bn between 2015-2020. It has ruled out increasing subsidies.

Devereux said it cost A$3,750 more to build a car in Australia than at GM's other plants in Asia and that gap would have to shrink with the help of government assistance and further cost cutting in order to keep the operations open.

He praised the US government's decision to bail out car makers during the global financial crisis, saying that had spurred the industry's resurgence, and said as the No.2 car brand in Australia, Holden wanted to continue making cars here.

"The budgetary cost of losing this industry would dwarf the cost of keeping it," he said.

Devereux declined to say how much assistance the company had sought from the government, but the Labour opposition's industry spokesman Kim Carr has said Holden would keep its plants open if it received A$150m (US$136m) a year.

Even with government support, Devereux said Holden would look to cut the local components used in its flagship Commodore cars beyond 2016 to around 25% to 30% from 50% of the vehicle currently, Reuters said.

Once dominant Holden, which claims a 10% share of the Australian market, posted a A$153m loss in 2012. It employs nearly 4,000 people.

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