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GMH To Close Australian Manufacturing Operations In 2017: Official

General Motors has announced that it will discontinue vehicle and engine manufacturing in Australia by the end of 2017, bringing to an end 60 years of making the iconic Holden car.

HoldenThe official announcement from General Motors says it will “transition to a national sales company in Australia and New Zealand”.

The decision will affect approximately 2,900 positions over the next four years, 1,600 in South Australia and 1,300 in Victoria.

The announcement cited the value of the Australian dollar as a chief reason for the decision. “The appreciation of the currency alone means that at the Australian dollar’s peak, making things in Australia was 65 percent more expensive compared to just a decade earlier.”

News of the General Motors decision was announced by the Victorian Premier, Denis Napthine, during Question Time. In Federal Parliament, the Opposition moved a motion criticising the government over the loss of jobs.

Treasurer Joe Hockey accused the Opposition of confected outrage and hypocrisy over Holden’s decision. He said global car manufacturers were moving operations to locations where production costs are cheaper. He pointed out that former Prime Minister Paul Keating, who as Treasurer floated the dollar in 1983, is to address the Labor Caucus tomorrow.

In Parliament yesterday, Hockey made a spirited demand that Holden announce its intentions. His remarks received front page treatment today, as shown below.

Text of a statement from General Motors.

GM to Transition to a National Sales Company in Australia and New Zealand

Company to cease manufacturing in Australia by 2017

GMDETROIT – As part of its ongoing actions to decisively address the performance of its global operations, General Motors today announced it would transition to a national sales company in Australia and New Zealand. The company also said it would discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017.

“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.”

As a result of the company’s actions, approximately 2,900 positions will be impacted over the next four years. This will comprise 1,600 from the Elizabeth vehicle manufacturing plant and approximately 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.

GM Holden Chairman and Managing Director Mike Devereux said an important priority over the next four years would be to ensure the best possible transition for workers in South Australia and Victoria.

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

The sale and service of Holden vehicles will be unaffected by this announcement and will continue through the extensive network of Holden dealers across Australia and New Zealand. Warranty terms and spare parts availability will remain unchanged.

“GM remains committed to the automotive industry in Australia and New Zealand. We recognize the need for change and understand the government’s point of view.

Moving forward, our business model will change significantly however, GM Holden will remain an integral part of its communities and an important employer both directly and through our dealers,” Devereux said.

Since 2001, the Australian dollar has risen from US$0.50 to as high as US$1.10 and from as low as 47 to as high as 79 on the Trade Weighted Index. The Australian automotive industry is heavily trade exposed. The appreciation of the currency alone means that at the Australian dollar’s peak, making things in Australia was 65 percent more expensive compared to just a decade earlier.

With the decision to discontinue vehicle and engine manufacturing in Australia by the end of 2017, GM expects to record pre-tax charges of $400 million to $600 million in the fourth quarter of 2013. The charges would consist of approximately $300 million to $500 million for non-cash asset impairment charges including property, plant and equipment and approximately $100 million for cash payment of exit-related costs including certain employee severance related costs. Additional charges are expected to be incurred through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed with the employees’ union. The asset impairment charges will be considered special for EBIT-adjusted reporting purposes.

General Motors Co. (NYSE:GM, TSX: GMM) and its partners produce vehicles in 30 countries, and the company has leadership positions in the world’s largest and fastest-growing automotive markets. GM, its subsidiaries and joint venture entities sell vehicles under the Chevrolet, Cadillac, Baojun, Buick, GMC, Holden, Jiefang, Opel, Vauxhall and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety, security and information services, can be found at http://www.gm.com.

Front page of the Australian Financial Review, December 11, 2013.

AFR

Statement from the Minister for Industry, Ian Macfarlane.

I am deeply disappointed by Holden’s decision to end car manufacturing in Australia from 2017.

The Government has been following a clear, methodical process via the Productivity Commission to provide a full assessment of all the factors impacting on car manufacturing in Australia, to fully inform the Government on its response to support the industry.

I am disappointed that Holden hasn’t given the Australian Government the time to complete that process.

I understand that Holden’s decision is a result of many factors, including the impact on its operations from the high Australian dollar making it very difficult to export vehicles to what have, in the past, been very successful exports markets.

The Government will now work with Holden, workers, the South Australian and Victorian Governments and the communities of Adelaide and Port Melbourne to ensure they are supported during this difficult time.

The Government will also further consult with Toyota and the components sector about the impact of this decision.

Statement from Jay Weatherill, Premier of South Australia.

Black day for Holden workers as Liberals turn their backs on SA

Premier Jay Weatherill says today is a black day for South Australia, with Holden announcing it will close its Elizabeth plant. Mr Weatherill has committed to standing by Holden workers, their families and the people of the northern suburbs in the light of the devastating news.

He has condemned Prime Minister Tony Abbott for failing to support South Australia.

“Holden’s decision to close its Elizabeth plant is devastating news for the workers and families who rely on the automotive industry,” Mr Weatherill said. “Tony Abbott and his Coalition Government have turned their backs on this industry and the people in it.

“Holden had made it abundantly clear that if the support committed by the previous federal Labor Government remained on the table it would stay in Australia. “By cutting funding and, in the past week, by attacking Holden, Tony Abbott and the Coalition have forced Holden out of Australia.

“My first concern is with the workers, their families and everyone connected with the car industry. “This affects up to 13,000 jobs in South Australia.” Mr Weatherill said the social and economic cost of the decision would be enormous. “The Federal Government will have a massive price to pay,” he said. “I will begin discussions about that with Tony Abbott tomorrow. “South Australians have always demonstrated their enormous resilience in the face of adversity. “We will face this challenge, we will overcome it and we will emerge stronger.”

Statement from Toyota Australia.

TOYOTA AUSTRALIA RESPONDS TO GM HOLDEN ANNOUNCEMENT

We are saddened to learn of GM Holden’s decision.

This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia.

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.

We will continue with our transformation journey as planned.

Statement from Victorian Premier Denis Napthine.

Today is a very sad today for Australia and for Victoria.

My thoughts go immediately to Holden workers and their families, and to workers across the supply chain who face uncertainty about their future.

We will do everything we can as a Government to support the workers and their families through this very difficult time, as we have done with Ford workers in Geelong and Broadmeadows.

I will be seeking at the earliest opportunity to discuss the difficult challenges ahead with the Prime Minister. I also expect a detailed briefing from General Motors Holden on their plans to support affected employees.

From the information we have received so far we understand that Holden will cease its vehicle and engine manufacturing in Australia by 2017. It is particularly disappointing to be informed by General Motors that this decision is irreversible.

I can assure the people of Victoria that we will be seeking a commitment from the Federal Coalition Government to provide a comprehensive adjustment package for workers at Holden and affected suppliers.

The Victorian Government fought hard against Labor’s carbon tax, we fought hard against Labor’s FBT changes. These had a significant impact on the auto industry.

The Victorian Government made a strong submission to the Productivity Commission on how best to support our auto manufacturing industry, including the importance of building exports, as Toyota Australia has done successfully in the Middle East.

The Government has also led automotive trade missions to the United States, China and India to promote Victorian manufacturers into the global automotive supply chain.

My government will be seeking urgent discussions with Toyota Australia to do all we can to help ensure their ongoing presence as a leading manufacturer in Victoria. We share Toyota’s concerns about the vital importance of greater workplace flexibility in order to secure a future for vehicle manufacturing in Australia.

We will also seek immediate discussions with all three car-makers, and the wider automotive supply chain, in an effort to maximise opportunities to sustain the operations of as many component suppliers as possible.

We will be seeking from the Commonwealth a significant additional commitment to the Automotive New Markets Program, which has already provided more than $13 million in assistance to more than 20 Victorian automotive parts suppliers to help them diversify their product and customer base.

Football, Meat Pies, Kangaroos and Holden Cars

Classic Holden television commercial from the 1970s.

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