Tim O'Brien | Feb 19, 2009

General Motors Corporation's announced Restructuring Plan that has been presented to the US Federal Treasury contains some grim reading for GM's global operations. GM has proposed cutting 47,000 jobs; 20,000 of these from its US operations (after having already cut tens of thousands of jobs there), the remainder from its global operations.

Certainly, Saab and Opel/Vauxhall, with massive declines in their home European and UK markets will be trying to pull their heads below the parapets, but can expect to be first in the line of fire. (The blindfold has been waiting for a dismally-performing Saab for months.)

Regrettably, with shrinking local and export markets, the collateral damage will extend to Holden. The P&L sheets are not yet in from Holden for its 2008 performance, but it lost $144.6 million in 2005, lost $146.56 million in 2006, and, although managing a massive turnaround, lost a further $6 million in 2007.

But 2008 will have been problematic. With the Oz dollar rising from around 88cents to near parity with the greenback, just when Holden’s G8 export program to the US was gathering momentum, it will have carried some pain in its currency transactions both for this program and for its engine exports during 2008.

While Holden’s export programs have been successful enough, the local market is looking increasingly tough. Here, Holden’s sales fell by 11 percent in 2008, and, while the Commodore has held up, January 2009 sales were down 14.5 percent.

While Holden is mentioned just briefly in GM’s restructuring plan, and mention is made of the new small car to be built in Australia from 2010, there are dangers afoot that will likely impact on Holden’s current operation and activities here.

First, regrettably, Holden’s rear-drive design and development programs (you’re aware that Holden engineered the platform for the upcoming US-market Camaro) will certainly be experiencing nervous days. Any changes to GM’s rear-drive programs will see job losses here.

pontiac-g8-st-ute

Last year Holden culled numbers in design and engineering as a result of cancellations of a number of the vehicle projects it was working on for the global GM operation.

Secondly, the ST ute having been dropped, the G8 program is itself also looking a tad shaky. Pontiac is to largely disappear as a stand-alone brand in the US, and the original commitment to the G8 was for just five years.

Also, with tax-payer dollars behind the massive bail-out loans to GM, having an imported model on US showrooms floors which may be seen as substitutable for a US locally-built car, might find some resistance from those reviewing GM’s restructuring plans.

Reading behind the words of Holden spokesperson, Media Relations Manager Scott Whiffin, however, may provide the clearest indication of the clouds of uncertainty swirling around ‘the General’.

"We are actively looking at all aspects of the business and will be making some decisions - some of them tough decisions - in the coming weeks in terms of our structure and operations,'' he told the Herald Sun newspaper.

It’s the “tough decisions” we have to worry about because most of those will not be made here, but made in Detroit.

So, we can expect more shut-down days and further slowing of assembly lines in the months ahead. The Korean-sourced Cruze project will certainly proceed but you can forget the nonsense that Wheels periodically rabbits on about of a ‘Torana’ in prospect. Won’t happen, never would.

cruze

With sales in free-fall overseas, the planned end-2009 closure of the Family II engine plant will certainly be brought forward.

The Commodore is safe, for now, regardless of what happens with the G8 and other export programs. But it may be sharing showrooms with some strange bed-fellows in the future.

If we want to keep our impressive and incredibly robust Aussie sedans, utes and wagons, we simply have to buy them.

The death rattle in the US parent will unsettle things here and there will be some ‘collateral damage’ inflicted on Holden’s operations, you can bank on it. A strong sales sheet is the only defence – in the long term - for Holden (and for Ford and Toyota).

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