Holden Productivity Commission Submission Reveals Costs, Union Deal

TMR Team | Dec 3, 2013

Holden has confirmed details of a deal with Holden workers and unions that could see production costs per-vehicle cut by nearly $4000.

But, as it has revealed as part of its submission to the Productivity Commission's public inquiry into Australia's automotive manufacturing industry, Holden will still be seeking financial co-investment from the Federal Government and from parent General Motors, if it is to continue production in Australia.

The Commission's first three days of hearings have been dominated by the uncertainty of Holden's manufacturing future.

The Productivity Commission, which is taking submissions from government, industry, trade bodies and unions, is to release a preliminary findings report by 20 December 2013. It will then deliver a final report to the Federal Government by 31 March 2014.

Holden said the savings - around $3750 per car - would be found as part of an agreement made with unions and its workers.

Holden's submission reports that unions have agreed to an extension of 16-minutes to the work day for Holden's 1100 plant workers, along with wage freezes, a $2.00 per-hour lower rate for new workers, and flexibility on its obligations to casual workers.

The union deal alone will not be enough to keep Holden's manufacturing operations alive however, with future funding both from within GM and from the Australian Government yet to be assured.

“Holden, as a subsidiary of GM, must compete with its global GM counterparts for internal capital investment, as well as demonstrate appropriate levels of return for that investment,” the submission reads.

Recent years have seen investment in the development of new Holden models come from both GM and the Australian Government, with GM - Holden says - investing $3 for each dollar of public assistance.

“The Green Car Innovation Fund was an example of this type of assistance, and was successful in attracting foreign (GM) investment.”

Holden's submission to the Productivity Commission also outlined key manufacturing costs, revealing that an average of $15,400 is spent on locally produced parts.

The carmaker added that the new Abbott Government's plan to cut $500 million from the 10-year $2.5 billion Automotive Transformation Scheme could have a dramatic effect on the viability of Holden's local manufacturing operations.

Holden will make its case in a Productivity Commission hearing on December 10, the outcome of which will surely impact on the question of whether Holden - and GM - will commit to its plan of producing two new models in Australia.

“To be globally competitive with other countries which are providing perpetual assistance to their local automotive manufacturing industries, Australian automotive assistance needs to be set at appropriate levels and be ongoing."

The Commission has so far taken submissions not only from Holden, but also from the South Australian Government, Australian Manufacturing Workers' Union, industry body the Australian Automotive Aftermarket Association and industry expert Professor Goran Roos.

South Australian Premier Jay Weatherill has warned that around 13,000 jobs are at risk across the state's automotive manufacturing, supply and retail industries.

Holden is not alone in seeking ways to reduce manufacturing and labour costs, with Toyota also battling to cut $3800 from the production cost of each vehicle by 2018.

"We need to take urgent action because we are now seeing gaps in our transformation plans. We must develop detailed plans to close these gaps if we want to remain at the negotiating table for future investments," Toyota Australia boss Max Yasuda said in October.

Holden is expected to make a decision on its future in early 2014, when the Productivity Commission makes its recommendations to the Federal Government.

[via GoAuto]

Filed under: Holden, manufacturing, australia, News, industry, productivity commission

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  • CAZZO says,
    5 months ago
    Wonderful, make the car $4k cheaper, the governement picks up the $4k tab [thats us, the taxed public]

    GM do us a favour, STOP MAKING CARS here!!
    • Bob says,
      5 months ago
      Great idea Cazzo. Then we can all pay for most of those workers to be on the dole!! Most has spent large part of their live in manufacturing & are going to struggle to find other jobs, as manufacturing in jobs are very hard to find these days. Then there is the flow on affect to various parts suppliers who's workers will be in the same boat. To top it off, you can then have a whinge about the cost of cars when eventually prices go through the roof as finally a bunch of the O/S car companies decide competing in a market of roughly 1 mil car sales a year is not worth it & stop selling cars here, especially if there is a downturn in the Oz economy causing sales to drop. This all happened in England many years ago until they realised the damage to the economy it did giving away their car making on home soil. Subsequent English governments have then had to spend massive amounts of tax payers’ money enticing car markers back to England, which now has a decent car making industry. How about both sides of politics make a decision to make sure "free trade" agreements with other conuntries are not so one sided that it results in massive job benefits for other countries but cost jobs in Oz.
  • Aaron says,
    5 months ago
    1 like
    Once again Cazzo steps in with a comment with no real forethought.

    The loss of local manufacturing from either Holden or Toyota will have a massive knock on effect that will result in hundreds if not thousands of job losses down the line.