GM Holden, Ford Discuss Manufacturing Futures With Federal Government Photo:
Tim O'Brien | Jan, 10 2012 | 0 Comments

We’re becoming used to media mulling out loud over the future of local vehicle manufacturing in Australia, but we’re less used to Ford and Holden doing the mulling.

That they are - Holden and Ford at least - has more to do with political manoeuvring and the shoring up of Government guarantees for ongoing assistance, than any current crisis.

Both Holden and Ford are in the black, just. And while the Australian new car market is a savage and unrelenting bullpit with paper-thin profit margins (made worse for the locals by the rampant dollar), there is still a dollar to be made here.

So, while tough, and getting tougher, there is no immediate crisis.

But, with a Federal Government that is singularly vulnerable on the issue of local manufacturing, more particularly the loss of manufacturing, there is every reason for Ford and Holden to put on the poor mouth and put the cap out for assistance.

And why not? Any bad news from the automotive sector would really sink the Federal government’s leaky ship.

Ford, Holden - and Toyota - have also got industry parents that are disinclined to support small manufacturing outposts and limited-run indigenous vehicle manufacture.

Instead, both US giants are actively seeking to limit models, platforms and drivetrains to those with applications across their global operations.

Ford’s "One Ford" strategy is as clear a statement as you’ll find of that intent.

That’s why Australian Minister for Manufacturing, Senator Kim Carr, and South Australian Premier, Jay Weatherill, are twitchy as hell and in discussion with GM Chairman and CEO, Dan Akerson, to "discuss Holden’s ongoing commitment to manufacturing cars in Australia".

Holden Chairman and Managing Director, Mike Devereux, has been bullish on the issue and has raised previously on a number of occasions the issue of ongoing government assistance to the Australian motor industry under a mantra, paraphrased, that ‘everyone else is doing it’.

While there is as yet no announcement on the details of the size of the ‘co-investment’, either from GM Holden or the Federal Government, there is a lot of money on the table - AU$3.4 billion no less, available through the Federal Government’s Automotive Transformation Fund, set to run until 2020.

Ford Australia too has taken its bowl to the table, also in talks with Federal Minister for Manufacturing Senator Kim Carr while at the Detroit Motor Show.

It is arguably more vulnerable than Holden thanks to its shrinking market share and with two models sitting on a platform that has no future beyond the life of the current Falcon and Territory.

Speaking from Detroit, Ford Asia Pacific and Africa President, Joe Hinrichs, and Ford Australia President and CEO Bob Graziano, announced an AU$103million investment in "clean technology and additional upgrades across the locally-produced Falcon and Territory lines".

The funding includes $34 million from the Federal Government, with additional support from the Victorian State Government.

The announcement by Ford Australia of the $103million investment comes on top of its $232million "sustainability initiative".

"Across our range we are rolling out new smart technologies which improve fuel economy and reduce CO2 emissions while remaining affordable for consumers, through the broader application of diesel engines, smarter powershift transmissions, EcoLPI, and global Ford technologies such as EcoBoost," Mr Graziano said.

Mr Graziano also picked up Mr Devereux’s mantra, "Every car manufacturing country in the world receives Government support, most far more than Australia receives," he said.

Taxpayers, in the main, quite likely support a degree of assistance to our vehicle manufacturing icons.

Most understand there is a wider economic benefit that flows from the manufacture of elaborately transformed products, and from the technologies and skills generated by the sector and its myriad suppliers.

They may however, quite sensibly, expect some longer-term commitments than our vehicle manufacturers have been giving to date on their manufacturing futures in this country.

Corporate welfare, of the scale of the now-scrapped Green Car Innovation Fund, and now the Automotive Transformation Fund, should perhaps be tied to longer terms than the three to four years currently bandied about - both Ford and Holden have a circle of sorts around 2016.

If Australian taxpayers were holding the purse strings the Federal Minister for Manufacturing holds, they might be pressing harder on the term of the commitment.

Tim O’Brien
TMR Managing Editor and Industry Analyst

Pictured at top: Mike Devereux, Dan Akerson, Kim Carr, Jay Weatherill.

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