Holden Productivity Commission Submission Reveals Costs, Union Deal

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]