Holden's Future: "No Decision" In GM, But Doubts Remain Photo:

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Mike Stevens | Dec, 10 2013 | 27 Comments

UPDATE: IT'S OFFICIAL - Holden Ending Australian Production By 2017

Holden boss Mike Devereux has responded to reports that General Motors (GM) is preparing to announce an end to Australian manufacturing, declaring that "no decision" has been made on the future of the carmaker's local production.

Speaking at the Productivity Commission inquiry in Melbourne this morning, Mr Devereux said that GM has not set a timeframe on a decision, and that today's hearing was not the time to speculate.

The Australian Manufacturing Workers Union's Dave Smith today told the ABC that Mr Devereux's assurance is good news.

"It keeps us in the ball game. It's been a difficult time but we've had some discussions and he's made it very clear to me that Holden wants to remain in Australia but it's about the government having the right policy settings to allow it to do so," Mr Smith said.

However, reports this week suggest that Federal Coalition ministers believe that a final decision has already been made inside GM - despite Mr Devereux's statements today - but that an announcement will not be made until next year.

At the very least, it is likely that GM has made preparations for both ending or continuing Australian production.

The final decision - which will be made in Detroit - will likely hinge on the outcome of the Productivity Commission inquiry and commitments for additonal and on-going support from the Federal Government.

Mr Devereux said today that the cost of manufacturing in Australia is around $300 million - or around $3750 per car - higher than at its overseas plants.

It remains unknown what level of taxpayer-funding Holden will pursue to continue building cars in Australia, but Mr Devereux said that the company is not seeking "to close that gap (from $3750) to zero".

He added that while around $2000 of that per-car figure is labour costs, Holden's Australian production of the Cruze - which is also produced in other countries - is "the most productive" worldwide.

He said that, on average, the carmaker has spent around $484 million each year on its local operations, while receiving around $153 million annually in federal funding.

Mr Devereux said that Holden has received $1.8 billion from government programs between 2001 and 2012, while generating $32.7 billion in economic activity for Australia.

"The economic benefit of us making things is $33 billion to the Australian economy," he said. "That's 18 times the assistance we receive."

Mr Devereux's comments echoed details revealed in Holden's submission to the Productivity Commission ahead of today's hearing.

"An effective level of capital investment assistance which has worked is a 1:3 ratio of public assistance, to investment by the car maker," the submission said.

"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."

MORE: Holden To End Production In 2016?
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Holden's submission said that investment in Australia's automotive industry has also led to innovation, technology and skills growth that could benefit other industries, from defence and aerospace to mining and construction.

Mr Devereux today reiterated earlier claims that the cost of losing Australia's automotive manufacturing industry would dwarf the cost of keeping it, with suppliers alone making nearly $1 billion each year from Holden.

"We have continued over the years to tell our parent that we want to continue to build things in this country," he said.

It is unclear however if Holden's local supply contracts would continue into the future, with the company expected to take more parts from international suppliers in a bid to reduce local production costs.

Mr Devereux has reportedly confirmed that local parts make up around 25 to 35 percent of Cruze production in South Australia, while around 50 percent of the Commodore's parts are sourced in Australia.

Treasurer Joe Hockey said this week that Holden's future depends on its ability to sell cars.

"From 2015 onwards we committed $1 billion to help the car industry, but ultimately the thing that's most going to help the Australian motor vehicle industry is for Australians to buy their cars."

The Commodore, Cruze, Caprice and Holden Ute are all produced in Australia, and currently make up around half of the carmaker's local sales.

Other models in the carmaker's range are suffering however, with the Barina and Barina Spark, the Malibu and the Captiva models all performing poorly in their individual segments.

Mr Devereux will soon leave Holden for a new post in General Motors, although Holden has denied that his departure is a sign of plans to wind-down local manufacturing.

MORE: Holden To End Production In 2016?
MORE: Holden To Shut Down? Disaster Looming For Dealers

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