Holden to cut Australian production

1946 Holden prototype. The first Holden rolled off the production line in Melbourne on October 1, 1948.
1946 Holden prototype. The first Holden rolled off the production line in Melbourne on October 1, 1948.
Holden manufacturing a Chevrolet Omega at Elizabeth, South Australia.
Holden manufacturing a Chevrolet Omega at Elizabeth, South Australia.
A Holden Cruze hatchback on the production line at the Holden Elizabeth plant in South Australia.
A Holden Cruze hatchback on the production line at the Holden Elizabeth plant in South Australia.
Holden manufacturing plant at Elizabeth, South Australia.
Holden manufacturing plant at Elizabeth, South Australia.

Sixty-five years after it first began producing cars in Australia, Holden has confirmed it will cease local manufacturing in 2017.

Holden chairman and managing director Mike Devereux confirmed in a heated press conference on Tuesday afternoon that the decision to wind down its Victorian and South Australian manufacturing facilities within four years was taken on Monday afternoon, by the General Motors senior leadership team in Detroit.

"GM has made this decision, it is irreversible," Devereux said, ruling out any chance of renogotiations, following an intense attack by the federal government over the past week.

The move ends weeks of intense speculation and years of uncertainty surrounding the brand’s Elizabeth production line and Port Melbourne engine plant from the company that began as a saddlery in 1856 and first started manufacturing cars locally in 1948.

Hundreds of workers began streaming out of the Elizabeth plant manufacturing plant in Adelaide on Tuesday afternoon, having received the news just before the end of the plant’s day shift.

"We're just shocked, we knew it might have been coming but we've all been trying to stay optimistic," one worker said as he left the plant.

"Merry Christmas, isnt it?"

About 2900 Australian jobs will be affected by the decision, General Motors said in a statement. This will comprise 1600 jobs from the Elizabeth vehicle manufacturing plant in Adelaide and about 1300 from Holden's Victorian workforce.

"A lot of people have high mortgages. It’s going to be a stressful four years for them," worker Craig Oxenham, who has worked in the wheel and tyre section for 26 years, said.

"I’m going to be 47 when it closes that's getting into the age bracket where it could be hard to find work."

Professor Goran Roos, from the University of Adelaide, said the situation was grim for Holden employees. "Workers will find a lower paid job with poorer working conditions," he said. "Many will not find work at all."

Addressing workers this afternoon the plant manager at South Australia said the Fishermans Bend plant in Melbourne will close in late 2016, ahead of Adelaide's closure in 2017, and the company's Port Melbourne engineering centre and its Lang Lang proving grounds will also be shut.

In Melbourne, production of Holden engines will also be cut to 300, down from its current 350, by the middle of 2014.

The decision will send shockwaves through the struggling automotive industry, which has warned of upwards of 50,000 job losses. It comes on top of Ford confirming earlier in the year that it would cease vehicle manufacturing by 2016.

Already the parts industry, which accounts for more than 160 suppliers, is warning of widespread closures, while Australia's largest car maker, Toyota, has warned it will struggle to survive as the sole manufacturer.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota said in a statement on Tuesday afternoon.

For almost two years the local manufacturers have been pitching its case for additional funding, pointing to overseas funding models that deliver generous incentives for automotive manufacturing plants.

Holden said it would "transition to a national sales company in Australia and New Zealand" from 2017 and cited the strong Australian dollar, high production costs and the competitive local market for the decision.

"Holden is not leaving Australia. Holden is committed to the auto industry in Australia",  Devereux said. "We expect we will be a thriving brand in this country for many years to come."

From 2017, Holden will comprise a national sales company, a national parts distribution centre and a global design studio.

"We really are facing a complex and perfect storm of conditions," Devereux said.

"It would seem to global leadership at General Motors that it doesn’t make long-term business sense for us to continue to assemble vehicles in Australia. It’s no secret that things are difficult in terms of manufacturing in this country.

"Our business case for two vehicles that we were planning to make in this country is no longer viable."

He said Holden would become an importer of vehicles, like most of its competitors. Ensuring the "best possible transition" for workers in South Australia and Victoria over the next four years would be a priority of the company.

"This has been a difficult decision, given Holden’s long and proud history of building vehicles in Australia," Devereux said.

"We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people."

General Motors chairman and chief executive Dan Akerson said the decision "reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world".

Acting Prime Minister Warren Truss confirmed he had spoken with Devereux about 10 minutes before question time and Devereux had informed him of the decision made at the company’s Detriot headquarters. 

Amid booing from Labor MPs, who blame Holden's departure on the Coalition's refusal to give more government funding to the car market, Truss told Parliament that "like all members in the house, we regret the fact that GM is to phase down its operations in this country".

"Holden has been an iconic... brand for Australians, a part of our heritage," Truss said. He is standing in for Prime Minister Tony Abbott, who has been in South Africa for Nelson Mandela's memorial.

"It's meant a great deal to Australians over several generations. Many of us have had the pleasure of travelling and owning Australian-built Holdens and it is a pity that that will not continue into the future.

"Now this government had indicated right from the very beginning that we wanted Holden to remain manufacturing cars in Australia. We've wanted," he continued, over loud jeers, "we want to have a strong and active motor vehicle manufacturing industry in Australia."

Treasurer Joe Hockey said the government would do what it could to work with unions and the governments of South Australia and Victoria to help the workers "transition" and prepare them for losing their jobs.

Hockey said it was "no surprise" that Holden was leaving and wondered why Labor had not shown similar outrage when Mitsubishi and Ford left Australia.

Labor asked Industry Minister Ian Macfarlane why the Abbott government had cut A$500 million (NZ$550 million) from automotive funding.

Macfarlane said Labor MPs had immediately degenerated to "raw politics" when Holden factory workers were going through an "extraordinarily traumatic time".

"Not one word of sympathy from the members opposite," Macfarlane said.

Acting Opposition Leader Tanya Plibersek accused the government of getting "exactly what it wanted".

The letter sent by Truss on Tuesday to Devereux was "designed for political consumption rather than being a genuine effort to communicate", Plibersek said.

Victorian Premier Denis Napthine said it was a "sad day for Victoria and a sad day for Australia".

"This will directly affect a significant number if Victorians," he said. "I can assure those workers we will stand shoulder to shoulder with them."

Napthine said the state government would be putting "enormous pressure" on the Abbott government to ensure there was a significant package to support workers. 

The sale and service of Holden vehicles would be "unaffected" by the announcement, General Motors said. Warranty terms and spare parts availability will remain unchanged and Holden is likely to continue selling vehicles under the Holden brand rather than adopt a global one such as Chevrolet. 

Workers in Adelaide said Devereux spoke for 10-15 minutes to break the news that Holden would no longer manufacture cars beyond 2017 and was loudly heckled during the speech.

He is said to have made reference to the Productivity Commission hearings in justifying the decision.

Steve Holliingsworth, who worked at the plant for 36 years before retiring in 2007, said he could see the strain of uncertainty in his son, who works at the Elizabeth plant and had been forced to move home because of financial uncertainty.

"He just goes in his room and shuts the door," he said. "They won't say anything's wrong but you can see."

Dave Smith from the Australian Manufacturing Workers Union said: "This is a dark day for the workers here at Holden, a tragic day for workers here at Holden."

Workers had been let down by a government that would not back them. He said it was now highly likely that Toyota would leave Australia. "It will see the end of 50,000 automobile jobs, there is no dispute about that."

Sydney Morning Herald