While fronting the Productivity Commission earlier today Mike Devereux, GM Holden Managing Director, was asked if the company had already decided to close down its local manufacturing as soon as 2016. His reply: “No decision has been made.”
He went on to compare government subsidies with other sectors, suggesting the cost of losing the automotive sector in Australia would have ramifications well beyond the outlay of any subsidies received: “The $3 billion a year that goes into mining companies … I’m not criticising that … or $5 billion in subsidies for negative gearing. But the budgetary cost of losing this industry would dwarf the cost of losing it.”
Devereux claims it costs Holden around $3750 more per car to manufacture in Australia, which equates to around $300 million each year. The magic number reported to keep Holden happy to keep making cars in Australia is an extra $150 million per year in government support.
There are many very sound arguments for fighting to keep the automotive manufacturers in this country, and keeping some form of subsidies, by any rational measure, seems to be a no-brainer. And yet, the question still remains, are there enough people in Australia who want to buy locally made cars in sufficient numbers to keep the industry viable?
Component manufacturers need local contracts to stay afloat. Economies of scale will increase if, or should that be when, Holden ends local production. As well as the Commodore and the Cruze, it’s easy to predict Toyota would cease local manufacturing of its Aurion and Camry models should Holden follow Ford off-shore.
One thing is clear, we’re a long way from Devereux’s tweet from March 2012 responding to a Federal Government funding boost which said: “Today’s announcement secures Holden manufacturing in Australia for at least the next 10 yearsâ€¦out till 2022.”
For their part the Victorian Automobile Chamber of Commerce unsurprisingly supports continuing government subsidies to help keep Holden making cars in Australia. The VACC issued a statement early this morning, which has been made available below.
VACC Calls for the Federal Government to Continue to Assist GM Holden
10 December 2013
VACC, which represents more than 5,000 businesses in the repair, service and retail sector of the automotive industry in Victoria, has called on the Federal Government to continue to assist GM Holden. Today, GM Holden, Chairman and Managing Director, Mike Devereux, will attend a Productivity Commission inquiry in Melbourne and on Thursday, South Australian Premier, Jay Weatherill, will meet with Prime Minister, Tony Abbott. VACC argues that these discussions should focus on how, not if, Australia can maintain its automotive manufacturing industry.
VACC has called for continued Federal Government assistance for GM Holden in what is an important few days for the Australian automotive manufacturing industry. Today, GM Holden, Chairman and Managing Director, Mike Devereux, will address the Productivity Commissionâ€™s inquiry into automotive manufacturing, and later this week, State Premiers, Jay Weatherill, South Australia, and Denis Napthine, Victoria, will lobby the Federal Government in Canberra.
VACC believes that Australia needs a strong automotive manufacturing industry and supports the principle that the Federal Government should intervene and provide financial assistance to ensure the continuation of Holden production in this country.
â€œWe absolutely need automotive manufacturing in Australia and it should be further fostered with targeted Government financial assistance,â€ VACC Executive Director, David Purchase, said.
â€œI am not suggesting we throw bags of money at every manufacturer, but Governments need to financially assist local automotive manufacturers. By doing so, Governments donâ€™t just support car makers; they support job security in communities as well as training, education, auto-apprenticeships, component parts suppliers, auxiliary automotive industries and the repair, service and retail sector.
â€œWe support the Victorian and South Australian Governmentsâ€™ fight for the right to support their local automotive manufacturing industry and protect jobs. They are sending a message to Holdenâ€™s American owner, General Motors, in Detroit, that they want local automotive manufacturing to continue. We call on the Federal Government to support the States and send the same message to the US that it also wants automotive manufacturing to continue in Australia and to ensure jobs are secure. It is a complex situation but a solution can be found,â€ Mr Purchase said.
VACC also called for this weekâ€™s discussions to be given some clear air. VACC wants the process, initiated by the Abbott Government, to be given the opportunity to run its course.
â€œThe Productivity Commissionâ€™s interim report is due to be released on Friday, 20 December and yet, recent comments by some politicians, industry commentators and the media have jumped the gun and appear to have pre-empted the Commissionâ€™s findings,â€ said Mr Purchase.