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Holden admits local content will halve if production stays in Australia Holden admits local content will halve if production stays in Australia
(about 4 hours later)
GM Holden has admitted that the locally made content of its cars would roughly halve if it decided to keep manufacturing in Australia beyond 2016.GM Holden has admitted that the locally made content of its cars would roughly halve if it decided to keep manufacturing in Australia beyond 2016.
The admission complicates the pitch by Holden, unions and the Labor party for further taxpayers’ assistance to attract $1bn in investment from Holden’s US parent to make two new models at its Adelaide assembly plant, ensuring production continued until 2023.The admission complicates the pitch by Holden, unions and the Labor party for further taxpayers’ assistance to attract $1bn in investment from Holden’s US parent to make two new models at its Adelaide assembly plant, ensuring production continued until 2023.
About half the content of the Commodore is sourced locally, but it is made only in Australia and all carmakers are shifting to global platforms. Only about 25% of Holden's Australian-made four-cylinder car, the Cruze, is locally supplied.About half the content of the Commodore is sourced locally, but it is made only in Australia and all carmakers are shifting to global platforms. Only about 25% of Holden's Australian-made four-cylinder car, the Cruze, is locally supplied.
Holden’s chief executive, Mike Devereux, told the Productivity Commission inquiry on Tuesday that the carmaker wanted to produce two models after 2016 based on global platforms and that "you would see localisation levels for supplies more in line with what you have on the Cruze".Holden’s chief executive, Mike Devereux, told the Productivity Commission inquiry on Tuesday that the carmaker wanted to produce two models after 2016 based on global platforms and that "you would see localisation levels for supplies more in line with what you have on the Cruze".
Other Australian-made cars, such as the Ford Falcon and Toyota Camry, have about 70% local content.Other Australian-made cars, such as the Ford Falcon and Toyota Camry, have about 70% local content.
But Devereux argued that the switch to global platforms would allow Australian component suppliers to bid for work in other countries where those cars were made. Holden estimates it pays a $1500 "supplier premium" when it buys local components.But Devereux argued that the switch to global platforms would allow Australian component suppliers to bid for work in other countries where those cars were made. Holden estimates it pays a $1500 "supplier premium" when it buys local components.
Devereux refused to be drawn on what level of government assistance Holden needed to continue making cars in Australia, but said a business case had been given to the federal industry minister, Ian Macfarlane, on 2 October and that a continuing "public-private partnership" was needed.Devereux refused to be drawn on what level of government assistance Holden needed to continue making cars in Australia, but said a business case had been given to the federal industry minister, Ian Macfarlane, on 2 October and that a continuing "public-private partnership" was needed.
"You can't set and forget [the policy]," he said."You can't set and forget [the policy]," he said.
Holden has argued that it has to cut $3,750 from the cost of each locally made car to be competitive with GM plants in other countries, of which about $2,000 related to labour costs.Holden has argued that it has to cut $3,750 from the cost of each locally made car to be competitive with GM plants in other countries, of which about $2,000 related to labour costs.
Holden has agreed on some cost savings with its workforce but these amount to only $15m a year, or about $200 a car.Holden has agreed on some cost savings with its workforce but these amount to only $15m a year, or about $200 a car.
Asked by the commissioners how Holden could cut the remaining costs, Devereux said the company’s confidential business case showed it could bridge some but not all of the gap.Asked by the commissioners how Holden could cut the remaining costs, Devereux said the company’s confidential business case showed it could bridge some but not all of the gap.
"There's no question in my mind that the government has the information it needs to answer your question,” he said. “But I don't think it appropriate to disclose our internal business case."There's no question in my mind that the government has the information it needs to answer your question,” he said. “But I don't think it appropriate to disclose our internal business case.
"We have continued over the years to make the case to our parent that we want to continue to build things in this country.""We have continued over the years to make the case to our parent that we want to continue to build things in this country."
Devereux argued that the cost of government assistance to the car industry was dwarfed by the cost of losing it, noting that the mining industry received about $3bn a year from tax rebates on diesel fuel, while tax breaks for negatively geared property investments were about $5bn.Devereux argued that the cost of government assistance to the car industry was dwarfed by the cost of losing it, noting that the mining industry received about $3bn a year from tax rebates on diesel fuel, while tax breaks for negatively geared property investments were about $5bn.
After the hearing, the presiding commissioner on the inquiry, Mike Woods, told Guardian Australia that manufacturing was still "quite strong”, even though some jobs were being lost.After the hearing, the presiding commissioner on the inquiry, Mike Woods, told Guardian Australia that manufacturing was still "quite strong”, even though some jobs were being lost.
"Manufacturing in Australia is bigger than just auto," Woods said. "There's a conflation ... of Holden with [overall] manufacturing in Australia, which isn't the case. We're trying to look at manufacturing and we're trying to look at the economy overall.""Manufacturing in Australia is bigger than just auto," Woods said. "There's a conflation ... of Holden with [overall] manufacturing in Australia, which isn't the case. We're trying to look at manufacturing and we're trying to look at the economy overall."
Woods said the commission would deliver interim findings on the local auto sector by 20 December. It would produce a draft report by the end of January that included suggested policy settings, and a final report in March.Woods said the commission would deliver interim findings on the local auto sector by 20 December. It would produce a draft report by the end of January that included suggested policy settings, and a final report in March.
Meanwhile, Toyota Australia has blasted car industry unions for advocating a "no" vote on a package of workplace changes designed to cut costs and boost productivity, claiming it could jeopardise the future of its manufacturing operations in Melbourne.
Toyota spokeswoman Beck Angel said the car maker was "doing everything that we can to secure the future for our employees and their families, and we expect the union would support us with this action".
"A decision will be made next year on the next generation Camry and export program and we need to make urgent changes to remain at the negotiating table," she said.
"A no vote is going to send a very strong message to our parent company that we are not serious about transforming our business. This will put our ability to continue building cars in Australia at serious risk."
The vehicle division of the Australian Manufacturing Workers Union has argued that it is willing to discuss changes to help Toyota, but has called for the company to more consultative. Toyota assembly workers are due to vote on Friday on a package which avoids outright pay cuts, but would reduce some allowances and allows greater flexibility in working hours.
The union originally wanted a group of more than 50 delegates involved in bargaining, but Toyota management rejected this as being too unwieldy. The company wanted any union negotiating group capped at 12 and has communicated direct to individual workers.
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