By on July 18, 2013

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Hot on the heels of a $275 million “investment”, Holden is going back to the Australian government, hat in hand, asking for more money. This time, Holden wants another $265 million to keep their assembly plants online.

According to Holden, assembling cars like the Cruze and Commodore in Australia carries a premium in the neighborhood of $3460 USD compared with other locales like Korea. The Thailand built Colorado 7 and the Korean-built Captiva, both crossovers, are said to help offset the loss-making nature of Australian manufacturing.

Holden is said to be seeking more money in the wake of Ford’s closing of their Australian manufacturing operations. The incoming administration in Australia’s government are known to be supportive of propping up Australia’s manufacturing sector, with the new Industry Minister a vocal supporter of the auto industry. Meanwhile, opposition figures have indicated that they would look to dramatically cut subsidies for the auto sector, so Holden may be feeling extra pressure to get a deal signed sooner rather than later.

While Holden has previously been firm in its commitment to Australian manufacturing, the tone seems to have changed, with Holden indicating that further investment is a prerequisite for maintaining a manufacturing presence in the country. Holden isn’t alone either; Toyota is said to be looking for government subsidies as well, as a rapidly changing auto market and unfavorable exchange rates has left many auto makers caught flat-footed down under.

While other countries are making substantial investments in their auto sector, Australia, like Canada, has been taking cautious half measured, investing more modest amounts in conjunction with the OEMs and while adopting a “wait and see” approach. Both countries are watching their auto plants gradually fade in both importance and number, as cheaper manufacturing sites and unfavorable exchange rates and other structural factors erode whatever competitive advantages the two countries may have once had.

The nature of globalized product lines also doesn’t do any favors for Australia, which used to assemble vehicles that were locally popular, like large rear drive sedans and Ute pickups. But with the Ford Falcon gone, the Holden Commodore rumored to be moving to a global platform and consumers flocking to vehicles like the Toyota Hilux, Ford Ranger and Holden Colorado for their truck fix, Australian cars and their manufacturing sites seem to be slowly losing the battle for their lives.

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23 Comments on “Holden To Aussie Government “Moar Monies Plz”...”


  • avatar
    Freddy M

    So you have the Ford approach, which is “Australia is no longer a viable manufacturing location”

    Or GM/Toyota’s approach which is “Australia IS a viable manufacturing location because the subsidies make it so.”

    Either way, the local economy takes a beating.

    • 0 avatar
      carguy

      Neither option is pleasant but one is decidedly worse. If Holden closes local manufacturing then a few thousand folks will have to find new jobs and that will impact the economy. Australia’s economy is currently in good shape and they should be able to find elsewhere relatively soon.

      The other option is to have everyone in the country pay higher taxes to keep this charade going. Even if it saves 5000 jobs, $265 million would work out to be a subsidy of $53,000 per job. That simply doesn’t make any sense.

      However, don’t be surprised if the current labor government chooses this as they are facing an election in later this year and are way behind in the polls. Timing is everything.

      • 0 avatar
        CJinSD

        Agreed.

      • 0 avatar
        RobertRyan

        We are facing a similar situation to what you did as regards the bankruptcies of GM and Chrysler. Yes Holden can turn it around and it looks like the business environment is becoming more favourable by the minute.
        Trying to get a consistent Government Policy as regards the car industry is more frustrating.
        The irony is Australia is buying MORE Cars.Pickups, SUV’s,CUV’s and MDT/HDT trucks than ever before. No car meltdown so far.

    • 0 avatar
      rgil627il

      well said.

  • avatar
    TonyJZX

    they are doing this now because there’s big changes come September

    also a falling exchange rate favors exports but since they export sweet FA…

    you may also note that the government made some sweeping changes to the leasing taxation laws on vehicles which has a very negative effect on car sales

    they dont care about the car industry

  • avatar
    JD321

    If you want to accurate – Holden wants the Legal Mafia to put a gun to every Australian’s head and “ask” for money on Holden’s behalf.

  • avatar
    Big Al from Oz

    I think the Australia government first should ring Detroit, tell GM to send the money back that was stripped out of GMH to help save GM USA’s ass.

    Then tell the workers if you want to have a job, lower your income down to the minimum wage. Then take it from there, they will be competitive.

    That is fair, I’m totally against saving a company that can’t compete. The poor slob who owns a takeaway (takeout) doesn’t get saved if he has the wrong menu or is bad at business.

    If they do fold, there is no redundancy package for any worker, this goes for management. No money flows back to the US, the money is given back to the people/governement to help cover the costs of previous handouts or to re-educate the workers for a different occupation.

    • 0 avatar
      bball40dtw

      Look at you Mr Ryan with principles and ideals. Too bad corporations and governments have neither. I’m sure if the Australian government called the RenCen to get their money back, all they would hear is a dial tone.

      Just for my education, because I’ve never been to Australia, and my sister who studied at University of New South Wales for a few semesters doesn’t care about cars, are there automotive towns in Australia like Detroit or Flint? Did Ford and Holden set up factories and towns sprung up around them? Hopefully there aren’t places solely based on one industry like Detroit.

      • 0 avatar
        RobertRyan

        @bball40dtw,
        Geelong in Victoria really depends on Ford so it will be a hard hit when it goes.
        The Ford fob of introducing a RHD Mustang when Geelong closes will not be lost on the workers and the specialist FPV division
        http://fpv.com.au/

        I should add Australians are not great fans of Coupe’s, although we produced two limited run Holden Monaros(mid 1970′s model and the later Monaro that became the Pontiac GTO).

        Ford has basically dropped off the Automotive map here and I cannot see it ever coming back. Well they will be not selling to many in Geelong or to ex-FPV people that is for certain.

      • 0 avatar
        pacificpom2

        Elizabeth in South Australia is also a “car” town seeing that Holden has its assembly line there. A Holden shut down would decimate that town. There are no more jobs around unless (1) you have a skill transferrable to the defence sector i.e. building warships and subs. There is no light manufacturing left in SA or Australia for that matter. The mining industry is not expanding, the tourist sector is abysmal and farming isn’t going to absorb that many people. When Holden goes, Toyota will go and that will be the end. Imagine Chrysler, Ford, Toyota, GM el al all going from the American landscape. No car manufacturing, no suppliers. Follow on effects in the transportation, finance, and specialist manufacturing industries would also be in dire straits. I do not know what the welfare system is in America, but over hear the burden on the state would be enormous. If saving Holden comes at a price so be it. I personally do not want to support a huge unemployed sector. If my taxes are going to save the 900+ jobs directly at Holden I’m happy. If my taxes are now going to have to support 6000+ extra dole recipients, that will hurt. I know that this amounts to “socialism” in some peoples eyes, and is an anathema to a lot of Americans but that is the nature of this country. We tend to look after the lower strata of society, we may not be the best at it, but it is certainly better, in our eyes, that the other extreme of “too bad, no job, we don’t care about your well being because it’s not my problem.” Of course there are external factors that yes, both Ford and Holden clung onto an out-dated idea of what Australians wanted in their cars, and the market spoke. The high exchange rate also is a factor making imports cheaper, the stupid notion of a “level playing field” and fta’s.
        You guys had the mantra that GM was to big to fail and successive US governments ensured that GM et al survived the GFC and market opinions. Why can’t we? Some of us here are also of that opinion, the collapse of the car industry is not palatable. There are no more jobs to go to. This is not Europe and America where there is a culture of moving from job to job in the same industries. Holden/Toyota and I wish Ford would remain,as part of a “work for the dole” equation in the extreme.

        • 0 avatar

          I understand how you feel, but wasn’t that how British Leyland was devised ?

          • 0 avatar
            RobertRyan

            No similar to the US bailouts of GM and Chrysler except there is no Bankruptcy.
            British Leyland was a creation of the then British Labour Party to administer the many small underfunded private British Car companies that existed at the time as an attempt to save the British Industry.
            Car companies have been allowed to close in
            Australia, Mitsubishi and Nissan had operations that were not viable.
            I agree with @pacificpom2 that there is a threshold point, like in the US where you need to retain that Industry. The US did that to retain its industry at the time of the GFC.

      • 0 avatar
        Big Al from Oz

        @bball40dtw
        Hey, I’m not Mr. Ryan. If you can’t see I have a slightly different view on how to manage the demise of the Australian auto industry.

        We don’t have a situation as dire as the US concerning ‘Motor Cities’.

        Geelong as Robert Ryan pointed out has a degree of reliance on FoMoCo. But, it could be considered a suburb of Melbourne. Many people from Geelong commute to Melbourne to work. If you don’t know Melbourne, it is a city of over 4 million inhabitants.

        Even when the Australian currency was at 65c to the USD we weren’t competitive. We exported few vehicles by world standards.

        In 1991 I wanted to buy a Nissan Pulsar, it was $21 000, now they are $20 000. In 1997 I bought a $46 000 Nissan D20 dual cab diesel Navara ST, equivalent to a mid spec. I just bought a Mazda BT50 with leather and power everything for $51 000 driveaway. That same Navara I bought in 97 can still be bought for $33 000.

        We have deregulated our industry gradually since the mid 80s and there is still one more 5% tax they will remove. Since deregulation our vehicle industry has prospered and Australian vehicle costs have dropped as I have shown.

        If we look at our Australian auto industry through the eyes of ‘nostalgia’ and emotion we forget what the cost has been to our country.

        If you look at it from a business perspective, then you will get rid of it.

        Newcastle, 100 miles north of Sydney had a much larger BHP steelworks. 12 000 people were employed not counting the 1 000s support industries, ie, engineering, logistics etc. Everyone said Newcastle will die as a city, it didn’t. BHP closed shop and Newcastle has boomed. So Geelong might not vanish when Ford goes, there’s a good chance it will prosper like Newcastle did.

        • 0 avatar
          bball40dtw

          I appreciate input from anyone with knowledge of the Australian auto industry. I find it interesting and more knowledge is a good thing. Thank you all.

  • avatar
    Big Al from Oz

    Here is why an auto manufacturing industry isn’t viable in Australia.

    Read this article and see how much you earn working at McDonalds in Australia.

    Essentially its to expensive to subsidies our auto manufacturers.

    http://www.news.com.au/business/worklife/mcdonald8217s-slammed-for-budget-fail/story-e6frfm9r-1226681193539

  • avatar
    doctor olds

    If your manufacturing sector dies, what will you do for national income when the natural resources run out?

    • 0 avatar
      Big Al from Oz

      @doc olds
      I think you live in the past when manufacturing of a nation measured its success. We don’t live in the 50s and 60s anymore.

      We have agriculture and the associated industries as well as mining and the associated industries, as well as tourism, our level of manufacturing is almost on par with the US as it represents 12% of our GDP.

      Australia is currently investing into what is called the NBN, the national broadband network. This will leave many nations behind in communications. This is the future as well.

      Developing infrastructure to allow us to be more competitive is investing wisely. Investing into union supported nowhere jobs and industry is an unwise investment.

      If more manufacturing was viable we would have it, just to reduce our standard of living to make us competitive unnecessarily is bad business.

      Our resources have over 200 years before depletion. Check out Australia reserves of mineral wealth, you’ll be shocked. I’m talking economically viably extracted minerals.

      I recommend we wait until then to find out what to manufacture.


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