By on December 19, 2013

holden-emblem

In the wake of General Motors’ decision to cease all manufacturing operations through Australian subsidiary Holden by 2017, the Australian government has announced that they will create a $100 million AUD ($89 million USD) fund for affected employees.

Australian Prime Minister Tony Abbott is creating the fund and programs related to help transition the nation from heavy industrial manufacturing to “higher value-added” production beyond subsidies. Abbott had this to say about the matter:

In the end, no government has ever subsidized its way to prosperity. This government will be very loathe to consider requests for subsidies. We will be very loathe to do for businesses in trouble, the sorts of things that they would be doing for themselves.

The fund will comprise of $60 million AUD from the federal government, $12 million from the state of Victoria, and the remainder from the state of South Australia. Abbott expects GM will contribute the fund, as well.

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25 Comments on “Australian Government to Create $89 Million Fund For Affected Holden Employees...”


  • avatar
    Ron B.

    Although he has only been PM for just over 100 Days,the news media in Australia is blaming Tony Abbott personally for GMH pulling the pin. Fortunately most of us know the truth and can disregard most of what the press has to say about Abbott. It’s a pity they weren’t so critical of the previous mob. GMH who have been building mediocre expensive cars since 1948 has recieved millions upon Millions from the Australian tax payer,but thanks to a barely competent Labor government , the country can no longer afford them . What Australia should really do now is remove all import restrictions on cars ,as New Zealand did ,and leave the car builders to face the real market forces,in other words … sink or swim .
    GM has plants in Indoneseia where they exist thanks to overly generous subsidies (amongst other countries ) , so It would appear that GM is really only in business to extract monies from Host coutries and when the funds dry up they pick up their bat and ball and sulk off home. Bye bye GMH,we wont miss you.

    • 0 avatar
      charly

      He, or more specific the electorate is to blame. They choose raw material extraction instead of industry. Had they banned coal export people would have had jobs and Australia a middle class.

      ps. Tilting the playing field is how you make great countries. One very effective way is subsidies like those given to the American semi conductor industry

      • 0 avatar
        Big Al from Oz

        @charly
        We have no other choice. Only GM can alter this.

        Mining and agriculture has long been around propping up the Australian economy prior to the existence of Holden.

        I think the $100 million is sufficient. It will be interesting to see how much GM throws in, especially after the billions it has received.

        As developing economies catch up to us more and more manufacturing activities will be offshored. Look at food processing in Australia. Food is grown here, then sent offshore and returned processed. That’s how uncompetitive we are in what can be regarded are quite basic manufacturing in a changing world, like vehicles.

        The current government made the correct decision and its supported by the majority. The problem is the previous Labour government has left a lot more debt than they admitted to.

      • 0 avatar
        ect

        The electorate doesn’t define the economy, the market does. Had Australia chosen to subvert the market by banning coal exports, it would be a poorer country, not a wealthier one.

        Labor in the 1980s recognized the failure of the high-tariff import substitution policies that had prevailed in Australia, and moved to dismantle them. Ironically, something they could do – and National/Country could not – because they were telling their own constituency that those policies had failed, and needed to be changed.

        And what are these “subsidies” you believe the US extends to the semiconductor industry?

    • 0 avatar
      mikey

      @ Ron B. We have a few guys that comment from Oz. Your has been one of the most interesting.
      As a retired GM Canada employee. I’m following the situation in Oz quite closely. We in Canada are facing a very similar situation.

      We have the advantage of a less expensive geographic location. With the Loony sitting at 5 cents below the USD, it helps. IMHO I’d like to see the Loony around 20 cents behind the greenback.

      As far as extracting money from Host countries. GM is not alone. All of the car companies do it, every where in the world. Did GM make a commitment to the government of Australia?
      In the mid 90’s we had 20000 hourly in Oshawa. Today, after the government bail out, we got 5000. GM has agreed to keep production levels until 2016. After that?????

      In fairness GM is not alone in this practice. Honda, Toyota and the Koreans all shop for the best deal. I can’t say as I blame them. Its the way of the world these days

      • 0 avatar
        raph

        Indeed Mikey, corporate welfare is huge and just not peculiar to GM or Chrysler or Ford in an outside the US.

        The auto industry relies on a lot of cottage business local and otherwise to support its manufacturing so the effects are going to be greater than just GMH, I believe when GM was in danger of disintegrating in the US the factor commonly cited was at least ten times as many people ( or was it 100 times? I might be understating things) would be affected as suppliers would be harmed as well as unrelated business that supported the employees like restaurants and the like.

        • 0 avatar
          mikey

          @raph Oshawa and the areas 50 miles to the east and north took on awfull beating 2007 to 2010.

          What mostly saved us was Toronto housing costs sky rocketing. We became a bedroom community. We also expanded our community College, and created a university.

          That being said, I can drive 5 miles from where I sit, and the devastation is very evident.

    • 0 avatar
      NMGOM

      Ron B. – – –

      “…so It would appear that GM is really only in business to extract monies from Host coutries and when the funds dry up they pick up their bat and ball and sulk off home.”

      That is exactly what any modern corporation should do for its stockholders. And I’m sure you’ll see others following suit (e.g. Ford, Toyota).

      A corporation is capitalistic. It exists SOLELY for those who have invested in it. It does not exist to cater to the government-sponsored socialism of inefficient economies.

      I hope that the $89M deal from the Australian government will be used ONLY to help employees get other jobs to continue working elsewhere, and not to be on the “dole” for the rest of their lives, drowning their sorrows in Foster’s.

      —————-

      • 0 avatar
        Pch101

        Aussies don’t really drink Fosters. It’s not well regarded locally; the same brewer makes other beers for domestic consumption (many of which aren’t much better.)

    • 0 avatar
      Pch101

      “the news media in Australia is blaming Tony Abbott personally for GMH pulling the pin.”

      Then the media is getting the story right. It should be pretty obvious that GM was awaiting the election results before making an announcement, and believes that it won’t get enough support from Abbott’s government to make it worth staying.

      The issue of whether Holden should be subsidized is different from the question of what GM would have done had Labor remained in power. For better or worse, Labor is more likely to have provided the kind of support that would have kept Holden going for a few more years.

      • 0 avatar
        doctor olds

        Ryan- Pure fantasy. They just can’t compete.

        • 0 avatar
          ect

          Ryan, doctor olds assessment is worth far more than the imaginary “facts” that spew from your posts.

          PM Abbott has the right perspective, albeit a very tough row to hoe. High wage countries with highly educated workforces cannot compete in traditional “brawn-based” industrial activity. Nor should they try. That workforce is most competitively deployed in higher value-added, more complex activities, where they gain advantage from productivity.

      • 0 avatar
        Pch101

        In other words, the enormously high import tariff that the US levies against imported Australian cars (0%, or if you prefer, zero percent) has led to the failure of the Commodore. Yes, that makes a whole lot of sense.

        • 0 avatar
          Big Al from Oz

          @Pch101
          It’s great how you try and debate with a childlike and simplistic view.

          What about vehicle design, remember that is called a technical barrier.

          What about the changes from lefthand to righthand drive.

          There is more than just tariffs the US uses in trying to impede imported vehciles.

          Also, why would GM import from Australia, GM exists in the US. Why would Ford import from Australia, it exists in the US. Why would Toyota import Camry’s from Australia as Toyota exists in the US.

          I think you try and sound intelligent regarding business and economics and yet your views are tainted.

          Stating half baked and half factual bullshit is what let’s down your credibility.

          Learn how to be sincere. Sincerity is a great trait to have. You seem to have some intelligence deep down. Just try and dig it out now and then. Maybe you would become a reasonable debater.

          This is why I don’t debate you often as your comments are either incorrect or ambiguous with no proof to support your opinion.

          Opinion is just that. But at least give us a glimpse of why you have an opinion other than ‘it’s my word and you have to believe me.

          90% of your comments so far regarding Australia has been pure bull$hit.

          Research.

    • 0 avatar
      wmba

      @ Robert Ryan:

      So you want us to believe that at the height of the crisis back in 2008/9, a bunch of US government conspirators made it a condition of the bailout of GM that they would close down Holden?

      You flatter yourself that Australia or Holden was important enough that anyone spent 5 minutes pondering the question: “Hmm .. now, the US economy is totally screwed, the banks are going under, GM is bankrupt – perhaps we should spend some quality time discussing Australia and GM’s investment there, you know, as one of the most important problems we have in global trade and the huge implications on US trade and prosperity.”

      They didn’t even waste 5 seconds on this. Nobody cared. Just because you sat down and wrote your fantasy conspiracy theory doesn’t make it even remotely possible. I find it hard to follow your ramblings at the best of times, but this is ridiculous.

      I live in Canada, right next door to the US. When I visit there, as I have for well over 50 years, I have become inured to the fact that people living right across the border 100 metres away know SFA about my country. People in Calais ME refer to the place across the river as Canada not New Brunswick, while the Canadians think of Calais as Maine. We’re just an amorphous blob of land to an American. They’re only interested in themselves and are quite inward-looking. Hell, even their desperado crooks on the run stop at the border!

      The biggest sign that Americans knew that Canada existed used to be signs on ice-machines in towns next to the border: NO CANADIAN QUARTERS. That’s because the coin collectors took them to banks where equally uninformed people didn’t know what to do with them. A Canadian business couldn’t pay an American business with a Canadian cheque because their banks were so badly organized, interbank exchanges were unknown. We’d get them sent back from suppliers saying their banks wanted 20% to process them as late as 2002. Backwards doesn’t begin to describe their banks. But the mindset is indicative.

      Hell, US tourists on cruise ships that stop here in Halifax demand change in US coins and dollars to this day – big fuss last summer. International-thinking, as a general rule, the US is not. It apparently doesn’t sink in to the blue-rinse set from Philadelphia that wandering about a foreign port waving US greenbacks is supposed to make the locals turn into slavering Algerian bazaar owners eager to get a mighty US dollar. It’s an attitude from 1950s and 60s US movies, where army PFCs cavort with Italian countesses as if that were the way it actually was.

      I don’t care -it’s just the way it is.

      But you Australians should be aware that you are a complete sideshow as far as the US is concerned. Canada is too, and we’re a bigger non-event than Oz is.

      So I find it passing strange that the Australian commentators here seem to feel it their bounden duty to stand up and lecture the US on what they ought to do. Peeing in the wind, mate, and inventing fantasy because you think you’re important enough to matter is an absolute riot that attests to your complete misreading of actuality.

      Canada paid 20% of the bailout of GM and Chrysler. You never hear it mentioned by Americans – it flew right by their ears. They think they did it all. I’m beginning to think we should have kept our support to zero for all the thanks we got.

      So GM will pull out of Canada next. Then, as time goes by, they’ll pull out of the US too and run it all out of China. Then the real teeth-gnashing and wailing will reach a crescendo as the homeland is punted into touch for a few bucks.

      That’s what I see eventually happening.

      • 0 avatar
        Pch101

        The Aussies really fell for the idea that they had their own auto industry.

        Even “football, meat pies, kangaroos and Holden cars”…

        youtube.com/watch?v=VGW-WX77zjY

        …was merely a rewrite of the Chevy ad campaign:

        youtube.com/watch?v=yYXfdnhh2Mo

        The Aussie domestic producers were there only because of trade barriers. Reducing the barriers produced this inevitable result.

        Canada is not in the same position. Australia is a tiny market that lacks scale; Ontario is effectively the US with a different currency. Just so long as the exchange rate is manageable, there should be some sort of auto production in Canada.

        • 0 avatar
          mikey

          The CAW is history, and never was a “trade union”.

        • 0 avatar
          ect

          ““Canada is not in the same position” no it is worse, much more expensive than Mexico and has an expensive restrictive trade Union CAW.”

          Not so.

          Canada, like Australia, has an economy dominated by resource industries. And, like Australia, has a highly-educated, high-cost workforce, and a relatively small domestic population/market.

          So, both countries need to focus on industries that benefit from a more productive workforce. This means high-tech manufacturing, where production is done by automated processes/equipment managed by a small workforce.

          A vital difference that favours Canada, though, is that the Auto Pact and NAFTA have essentially integrated the US and Canadian manufacturing sectors, especially in the auto industry.

          In any capital-itensive industry, you need long production runs. The Australian auto industry has been producing a mutitude of vehicles for a small domestic market, which is a losing strategy.

          Canadian auto plants are part of the North American market, so cars built in Oshawa, Brampton or Oakville are built for sale across North America. Canadian plants prodcue a narrow range of vehicles, in large numbers, that are mostly sold in the US. In return, most of the “non-import” cars sold in Canada are made in the US. No ocean transport required.

          Thus, Honda makes Civics in Ontario that are mostly sold in the US. The Accords sold in Canada are made in Ohio. It roughly balances, has preserved the auto industry in Canada, and has significantly reduced the cost of cars in Canada. A big win.

    • 0 avatar
      mikey

      I’m going with “Pch 101” on this one. I won’t, however disagree with “wmba” on some of his thoughts, and views.

      With GM, like any other profit driven organization, it all come down to cost.

      The Loony is 6 cents behind the “Greenback”. Even an uneducated, retired, blue collar dude, like myself, knows what 6 percent means to the bottom line.

      • 0 avatar
        mikey

        Ontario has two Toyota assembly plants, and a Honda plant. Components are sourced from around the world. As are GM, Ford and the Chrysler plants. No Euro plants,and no Koreans….yet.
        To the best of my knowledge, we don’t import, or export any knock down stuff.

  • avatar
    mikey

    Ooops looks like my edit function isn’t awake yet

  • avatar
    Big Al from Oz

    Here’s an interesting link from one of our economic/finance sites.

    It shows the position of the current Australian government. It is 100% correct.

    Hopefully other governments around the world see the light as well. Subsidising/protecting under performing industries should be stopped.

    Globally governments should start to challenge large corporation demanding handouts as this money is coming from hard working people.

    http://www.businessspectator.com.au/article/2013/12/19/industries/end-road-good-money-after-bad

  • avatar
    mikey

    @ BAfO …As we mentioned yesterday, politicions rarely do the right thing. They base their policy decisions, on what they think will sell to the electorate.

    Its called democracy. As they say “far from perfect, but better than the alternative”.

  • avatar
    Big Al from Oz

    From my research I’m going to back Robert Ryan on this.

    GM is going to move Commodore production to the US. GM will finally have a needed quality rear wheel drive platform.

    The intention of GM has been to offshore production from Australia to low income economies. This has been mentioned numerous times over the years by GM.

    I have been discussing this very issue now for several years.

    The Canadians see the writing on the walls and now are going to accept UNECE regulated vehicles.

    Just like lumber that goes to the US from Canada the US will tax Canada when it needs to, just like any good friend should do;)

    The Australian vehicle component manufacturers are already looking at Asia as suppliers to make up for some of the loss by GM and Ford offshoring.

    Australia will come out of this much better than when Canada’s auto industry eventually falls over and is ‘offshored’ back to the US.

    Mexico is in a safer position. But China will become a supplier globally to all vehicle manufacturers. They already supply many components that are even used in American iconic vehicles like the Mustang.

    It seems manufacturers’ are becoming most loyal to the biggest providers of socialist industrial protection.


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