News - Holden
Punch's Holden plant bid fails
No go: The proposal put forward by Guido Dumarey from the Punch Corporation to continue manufacturing at GM Holden's Elizabeth plant beyond 2017 has been canned.
Canberra puzzled, FAPM irate as Punch’s bid to keep Commodore in production fades
29 February 2016
GENERAL Motors has announced that the Punch Corporation proposal to keep
Holden's assembly plant in Elizabeth, South Australia in operation after
production ceases in 2017 will not go ahead.
The failure of the proposal to progress has been met with scorn and scepticism
by some government and industry figures.
A joint statement from GM Holden and Punch Corporation released late on Friday
said that the two companies undertook a “detailed global evaluation” of the
proposal before determining it would not proceed.
“Both parties concluded that a viable business model was not possible for this
case. Therefore the proposal will not be taken forward,” the statement read.
“The challenges to domestic automotive manufacturing in Australia – lack of
scale, high production costs, supply base contraction and increasing market
fragmentation – persist and cannot be overcome for this business case.
“In particular, the wind down of the supply base following the manufacturing
exit of the three existing car makers, and the critical production mass they
represent, is insurmountable.
“GM thanks Punch Corporation for their proposal. GM will continue to consider
Punch Corporation, along with other interested parties, to participate in the
sale process of the Elizabeth plant and assets after GM ceases local
“Punch Corporation will continue to pursue other business opportunities in the
Australian automotive sector.”
Both industry minister Christopher Pyne and one of his predecessors, Senator
Kim Carr, expressed doubt about the claim that GM and Punch had completed a
“detailed global evaluation” of the proposal before pulling the pin, while the
local parts industry was irate about being made the scapegoat for the decision.
“What I think about it isn’t printable,” Federation of Automotive Products
Manufacturers (FAPM) manager Tom Chappell told GoAuto on Sunday night.
“They’ve got their own reasons for not doing it, but the supply chain is not
one of them.
I was pissed off when I read that.”
The failure of the proposal means the car industry will shut down at the end of
2017, with the estimated cumulative loss of 45,000 direct jobs within the
car-makers and the Tier One parts suppliers.
Many more indirectly employed workers are also threatened in the Tier Two and
Tier Three companies that form part of the Australian supply chain.
Shock and dismay over the decision was shared across the political divide in
“I am surprised and disappointed at the sudden announcement from Punch
Corporation and General Motors this afternoon,” Mr Pyne said in a statement. As
industry minister, Mr Pyne has recently expressed concern about the imminent
closure of the car industry.
“It does not match the statements both Punch and GMH have made to me,” his
Senator Carr told GoAuto on Sunday night that he shared Mr Pyne’s
He said he had been aware that Punch chief executive Guido Dumarey – who was in
Australia earlier this month – was scheduled to have a meeting in Tokyo late
last week with a team from GM’s head office, not GM International's regional
office in Singapore.
“I thought the Tokyo meeting was about getting more information. It was a
series of questions they needed answering before Punch could put together a
full financial plan.
“I don’t think they (Punch and GM) did do a full financial plan. There’s
something else going on,” Senator Carr said.
In the joint statement issued after the Tokyo meeting, Punch and GM cited
several reasons for the proposal not going ahead, including a lack of
production scale, high production costs and fragmentation of the market, as
well as the wind down of the supply base.
However, FAPM’s Tom Chappell dismissed that excuse out of hand.
“GM’s got their own reasons for doing this, but the supply chain is up and
running,” he said.
“The companies are supplying, they are supplying at rate. Why they could not
keep supplying (to Punch) is beyond me.
“No-one’s closed down. They are still planning to supply for the next two years
and many of them are continuing to diversify out of automotive and into other
things, so they’re financially viable in the long run.”
Mr Chappell said FAPM members were keen to keep supplying to the Elizabeth
plant after GM left.
A recent survey of parts suppliers showed that 100 of the remaining 150 would
close their doors if car manufacturing ceased in 2017.
“If, by some fortunate strike, this all came together and it worked, those guys
would have moved heaven and earth to supply to a new venture building
Commodores in Adelaide for global markets,” Mr Chappell said.
“I’m sure they would have thrown all their weight behind that to support the
bid from Punch going forward.”
Mr Chappell said the local supply chain was keen for the plant to keep
“I want it on the record that the supply chain is fully supportive of this bid
and there is no reason to think that the supply chain could not fulfil that
task of supplying parts to Punch for the long term.”
Mr Chappell said he believed the decision was one made back in the Detroit head
office of GM and not at Holden headquarters in Fishermans Bend.
“I don’t think they were even involved in the decision. It was a decision made
in Detroit by the merger and acquisition guys.”
Mr Chappell said it was a simple case of GM wanting to stay in the Australian
market but not wanting the expense of manufacturing.
“They want the revenue, but they don’t want the costs.”
There were other reasons to be sceptical, according to Mr Chappell.
“Why would they let someone else take a share of their market? Why would they
let somebody else sell Commodores against their Commodore replacement?
“To me, it’s just a very hard-nosed business decision that doesn’t make any
allowance for all the hard work that’s been done over many years by good old
Australian engineers and workers, and the taxpayers.”
Despite the disappointment about the decision and the scepticism about there
having been a full financial assessment done, Senator Carr said he would
continue to concentrate on the positives.
“Punch says in the joint statement that it is looking at other Australian
automotive investments and I believe they are coming to Melbourne again very
soon,” Senator Carr said.
“I welcome Punch’s continuing interest in further investment opportunities in
the Australian automotive industry and I will do all I can to facilitate
keeping Australian automotive workers in employment.”