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Kim Carr to meet GM, Ford CEOs in Detroit

Much at stake: Minister Kim Carr's upcoming meetings with chief executives from Ford and GM will be significant in determining the future of local car manufacturing.

Future of Commodore and Falcon at stake as Oz industry minister heads to Detroit

16 Dec 2011

MEETINGS between Australian industry minister Kim Carr and the chief executives of General Motors and Ford during the Detroit motor show will have a significant influence on the future of manufacturing for both companies in Australia, as well as its two iconic large cars - the Holden Commodore and Ford Falcon.

The Senator’s meetings will happen just as GM is considering how to proceed in 2018 when the upcoming 2014 VF Commodore is due to be replaced.

For Ford, the time frame is different, with the next all-new Falcon due by 2015, but global design chief J Mays has indicated that the form of a future Falcon will be unveiled at the Detroit show in January.

The aim of both meetings is the same, Senator Carr said. He wants to secure investment in the local industry to ensure it has a future.

“There are two separate missions,” he told GoAuto about his Detroit trip.

“There are the decisions in regard to the future of GMH, being made next March, and the questions in regard to Ford, which are on a different time scale.”

“But I am concerned to ensure that we get some certainty,” he said.

 center imageLeft: Minister for manufacturing and defence material Kim Carr. Below: Holden Cruze and Toyota Camry.

The Senator’s mission to Detroit indicates that he has lost none of his enthusiasm for the task of ensuring the future of the Australian automotive industry since he was stripped of a large part of his portfolio and ousted from the federal Cabinet in prime minister Julia Gillard’s latest ministerial reshuffle.

Senator Carr lost responsibility for industry, innovation, science and research, but retained responsibility for manufacturing and was also appointed minister for defence materiel.

The talks in Detroit early next month will cap lengthy discussions between the ninister and the two US companies.

“There’s negotiations continuing. They’re live. I have undertaken them for some time.”In an interesting twist, he indicated that he might be able to adapt the New Car Plan for a Greener Future to changing circumstances.

“I have the authority of the government to seek a revamping of the New Car Plan,” he said, without elaborating.

At present, the principal policy available is the Automotive Transformation Scheme, which started in January this year.

Under the ATS, car-makers will receive assistance in line with their output and also will be able to claim up to 50 per cent of any research and development done and up to 15 per cent on any investment in plant and equipment.

He said the first stage of the ATS, which has $1.5 billon available between 2011 and 2015, would prompt the investment of $4.2 billion in that period. That investment will underpin production valued at $39 billion in the same period.

However, there will be no new money available from the government and any projects will have to be achieved within the current policy budget.

“This is an environment where we are facing production levels around 1957 levels and the high value of the dollar. The economic uncertainty requires us to be creative.”However, the minister ruled out a temporary tax on imports to counter the effect of a surging currency, as Brazil has done with its Industrial Products Tax, which applies up to 55 per cent on top of the standard automotive tariff of 35 per cent.

Like Australia, Brazil’s currency has dramatically increased in value due to the resources boom.

“We have no intention of introducing such a tax. There is no appetite in government to change these arrangements,” Senator Carr said.

“We have to be creative in terms of the pattern I have adopted with the New Car Plan for the last four years. We have to adapt to changed circumstances.”And, even though the plan has not been changed since the global financial crisis in 2008, Senator Carr believes his New Car Plan has worked.

“The fact remains that the proof is in the pudding. It works. The co-investment approach works,” he said.

In his role as president of the nation’s peak motor industry body, the Federal Chamber of Automotive Industries, GM Holden chief Mike Devereux has been critical of the axing of the Green Car Industry Fund, which generated $2 billion of investment for a government outlay of $500 million.

However, Senator Car said the GCIF was a key factor in the introduction of the Holden Cruze small car, Toyota’s hybrid Camry and Ford’s upcoming turbocharged four-cylinder Falcon, the EcoBoost engine in which was recently named one of the world’s 10 best engines by Ward’s.

The GCIF also played a part in the development of the one-piece carbon-fibre wheel, the commercialization of Orbital’s liquid-injection LPG system, the Futuris one-piece carbon-fibre seat frame and the all-plastic rear-view mirror.

There has also been a successful business improvement program for many parts manufacturers, producing average cost savings of $1.3 million a year for the companies that participated.

“So, the scheme works,” said the minister said. “But we have to adapt it to changed circumstances, particularly given the very low production numbers we have at the moment, which makes attracting capital to Australia very, very difficult.”Senator Carr said it was important to maintain the high level of skills within the local car industry during this period of adverse exchange rates.

“I am seeking investment so we can maintain full capabilities of design and engineering right through to the showroom floor, and I want to encourage the capability for exports when the dollar returns to more normal levels.

“It is critically important that we keep the capabilities in the country. We’ve got to be able to work our way through these acute stresses that are on the industry right now. This is vital to the future employment in the industry.”Senator Carr stressed that his move to the outer ministry had not changed his responsibilities to the car industry or, indeed, government policy.

“In the new job I have got, the policy will continue. I want to reassure the industry that government policy hasn’t changed. I’m still doing the auto industry because it is a vital part of manufacturing.

“One of the main reasons I accepted this new role is because of the sense of obligation I have to the people who work in this industry.

“I am determined to do all in my power to ensure the continued viability of the industry in Australia, given how important it is to the society.”Last month the Association of Professional Engineers, Scientists and Managers Australia (APESMA) launched a ‘Save our Commodore’ campaign after emerging from enterprise bargaining agreement negotiations with Holden management with the claim that the next all-new Commodore is “likely to be replaced with a medium front-wheel (drive) car designed and largely produced overseas”.

The move could see up to 350 jobs cut as early as the first quarter of next year, while Ford is deliberating on a switch to a global front-wheel drive platform for its next Falcon, which could be largely designed and engineered overseas.

If both plans go ahead, Ford’s recently updated FGII Falcon and Holden’s facelifted 2014 VF Commodore will be the last large rear-drive cars to be engineered in Australia.

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