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Anger at latest Holden job cuts

Small change: Holden’s decision to cut its workforce was due to declining sales of the Cruze small car rather than the ongoing large-car slump.

Holden dismisses claims job cuts breach co-investment deal with SA government

Holden logo9 Apr 2013

GM HOLDEN’S announcement it will cut its workforce by 500, with 400 of those at the Elizabeth manufacturing plant in Adelaide, has raised the ire of unions and South Australian premier Jay Weatherill.

Mr Weatherill lashed out at Holden, claiming the latest round of job cuts are in breach of the car-maker’s agreement with the SA government for a $50 million contribution to the government co-investment guaranteeing local manufacturing until at least 2022.

In an interview with the ABC, Mr Weatherill said the SA government’s agreement with Holden included a “commitment to minimum employment levels”.

“That’s been breached by the announcement that’s been made today,” he said. “Suffice to say the 400 reduction announced today brings it below those levels.” SA Unions labelled Holden a “shocking corporate citizen”, with state secretary Janet Giles describing the job cuts as “a breach of faith with Australians who have supported the car-maker for decades”.

“Holden took money from South Australian taxpayers and then just tore up the agreement.” But in a media conference call yesterday, Holden chairman and managing director Mike Devereux said the company did not yet have a contract with the SA government and that in any case, the money was not planned to be received until after 2016.

“We had a $50 million preliminary agreement – which had not been contracted yet – with the South Australian government … we haven’t actually put pen to paper on that one yet,” he said.

“We are not in breach of anything we discussed with the federal government and we don’t have any signed contracts with the South Australian government yet or the Victorians, not for any other reason than we are still working through the details of the contracts.” Shadow minister for innovation, industry and science Sophie Mirabella criticised the Labor government for providing local car manufacturers with financial assistance without seeking guarantees over job security and “with no transparent criteria”.

“Tens of thousands of car industry jobs have already been lost under Labor. The other critical industry indicators such as vehicle production, exports, R&D, turnover and productivity, have all dropped under Labor, despite them having grown consistently under the Howard government,” she said.

Meanwhile, acting minister for climate change, industry and innovation Gary Gray said Labor is investing $5.4 billion to 2020 under the New Car Plan while the Coalition “wants to take out $1.5 billion from the automotive sector, endangering tens of thousands of jobs and the sector’s viability generally”.

Although it is well known the protracted decline in large car sales in Australia have put pressure on local car manufacturing, Mr Devereux said the cut in production line workers at Elizabeth was “mostly attributable to a drop in Cruze volumes”.

He said the decline in sales of Holden’s Australian-built small car was “precipitated by fairly vicious price competition”.

 center imageFrom top: Holden chairman and managing director Mike Devereux, Holden VF Calais, Shadow minister for innovation, industry and science Sophie Mirabella, Holden Cruze and South Australian premier Jay Weatherill.

“With the sustained strength of the Aussie dollar and some of the active participation of central banks in some countries to weaken their own currencies and protect their own automotive industries, we are certainly having to react to that as we build a trade-exposed vehicle here in this country.” Just 1606 Commodores were sold last month, slipping 40.2 per cent year-on-year and dropping out of the top 10 for the first time in its 34-year history, while Cruze sales fell 19 per cent to 2335 units.

From August 1, the production rate at Elizabeth will reduce from 400 units per day to 335 units, across 220 production days per year, equivalent to 73,700 units per year, and Mr Devereux expects around 60,000 of those will feed into the Australian market.

“We would like to be making a heck of a lot more than that and frankly through sharper marketing, sharper pricing, we hope to do just that and hope to maintain that level and over time – perhaps even increase it,” he said.

“We are optimistic about our continued stability of export volumes and really our story from today is the trade-exposed nature of the small-car segment, really being impacted by dramatic shifts in currencies that we really don’t have control over, literally in the last three to five months.” Mr Devereux said Holden wants to “make sure that we continue to be able to build things in Australia”.

“The challenging times certainly don’t make it easy to do that but we are committed to being able to do that for hopefully many years to come.” But he could not guarantee there would not be further job cuts in future.

“Just as in life there are no guarantees to how many cars people are going to buy, what the automotive market might look like three or four years from now, what the value of the Aussie dollar might be, what people’s preferences for the vehicles are,” he said.

Engineering revisions and price cuts just applied to the Cruze and an upcoming launch of the radically redesigned, much-anticipated VF Commodore should help boost sales – but Mr Devereux remained conservative.

“All I can do is focus on what I can control and that is putting a couple of great cars into the plant, I think we’ve done that with the changes to MY14 Cruze … we did see a little up-tick in the month of March but we have got to plan our business to what we see – I hope we sell more Cruzes.

“The VF Commodore is the second part of that equation – nobody’s even driven it yet and we’ve got fantastic response from a lot of people who have seen it in the flesh and we hope we sell a lot more of those.

“But for the short-term future time-being we see 335 a day, 220 production days as our plan for the next little while.” The latest round of Holden job cuts come just months after it shed 170 production roles in November and 100 in February last year.

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