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Canberra warned on Holden exit threat

Decision time: GM needs clarity from government if it is to pump $1b into Australia to build the next Cruze and Commodore from 2016, says SA premier Jay Weatherill.

Urgent calls for Coalition to reveal planned co-investment in Holden beyond 2016

Holden logo19 Sep 2013

UPDATED: 11:44AMTHE South Australian government has requested urgent talks with the new federal Coalition government over the level of co-investment it intends to provide to Holden beyond 2016.

State premier Jay Weatherill warned this morning that unless the Abbott government could give clarity to its funding commitments by year’s end, the car-maker would cease production here within three years.

Mr Weatherill estimated the exit of Holden’s local manufacturing division would cost South Australia 16,000 jobs, either directly or from the supply chain.

Should Holden leave, this would put enormous strain on final remaining local manufacturer Toyota and local parts-makers that live off the car-makers, especially as Ford has already announced its exit from 2016.

In response, newly-appointed industry minister Ian MacFarlane told the ABC the government was “going to do all we can” to give Holden an answer on co-investment by Christmas. It is understood Mr MacFarlane wants to visit Adelaide in early October.

“The car industry has been pulled from pillar to post by the past government,” Mr MacFarlane said. “They changed the scheme that I left them when I was the minister.” “Reality is ... 80 per cent of Australians now buy imported cars as their private vehicles. So they've (Holden) got to build a car that Australians want to buy and Mike's (Holden MD Mike Devereaux) aware of this.

“I know he's got something up his sleeve. I'm hoping he'll show me in the privacy of his office plans for one.

“I will be on the side of the car industry. That's what I'm there for. I'm the minister for industry. I want to see industry happen,” he said.

Holden’s American parent company General Motors previously postponed a decision on whether to invest the requisite $1 billion to fund production of the next-generation Commodore and Cruze models at its Elizabeth plant in SA until after this month’s federal election.

Should Holden secure this GM investment, local production would likely be assured until around 2022. But GM’s decision is understood to hinge on the level of government funding promised.

Holden received $275 million in state and federal grants under the previous federal government, on the caveat that GM would spend $1b in private money. It was reported that after this agreement was reached, Holden then requested additional commonwealth funding a claim the car-maker has since hosed down as speculation.

In reference to this morning's claims, Holden corporate affairs manager Sean Poppitt told GoAuto today the company was "not in the habit of addressing speculation".

"We're going to sit down with the Federal government and have detailed discussions about the necessary policy settings to secure the future of Holden manufacturing in Australia," he said.

Prime minister Tony Abbott said in opposition the Coalition would cut around $500 million out of the $1.5 billion Automotive Transformation Scheme allocated to local car-makers, and is understood to remain committed to this plan in government.

Mr Abbott also promised that, if elected, the Coalition would launch a Productivity Commission review into Australia’s car-making industry, looking at the level of finding the industry receives – an idea rubbished by then-Holden government relations and public policy manager Matt Hobbs, who told us earlier this year that the process would take too long to resolve anything.

In an interview with the ABC this morning, Mr Weatherill said his government had reinforced to Mr Abbott “that co-investment is critical to the future security of Holden in Australia, and indeed the nation”.

“We’ve been negotiating with them (Holden) extensively over an extended period, we had an arrangement that involved a significant commonwealth contribution, and that does appear to be in jeopardy because of the policy the Coalition took to the election,” he said.

“They need a commitment as soon as possible. They are making decisions about $1 billion worth of investment in two new models which will secure the future of the plant for another 10 years.

“They need to know that they have a Commonwealth partner and indeed a state partner. We're certainly willing to make our contribution.

“The workforce has made its contribution by agreeing to very substantial wage restraint, so really it is over to the Commonwealth Government to see what contribution they're prepared to make to secure the future of Holden.”

Holden workers last month voted in the affirmative to proposed cost cutting measures to keep Elizabeth afloat, which included a three-year wage freeze and restrictions on annual leave.

The car-maker last week axed an undisclosed number of white-collar jobs in Victoria saying it was acting to protect the company’s long-term future in Australia. The move came just months after the troubled company handed redundancy packages to about 500 blue-collar staff at Elizabeth.

Holden sales are down 5.4 per cent this year in an overall market up four per cent. Holden posted a $152.8 million loss last year, at least partly because the high Australian dollar exposed local cars to increased competition.

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