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Holden was “on a knife edge” – Devereux

Local saviour: Holden chairman and managing director Mike Devereux says Australian production of the Cruze small car will be vital for the company.

Cruze local manufacturing decision in 2008 sealed Holden’s Aus future, says MD

1 Mar 2011

GM HOLDEN has revealed it was at a crossroads just two and a half years ago, when the threat of closure was a real possibility as it awaited financial support from the government to add the Cruze small car line alongside the VE Commodore and WM Caprice at its Elizabeth plant in South Australia.

“It was the worst time in our history no doubt,” GM Holden chairman and managing director Mike Devereux told GoAuto on the eve of this week’s unveiling of the Australian-made Cruze Series II small car – the model he says saved Holden manufacturing.

“If we didn’t have the backing that we did from the federal and South Australian state governments we would not even have come close to making the local Cruze happen.”

Holden accessed $149 million from the federal government’s Green Car Innovation Fund and another $30 million from the SA government to help bring the Australian-made Cruze to market next month.

The plan was formulated by ex-Holden boss Mark Reuss in 2008 as the end loomed for the company’s vital Pontiac G8 export program to North America, during the worst global economic downturn since the Great Depression and when oil prices were at an all-time high, scuppering demand for V8-powered performance vehicles worldwide.

13 center imageLeft: GM Holden chairman and managing director Mike Devereux. Bottom: Former Holden chief Mark Reuss.

Additionally, US parent General Motors was sliding into bankruptcy, effectively ruling it out as Holden’s financier.

“You have to remember that in late 2008 the world for General Motors was caving in. We were on a knife-edge.

“By building the Cruze in Adelaide, it makes it more viable for us to have Commodore. I can’t just conjure up 40,000 additional exports for Commodore and Holden can’t just survive on 60,000 Commodores every year.

“We lost between 35,000 and 40,000 US export Commodores as a result of the demise of the Pontiac G8 (announced in mid-2009).

“So to have stayed with just one car line is not viable. You have to be building over 100,000 cars to be viable – we tried to achieve that with the G8 Commodore but of course it went away.”

With General Motors attempting to shore up its own survival during 2008 with billion-dollar lines of credit from an at-times hostile US Congress, Mr Devereux admits Holden did not know if it was going to be sold off (as GM attempted with Opel and Saab) or shut down (like Pontiac, Saturn and Hummer eventually were). “To be frank, nobody knew what the future held, for anybody who worked at GM at the time.

We had no idea what the ‘New GM’ was going to look like either… we had already ditched four brands.”

It was not until December 22, 2008 that Holden could announce that local Cruze production would commence during late 2010 or early 2011.

Just one month later Mr Reuss revealed to GoAuto at the 2009 North American International Auto Show in Detroit that the then-secret hatchback version designed at Fishermens Bend in Melbourne would join the sedan down the line.

Mr Devereux went on to praise the Labor governments of the time – with Senator Kim Carr, then Prime Minister Kevin Rudd and the Mike Rann government of South Australia singled out in particular – for “understanding” Holden’s situation and the importance of adding a second vehicle line.

“Not just in order to ensure continuing production but to also help keep suppliers in South Australia, Victoria and elsewhere in business,” he said.

“For (local Cruze production) not to happen and go away, it would have been a tragedy.

“It is just remarkable that the federal and South Australian state governments reached the decision that they did when they did.”

For his part, premier Rann told the gathered dignitaries – including Prime Minister Julia Gillard – that he was not about to let yet another car factory close in South Australia on his watch.

“We saw what happened at Mitsubishi and we were not prepared to let that happen to Holden,” he said.

“And we saw what was happening in America and the rest of the world, and we didn’t want to see that happen to South Australia too.”

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