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Holden destiny in our hands, says Reuss

Exports slump: GM Holden boss Mark Reuss has declared that Holden has to find its own solutions.

As its parent company struggles, GM Holden hopes to Cruze out of trouble

Holden logo19 Feb 2009

GM HOLDEN’S fate as an Australian manufacturer is in Australian hands, according to its chairman and CEO Mark Reuss.

“I still think we control our own destiny here,” he said on ABC radio in Melbourne today, indicating that Holden needed to find its own solutions while its US parent was fending off bankruptcy.

“If this operation doesn’t work, certainly this wouldn’t be part of the viability plan for General Motors.”

In Washington, Holden’s parent company GM has asked the US government for $US30 billion in loans to help it survive the global crisis while it restructures for a viable future.

It told the US treasury that it would cut 47,000 jobs globally – 27,000 of them outside the US.

In Melbourne, there is speculation that Holden will bring forward the planned closure of its Port Melbourne four-cylinder engine plant from late this year to as early as next month, at a cost of more than 500 jobs.

Mr Reuss said Holden’s export program – which made up 50 per cent of its business – had crashed in the past four weeks as orders for cars such as the Commodore-based Pontiac G8 in the US dried up in the global recession.

“We had a really good export business, but I got to tell you, the export business has gotten unbelievably tough in the last four weeks, really,” he said.

Mr Reuss said that globally, people were saving money because of the uncertainty.

“The world is changing around us faster that we could ever predict, and the market as well,” he said.

While he stopped short of declaring potential jobs cuts at Holden’s facilities in Victoria and South Australia, Mr Reuss said the US situation would have a direct impact on Holden because of the two-way business relationship with both products and intellectual property, such as design and engineering.

But he said the impact would be mitigated by Holden’s quick action to rein in production and the introduction of a new small car to be built on GM’s new Delta platform in Australia from 2010 (thought to be a version of the Chevrolet Cruze).

“When that resource (GM) gets threatened, we have to be very creative in Australia with projects to keep that keep resource intact, and that’s where the Delta comes in,” he said.

 center imageLeft: Chevrolet Cruze.

When it was announced, GM Holden said the Delta project would create 500 to 600 jobs at its Elizabeth factory north of Adelaide, plus a further 500 to 600 positions at suppliers.

Mr Reuss said the financial assistance from the Australian and South Australian governments would be vital to the success of the Delta project and Holden’s future in general.

He hinted that Holden would not have to seek more aid to fund Delta, saying: “The business model for that (Delta) is quite different than the United States where the company is actually going after and getting bridge loans because of the market drop.”

The federal government has offered Holden $149 million from its green car innovation fund over the next three years to help it begin production of the Cruze, while the South Australian government has offered $30 million over four years.

Asked if it was possible that GM would offer Holden for sale alongside Saab, Hummer and Saturn, Mr Reuss said Holden was much more valuable as a part of the global GM group because of its interwoven product and intellectual property relationships.

He said it would be difficult to separate that if a sale were contemplated.

Mr Reuss said he did not know what steps Holden would take if GM filed for Chapter 11 bankruptcy “because we haven’t actually gotten to that point”.

He said his job was to make Holden work. “The customers tell me that, the prime minister tells me that, Kim Carr (federal industry minister) tells me that. More importantly, the workers in Holden tell me I have that in my hands. I have taken that to my heart.

“My job is to make Holden work as part of the GM fabric,” he said. “The intellectual property and skill-set in Australia with our workforce is extremely developed and highly regarded, and very much a part of Holden as the products we produce.”

Mr Reuss said Holden had worked with its workers to bring forward “down days” to cut car production to bring its inventory in line with reduced customer demand in both export and domestic markets, thus avoiding redundancies.

He said the cut-price retail market was moderating as stock levels dropped and the Japanese Yen rose, easing the discount pressure on local manufacturers in the showrooms.

But he said recovery depended on re-generating customer confidence.

“The stimulus packs that have been put into execution around the world will take affect it is just a question of how fast they will take affect,” he said.

“The faster we can see some signals of recovery around the world the better that will be for our export business and our domestic business as well.”

Melbourne’s The Age reported this morning that Holden was poised to rush the closure of its Port Melbourne four-cylinder engine plant in a bid to help its parent fight off bankruptcy.

It said the closure, originally planned for late this year and affecting 530 workers, could happen as early as next month.

The article quoted Australian Manufacturing Workers Union vehicle division federal secretary Ian Jones as saying export demand for the engines had “almost completely dried up”.

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