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‘Renaissance’ time for Holden

Building a future: Holden's investment in its local manufacturing for Cruze represents "greater commitment than Toyota".

Holden welcomes Toyota’s engine plant but says Cruze investment is greater

14 Sep 2010

GM Holden has welcomed Toyota Australia’s decision to spend $331 million on a new four-cylinder engine plant in Victoria, but says its investment in Cruze small-car production from next year represents a far greater commitment to Australian car manufacturing.

Holden believes Cruze production will mark the beginning of a ‘renaissance’ for the company.

Responding to Toyota’s announcement – made on the same day that Holden launched its VE Series II Commodore range to the media in Adelaide – Holden chairman and managing director Mike Devereux said a broader manufacturing and supply base was good for all Australian car-makers.

“It’s great news,” he told GoAuto. “I think that’s testament to the fact you do want to build cars and engines and have a high technology base in this country.

“I don’t care which government is talking about it if you want to be a developed market, you have to make stuff – you can’t just dig things out of the ground and ship them.”

Mr Devereux said he has a good line of communication through the FCAI with Toyota Australia president Max Yasuda and Ford Australia president Marin Burela.

“We talk quite a bit about the joint health of the supply base and getting the technology base up in this country it’s in all of our interests because we want good things to happen for Australia to keep the volume here.

“Today’s announcement is a testament to that and I applaud them for doing it. (But) our investment here on localising the Cruze is a huge investment, far in excess of what Toyota announced today.

“Building two cars here – a small one and a big one – is a big deal for us … it’s a big investment.

“Ford also made a powertrain investment decision a few months ago, so manufacturing is certainly alive and well and we’re here to stay.”

Holden will begin taking orders for the Statesman-based Caprice Police Patrol Vehicle (PPV) from North American law enforcement agencies on October 1 and in November will recommence low-volume Commodore exports to Brazil.

 center imageFrom top: Holden Cruze, Cruze five-door hatch, Chevrolet Caprice PPV and Holden chairman Mike Devereux.

It has also completed its upgrade of the second line in the Elizabeth plant’s south body shop, which is already producing pilot versions of the Cruze sedan body alongside the Series II Commodore. Cruze will account for one in three vehicles produced on the same line in the general assembly plant, which will also produce the PPV.

In preparation for the production ramp-up, Holden has begun a recruitment drive for 50 new production workers before reinstating the second shift that was eliminated in April last year, returning around 2300 workers to full-time employment from November 15.

The move will increase Holden Vehicle Operations’ production line rate from 340 to 430 vehicles per day.

While that is still well down on its maximum capacity of 620 per day, or 145,000 per annum, the eventual addition of between 25,000 and 30,000 Cruze models to about 68,000 Commodores should eventually bring annual Elizabeth production back up to about 100,000.

Holden began Series II Commodore (and pilot PPV) production last week, but Mr Devereux said first Cruze deliveries – expected to start with the sedan in February, before the hatch comes on line later in 2011 – would not commence until the car was right.

“It’s our hope that from mid-first quarter of next year we’ll start shipping cars. (But) as I’ve said to dealers, we will ship the cars when we’re ready. Our focus on making sure they’re right when they roll off the line is absolutely laser-focussed, so if it’s February, great if it’s two or three weeks later, great.

“Whenever these cars are ready is when they’ll be shipped, but certainly in the first quarter, followed by the hatch in the third or fourth quarter.”

Mr Devereux said there was no current plan for Cruze exports from Australia.

“Obviously we’ll be right-hand drive, so if there are (export opportunities) at some point we’ll have a look at it, but the business case we’ve done from a planning standpoint is based on selling Cruzes here in Australia.”

Mr Devereux said production of the detective version of North America’s PPV would commence this year, followed by pursuit vehicles in the first half of next year and then V6 versions in 2012.

He said he didn’t underestimate the challenge of breaking into the lucrative US police vehicle market and would not provide a firm sales forecast, but said Holden’s large rear-wheel drive would make the PPV the best vehicle in its class.

“It’s a 70,000 (vehicle) market in the US, dominated by Ford and Dodge. Busting into a new fleet is tough, whether it’s LAPD, NYPD, Alabama state police. Getting into any one of these fleets is not an easy thing, but we feel fairly confident because I think we’ve got the best car.

“We’ll get thousands and thousands, not hundreds. Rear-wheel drive is a very big deal. Ford will be retiring their stalwart Crown Victoria and going with an AWD Taurus, and there are definitely trade-offs when you go AWD – the car doesn’t drive the same.”

Mr Devereux said he believes Holden is on the verge of a renaissance, thanks to fresh products like the Series II Commodore, Cruze sedan and hatch, the export Caprice PPV and two new light-car contenders – this year’s “world-class” Barina Spark city-car and next year’s all-new Barina, to be previewed by the Chev Aveo in Paris this month.

“I think we’re starting a renaissance at Holden. We’re operating profitably, as is our parent company GM. We’ve come through the GFC, and we’ve seen the sacrifices the employees in Adelaide have made for the future of the business.

“When I talk about the connection we have with the people, this is real stuff, so I think the next 12 to 18 months is renaissance time for the Holden brand big time – and I didn’t do any of it. Mark Reuss, Alan Batey and the guys before me set the company up and I’m just thrilled that I get to walk in and lead the renaissance.”

Citing the Australian-designed Cruze hatch as an example of Holden’s global design and engineering expertise, the fifth Holden boss in less than three years – who has committed to returning the company to profit in 2011 after it recorded a mammoth $210.6 million loss in 2009 – also fired a parting shot at critics of Australian vehicle manufacturing.

The federal opposition and some importers have labelled Green Car Innovation Fund grants from the Labor government as a waste of taxpayers’ money, including $149 million for Holden’s Cruze, $42m for Ford’s EcoBoost Falcon and a respective $35m and $63m for Toyota’s Camry Hybrid and four-cylinder plant.

“You saw the Cruze hatch and I think that’s a fantastic looking car,” said Mr Devereux, adding that it was a big hit with the Holden dealers he visited over the past two weeks in Melbourne, Sydney, Brisbane, Adelaide and Perth.

“Richard (Ferlazzo) and his guys did it, which is the other thing we like to talk about when it comes to capability in Australia because, while people are taking shots about whether we should have a manufacturing base here, I think it’s a no-brainer.

“Holden was the design homeroom for the world for this vehicle, it will be built right here in Adelaide starting next year and it will also be built in other GM facilities. (For Holden to be a) global homeroom for something like that is something we’re really proud of.

“The dealers absolutely love this car. It was one of the stars of the show in the last two weeks.

“GM has seven places that can design, build and sell vehicles around the world, but in fact there are only three places that can do advanced design and build concepts and I feel very proud to be part of the organisation that can do that.

“(Holden designed) everything from the NV concept we had at the Shanghai exhibition, the Volt MPV5 some of you may have seen in Beijing, and the Camaro, which has tonnes of national pride in that vehicle.

“One of the things that Camaro highlights is that exports mean a lot more than they used to. We export ideas, people, design and engineering – not just the cars you would normally associate with exporting.

“When it comes to people, Holden actually has about five times the number of people on assignment outside this organisation than we have people coming in to work at Holden. So we’re definitely a net exporter of talent as well.”

In his first press conference as Holden chief, Mr Devereux said it was the “love affair” between Holden and Australians that has most surprised him since taking the top job here in March.

“Before I got here, I heard a lot about Holden as a brand, which is quite famous for its engineering prowess inside GM, but until you get here and see the connection that exists between the customers who buy the cars, the dealers, the workers in the plant and the people in the shop who pay their own money to buy the hats and the shirts…“This is not the same as the brand love that you have in other GM business units. This is something you’ve got to see to believe and I’m definitely a believer after five months in this country.

“The basic vision of the company hasn’t changed – it’s still to design, engineer and build the best vehicles in the world, full strop. Today, we’re absolutely committed to the promise of building the world’s best vehicles, bar none.”

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