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Plant efficiency blamed as Holden axes 600 jobs

Streamlined: Improved factory efficiency results in surplus staff at Holden.

Holden cuts 600 jobs after strongest ever VE Commodore sales and record export deals

Holden logo5 Mar 2007

GM Holden will slash 600 white and blue-collar jobs at its Elizabeth assembly plant in April, despite a resurgence in Commodore sales last month and new export deals announced in recent weeks that will send up to 30,000 vehicles to the United States alone.

Announcing the redundancies today, Holden claimed the job cuts were the result of production efficiency gains brought about by the introduction of the VE Commodore and an associated $532 million factory upgrade.

The maker of Australia's top-selling vehicle told its South Australian manufacturing staff of the redundancies today, just two hours after VFACTS sales figures were released showing VE Commodore sales improved to their best levels in February, when Holden sold 5544 Commodore sedans and wagons.

The announcement also comes less than a month after Holden trumpeted an unprecedented export deal to the US, via a VE Commodore SS badged as a Pontiac G8 sedan, and just three days after Holden's go-fast HSV brand announced its VE Commodore-based ClubSport model will be exported to the UK.

The company said it would soon wind up production of VZ Commodore-based models at Elizabeth, including the current utility and station wagon, which clears the way for the workforce reduction.

This week’s job cuts come 15 months after Holden culled 1400 jobs from its Elizabeth workforce as it reduced its production shifts from three to two in August 2005.

Holden executive director, manufacturing operations, Rod Keane, said the job cuts were necessary to ensure the viability of the plant.

"To remain one of the world’s most competitive and most flexible plants, we need to be as efficient as possible," Mr Keane said.

"The business is tough, we need to continue to improve the business."Holden will reduce its daily production rate at Elizabeth by 100 cars to 520, well down on the 2005 level of 800 cars a day when the company was running three shifts.

However, Holden said the Elizabeth plant is expected to return to the current level of production in October when the G8 Pontiac export program starts, without taking on any more staff.

"I’d like to point out that our capacity at this facility is 145,000 cars (a year), we have made this decision in the full knowledge that at the end of this year that is the rate we will have to be producing at and effectively 3450 people is the number of people that we need to produce that volume," said Mr Keane.

"What we are trying to do is…have a viable business plan that says we have one more car to build than rather than one less."Holden said the VE Commodore was designed with production efficiency in mind, including developing components that require less labour on the production line.

"Our engineers have worked hard to make the VE-based product even more efficient to build, again decreasing the need we have for resources here at the plant," said Mr Keane.

The VE Commodore features a new front-end module that is supplied to the Elizabeth plant as one-piece including the front bumper, headlights and windscreen washer bottle, saving assembly time and labour on the production line.

The new Commodore also uses single-piece side body panels that replace the VZ model’s two-piece panels that were welded together at the plant.

Mr Keane said Holden didn’t expect to make any further jobs cuts at the Adelaide plant, which is the biggest single employer in South Australia, in the near future. But he didn’t rule them out.

"You can’t rule out anything in this business, obviously the market changes, but we have made this decision in the full context and understanding of the current volume (and) in the latter part of this year," Keane said.

"Conditions continue to be dynamic, as I said we are extremely excited about the sales success of the Commodore particularly in February, the fact that it remains the number one selling car in the country by a long margin, all of those things build for a fair degree of optimism, but we recognise that unstable fuel prices, global prices and all other types of things impinge upon this business," he said.

Mr Keane said Holden will offer redundancy packages to white and blue-collar workers and give them two weeks to nominate their interest.

"A lot of people have been associated with the investments that have been made (at the factory) and a lot of people in those areas have expressed interest in participating in this offer which is quite generous," he said.

Holden said the latest job cuts would be restricted to its Elizabeth plant and would not affect any of its workers based at its Fishermens Bend facility in Victoria.

The car-maker, which reported an after-tax loss of $144 million in the past financial year, is not the only local manufacturer to wield the axe, with Mitsubishi and Ford also recently cutting jobs as large car sales slip.

Mitsubishi slashed its workforce by 1000 when it closed its Lonsdale engine plant in 2004 and cut another 100 jobs at its Tonsley Park factory last August, while Ford cut 640 jobs at its Geelong and Campbellfield facilities three months later.

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