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PM Abbott takes hard line on Holden

Holden on: Revelations on the ABC last night suggest that high-ranking government ministers have learned that Holden has already decided to follow Ford’s lead and quit its Australian car-making business.

Holden manufacturing future a hot topic as PM Abbott rules out added funding

6 Dec 2013

UPDATED 15:30 AESTPRIME Minister Tony Abbott has called on Holden to clarify its intentions for its local manufacturing division, while ruling out additional federal funding.

In an interview with Fairfax radio station 3AW, Mr Abbott said Holden had to make its intentions clear: to produce new-generation models from 2016 in Australia or to withdraw like rival Ford.

“The message we are getting from Holden is that they are in two minds,” he said. ''I do wish Holden would clarify their intention because at the moment they have got everyone on tenterhooks.”

The prime minister also ruled out giving the GM-owned brand additional federal assistance, saying its was not for the government to “chase them down the road waving a blank cheque at them”.

“Ever since the first car rolled off the line in 1949 there have been pots and pots of money available to the car industry in this country,” he said. “We stand ready to make that support available.”“But there's not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time.” The Coalition ran in September’s election on a policy that would cut $500 million from the Automotive Transformation Scheme.

Mr Abbott’s comments come shortly after revelations last night that high-ranking government ministers have told the ABC that Holden is gearing up for a 2016 shutdown as speculation over the car-maker’s future continues to fester.

The ABC reported that Holden had planned to announce before Christmas that it would follow in Ford’s footsteps and shutter its Australian car-making operations in 2016, but had decided to delay making the bombshell public until early next year.

Ironically, the renewed speculation came on the eve of Ford’s international launch of its sixth-generation Mustang performance car, which will sell in Australia for the first time.

In May, Ford announced its decision to pull out from its Australian car-making operations on the same day that its traditional rival launched what is likely to become the last Australian-designed and made Holden-badged car, the VF Commodore.

The ABC reported last night that several unnamed senior government ministers were the source of the story.

Since it aired late last night, both Industry Minister Ian Macfarlane and opposition industry spokesman Kim Carr have dismissed the claims.

According to the ABC, the revelation that Holden had already decided the fate of its Australian workforce had not come from Mr Macfarlane.

“He (Mr Macfarlane) said that this is not his understanding,” ABC political reporter Eliza Borrello told ABC News 24 late yesterday shortly after the story broke.

“He has again spoken to Holden tonight since we’ve put these claims to air and Holden has reassured him that this is not the case.”

Instead, Ms Borrello said the confusion from the federal coalition’s ranks indicated an “internal rift” within the government over support for the car-making industry.

“But we have been told by the ministers who have made these claims to us that there was nothing that was going to keep Holden here – they have made this decision that they actually don’t want to be helped,” she said.

The ABC story gains weight after it was revealed last night that its US parent company, General Motors, was expected to announce soon that it would move production of a compact soft-roader based on the Holden Barina – and sold in Australia as the Holden Trax – to Spain.

Holden has been adamant that whatever new model it planned to build at its Elizabeth production line would need to be among Australia’s best-selling models – with sales in the compact SUV market growing more than 20 per cent this year alone.

As well, Australia this week ended talks with South Korea over a revised version of a 15-year-old free trade agreement between the two countries that the government claims would help car-parts makers benefit from “the immediate removal of tariffs as high as eight per cent”.

The agreement allows GM Korea, a former Holden-owned subsidiary that now accounts for about half of the current Holden product line-up, to bypass tariffs on vehicles exported to Australia.

Reports are also surfacing that Holden’s parent company, General Motors, is shifting a significant amount of Cruze small car capacity for global markets out of South Korea – which is in direct competition for Cruze production against Holden – to other sites within the GM car-making empire.

The Cruze has been a big part of Holden’s plans beyond 2016 and the end of production of the current-generation Commodore large car.

The Federal Coalition has said it would wait for the outcome of a Productivity Commission review of Australia’s car-making industry before deciding on the level of public funding it will give to Holden and Toyota – and potentially Ford if it seeks more handouts to keep its research and development arm in Australia.

The commission will hand down a preliminary finding in less than a fortnight, with the final report expected to be tabled in Parliament by the end of March.

Holden chief executive Mike Devereux, who yesterday announced he had extended his tenure in Australia until February next year, is expected to present Holden’ s pitch to secure long-term funding before the commission at a public hearing next Tuesday.

Mr Devereux announced last month that he has take on a more senior role within GM’s global operations division, which includes its Australian car-making arm.

Mr Devereux will run Holden’s day-to-day operations from Singapore. His replacement was previously expected to be announced by the end of this year.

The loss of Holden would place further pressure on Toyota’s Altona engine-casting plant and Camry and Aurion production line, with key Toyota parts suppliers needing Holden’s business to build viable production volumes beyond Ford’s 2016 closure.

Both Holden and Toyota told GoAuto this morning that they would not be commenting. “Our discussions with government are continuing,” Holden manager of corporate communications Sean Poppitt said. “We do not respond to speculation.”

Toyota Australia media and external affairs manager Beck Angel said the car-maker would also not respond to rumours, or the question of if it could stand alone after the loss of Holden.

“As we have said previously, we rely on a strong supplier network and will continue to do everything that we can to support our supply base and assist them in becoming stronger,” Ms Angel said. Holden is also locked in an internal fight to help it strip up to $3750 in costs above the GM worldwide average from each vehicle that rolls off its Elizabeth production line near Adelaide.

A wage-saving deal thrashed out with unions late this year has helped reduce costs by almost $190 a car, the Australian Manufacturing Workers Union has revealed.

Holden has said it needs to reduce costs to win GM’s approval and $1 billion in GM funding to build its next generation of products, which includes a replacement for the locally designed Commodore large car, in Australia.

Holden is believed to be asking the Australian government to provide about $300 million in taxpayer funds to keep it building cars here beyond 2016.

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