GM to halt car production in AustraliaWednesday 11 December 2013 08.21
General Motors has said it will stop making cars in Australia by 2017 due to high costs and a cripplingly strong currency.
The decision by the world's second-largest car maker to close its Holden plants in South Australia and Victoria state sis the latest blow to Australia's manufacturing industry and the auto sector in particular.
"No matter which way we apply the numbers, our long term business case to make and assemble cars in this country is simply not viable," General Manager Mike Devereux said at GM's car plant in Adelaide today.
The decision to halt domestic production of Holden cars, long a source of national pride, will pile more pressure on Prime Minister Tony Abbott's conservative government.
The government is seeking to manage a slowdown in the $1.5 trillion economy as a decade-long mining investment boom slows.
Outgoing General Motors Chairman and CEO Dan Akerson said the decision reflected a "perfect storm" of negative influences facing the Australian automotive industry including the sustained strength of the Australian dollar, high cost of production, and a small, fragmented and highly competitive domestic market.
In May, Ford said it would shut its two Australian carplants in October 2016, blaming similar factors.
There have been widespread concerns that an exit by GM Holden would be followed by the sole remaining producer, Toyota, threatening around 150 parts and component suppliers directly employing more than 40,000 people.
Toyota said it would work with suppliers and the government to determine its next steps and whether it could continue operating in Australia, where it employs 4,000 people and produced almost 100,000 vehicles last year.
"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota Australia said in a statement.
The world's largest automaker is currently negotiating changes to its workplace agreement as it seeks to improve productivity and cut costs. A worker vote is due on Friday.
Australian manufacturing employs around 921,000 people, having declined by over 10% in the past decade as the strong Australian dollar and high costs make imports more competitive.
Holden traces its roots in Australia to a saddle maker in 1856 and is part of the Australian psyche, fuelled by a fierce rivalry with Ford in showrooms around the country and on racetracks such as Mt Panorama at Bathurst.
GM may look at shipping more South Korean-made cars to Australia as part of a global production restructuring, a source told Reuters last week.
The Australian government has also come under pressure to support flagcarrier Qantas Airways, which is shedding 1,000 jobs in an attempt to stem mounting losses.
Australia has annual sales of around 1.1 million new vehicles, but sales of locally manufactured vehicles have fallen to less than a quarter of that, from almost 389,000 in 2005.
GM said it expects to record pre-tax charges of $400-$600m in the fourth quarter of 2013 due to the closure.