Holden to cease manufacturing operations in Australia in 2017

Updated

Australia's entire car making industry and tens of thousands of jobs have been thrown into doubt by Holden's decision to close down.

Nearly 3,000 Holden workers are set to lose their jobs over the next four years as the iconic manufacturer winds down its Australian manufacturing operations.

The decision has prompted Toyota - the only other car manufacturer in Australia - to warn it will put "unprecedented pressure" on its ability to build cars in the country too.

General Motors Holden has announced the company will stop making vehicles by the end of 2017 - ending 65 years of building cars in Australia.

Key points Holden to end its manufacturing in Australia by end of 2017.

Holden says 2,900 positions will be impacted over the next four years.

Blamed the high Australian dollar, high cost of production, and small fragmented market.

Will retain sales division, parts distribution, and a global design studio.

33,000 people employed in the automotive components sector are likely to also be affected.

The decision means 2,900 people will lose their jobs - 1,600 from the manufacturing plant in South Australia and 1,300 in Victoria.

Prime Minister Tony Abbott says it is "dark day" for manufacturing in Australia.

"This is a dark day but there will be better days ahead," he told Parliament upon his return from South Africa, where he attended the Nelson Mandela memorial service.

"It is my determination ... to work with the people of Australia to ensure that the strengths of our society continue to be built on."

He said in the coming days the Government will be announcing measures "that will build on the strengths that we have, and which will offer hope for the people of the regions impacted".

"It will be a considered package of measures designed to rebuild confidence in the long-term economic future of those regions, in the long-term future of manufacturing in this country," he said.

Holden general manager Mike Devereux delivered the news to workers in Adelaide's Elizabeth plant.

"This is an incredibly difficult day for everybody at Holden, given our long and proud history of building cars in Australia," he told a media conference.

"But make no mistake, we have looked at every possible option to build our next generation cars here in this country to replace our existing models."

The decision has been met with regret by the premiers of South Australia and Victoria and by Deputy Prime Minister Warren Truss.

Mr Truss, who yesterday demanded an urgent clarification from the company about its future, told Federal Parliament he had spoken to Mr Devereux shortly before the decision became public.

"We regret the fact that GM is to phase down its operations in this country," he said.

"Holden has been an iconic national brand for Australians, a part of our heritage, which meant a great deal to Australians over several generations."

Victorian Premier Denis Napthine described Holden's decision as "terrible news" and is due to meet Mr Abbott in Canberra on Thursday.

He says he will be asking the Government for a substantial assistance package to re-train workers at Holden.

South Australian Premier Jay Weatherill described the closure as a "body blow" to his state, "not just economically but socially".

Opposition Leader Bill Shorten described it as a "devastating" announcement, accusing the Government of failing workers by refusing to give Holden any more taxpayer funding.

"There has been a game of high-stakes political poker played, and unfortunately the bluff was called and the losers are thousands of Australian automotive workers and their families," he said.

"Holden said very clearly yesterday that a decision had not been made. Something has changed in the past 24 hours.

"They were told by the Federal Government of Australia, who were elected to govern for all, that there would be no more support and no more investment, and I believe that Holden were pushed."

Sorry, this video has expired Video: Holden workers say the writing was on the wall (ABC News)

The Holden boss cited a range of economic factors, but would not speculate on whether the government's move to rule out financial assistance had played any role.

"Australia's automotive industry is up against a perfect storm of negative influences, including the sustained strength of the Aussie dollar against almost all major trading currencies, the relatively high cost of production and the relatively small scale of the local domestic market," Mr Devereux said.

And he painted a bleak picture for the wider industry, saying that "building cars in this country is just not sustainable".

Toyota now determining its 'next steps'

Toyota, which employs 4,200 people in Australia, has flagged the difficulties Holden's departure will cause.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota said in a statement.

"We will now work with our suppliers, key stakeholders and the Government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia."

Treasurer Joe Hockey urged Toyota workers there to accept a new wage deal in light of Holden's announcement.

"I say emphatically to the workers at Toyota, who are due to make a decision this Friday, on a proposal put to them by the management of Toyota, I say to them emphatically - please vote for your jobs this Friday."

However, the Australian Manufacturing Workers Union says it is now "highly likely" Toyota will leave Australia too.

"Toyota have told me they won't be able to survive in Australia because of the lack of volume in the component industry," national secretary of the AMWU vehicle division Dave Smith said.

Analysis

Nick Harmsen, SA politics reporter



It's something that's been on the cards for a long time. Last year, Holden made it clear it was going to need more money to stay in Australia.

We know things were put on hold while we had the federal election and we waited to see who formed government.

There is a much wider economic impact than directly jobs from Holden.

With Holden gone, components makers will struggle to survive which drastically increases the likelihood that Toyota will announce its own departure in the near future.

Obviously a lot of these jobs are centred in and around Elizabeth and Adelaide's northern suburbs have one of the highest unemployment rates in the country.

When you have an economic shock like this it makes it even worse and you run the risk of long-term unemployment and a whole lot of other issues that go along with that.

Car parts companies are also likely to fall victim to the Holden shutdown with its peak representative body, the Federation of Automotive Product Manufacturers, warning that up to 40,000 jobs are at stake.

President Jim Griffin says MPs need to understand the "downstream" impact of the demise of the big car manufacturers.

"If you cut the trunk down, the branches come down with it," he said.

"This is about small companies all around Australia that employ 20, 30, 40, 50 people that are all going to disappear in two or three years time if this industry does not continue."

SA Senator Nick Xenophon says the closure will trigger an "economic tsunami", while Greens Deputy Leader Adam Bandt has warned the sector is in a "death spiral".

Industry Minister Ian Macfarlane says the Government still believes car making can survive in Australia.

"The task for the industry has got measurably more difficult as a result of Holden's decision, but it is not impossible to maintain a component and car industry in Australia," he said.

Clearly emotional, the Minister said his "deepest sympathies" were with the workers, some of whom he met on a visit to the SA plant in October.

"You could tell by the looks in their eyes that there was a level of desperateness," he said.

"The workers there knew they were up against it in terms of Holden maintaining production."

Government to help workers find new jobs

The Federal Government says it will consult Holden, unions and all other stakeholders to help workers find new jobs.

"We will do what we can with General Motors to achieve the very best possible outcomes for these people," Mr Truss told Parliament.

"This is a difficult day for Australians, a difficult day particularly for the Holden employees, and we will stand with them to work constructively to make sure that they can transition into good jobs in other parts of our industry."

The demise of Holden has intensified the political debate about taxpayer support for the manufacturing industry, with Acting Opposition Leader Tanya Plibersek accusing the Coalition of "goading" Holden.

"Treasurer Hockey dared Holden to withdraw from Australia and he got his way," she said.

Yesterday in Parliament Mr Hockey urged the company to "come clean" about its plans, saying "either you're here or you're not".

But he has rejected Labor's criticism, saying Holden's decision would have been months - if not years - in the making.

General Motors says "action or inaction" on the part of the Australian Government is not to blame.

Holden will retain its sales unit, a parts distribution centre and a design studio in Australia.

Topics: automotive, industry, business-economics-and-finance, australia, sa, vic

First posted