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The boss of Holden says the company’s proposed pay raise deal for more than 3000 manufacturing and engineering employees is a step towards ensuring the viability of its local manufacturing operations into the future.

Holden chairman and managing director Mike Devereux insisted the three-pronged pay raise agreement was part of a long-term vision that extended beyond 2020, flying in the face of recent speculation about the decline of the local automotive industry.

“We’ve been talking about that for the last year or so of my time here: ‘How do we secure the long-term future for this industry?’ This deal actually goes a long way towards doing that by aligning everybody to have the most efficient and productive use of each hour of labour and how many hours of labour we apply to vehicles, how we make those vehicles, how great they are, the quality of those vehicles, and then how the marketplace reacts to our products in terms of market share.”

Under Holden’s proposed pay deal, employees will benefit from annual percentage increases, one-off payments and, potentially, further increases depending on the company’s performance.

Holden executive director human resources Mark Polglaze explained workers would receive base pay increases of three per cent per year for the three years of the deal.

The second component includes a series of one-off payments through the life of the agreement, which Polglaze said were designed to “recognise the hardship that our employees experienced through the global financial crisis”. He explained many Holden employees endured a 25 to 43 per cent reduction in their pay – largely on a voluntary basis – over the final 18 months of the previous agreement, which ran from 2008 to November 2011. The one-off payments are understood to be in excess of $1000 each.

Polglaze explained the additional variable pay component could see employees earn up to a two per cent pay increase dependant on “the achievement of company metrics”, which include Holden’s financial performances and productivity increases made at the plant.

Employees will vote on the deal before the end of this month and, if they agree to the terms, the new agreement should be finalised by mid March.

Devereux described the proposed agreement as a “fairly innovative deal” rewarding past hardship and future creativity and productivity.

“When we win on those items, we pay the workers more money. When we don’t win … we don’t pay the workers more money,” Devereux said.

“The whole team is being measured exactly the same way from the factory floor all the way up to the executive suite and it’s a pretty egalitarian approach to compensation.”

Devereux insisted Holden’s viability and success needed to be plotted not just for the period of this agreement, but into the next decade.

“This is a very intelligently crafted deal that actually rewards the workers at Holden for the success of the company, but that also protects our structural costs by not having that increase forever at fixed rates that are not what we would want them to be.”

Australian Manufacturing Workers’ Union (AMWU) national secretary Dave Oliver described the proposed agreement as a “reasonable deal”.

“Three per cent per annum is in line with what we’re getting around the traps,” Oliver said.

“The extra payments in there in regards to the hardship bonuses … they will go a fair way to compensating the workers who, in a lot of cases, took a 40 per cent reduction in their take-home pay, but it won’t totally renumerate them to that.”

While he said the AMWU was recommending Holden employees agree to the terms of the proposed deal, Oliver said it was not yet confirmed that the majority would support it.

“These workers have done it tough over the last few years and even though it’s a reasonable deal it’s not going to fully compensate them for the pain they’ve had. They’ll make the decision.”

Oliver said the impending announcement of a multi-million-dollar co-investment deal between Holden and the state and federal governments – due within 60 days – would give a clearer indication of how likely employees are to benefit from the performance-dependant variable pay component of the deal.

“What’s important is that we’re able to attract the investment that’s required to keep making Holden cars in this country.

“That’s why we’ve been calling on both sides of politics … that they will continue to provide assistance and support to this very important industry that employs over 200,000 workers in this country both directly and indirectly.”

The news comes less than two weeks after Holden confirmed more than 100 casual and temporary workers would be cut from its vehicle assembly plant in Elizabeth, South Australia, due to continued tough economic conditions.

The Holden deal also follows a hard-fought pay increase for Toyota Australia manufacturing workers in October last year, which involved protracted negotiations and six weeks of industrial action.

The Toyota workforce finally settled on a 13 per cent pay increase over 42 months. Three months later, 350 jobs were axed from the Altona assembly plant, which Toyota Australia also blamed on the high Australian dollar and difficult market conditions.

  • Shak

    This seems like some very good news after all the recent doom and gloom regarding local manufacturing. The workers should be happy they are getting a pay increase at all especially considering how well most of them are already paid.

  • Ramjet

    A taxpayer funded pay rise for union members. Of course the AMWU will support it. This will increase the cost of making cars in Australia and will reduce exports yet again.

    • Dan D

      Yes Ramjet because staff work better if they underpaid, under-appreciated and not part of  or rewarded for the companies successes.

      You have a great future in Australian management. No seriously the banks called and want to know where to send your first bonus cheque. QANTAS is also interested.

      • Tomas79

        Well if they are really worth more, surely they can find a better paying job elsewhere….

      • The Realist

         You’re a bright spark. I bet you believe Holden is Australian too.

        • Sumpguard

            Before any of you knock auto workers you should go and do one 8 hour shift on the assembly line. It is very hard work and they deserve every penny they get.

                I haven’t done it but have worked alongside those that have and marvelled at their grit!  Climbing in and out of 200 cars+ per day to fix in a dashboard, seats ,headliners etc  is certainly not everyone’s cup of tea.

               What many don’t realise is that governments have subsidised the auto industry here and in many other parts of the world for eons.

          • Phil

            In other parts of the world, the auto industrys use robots to install dashboards, seats, headliners etc.

          • Frenchie

            Robot also cost lots of money!

          • Tomas79

            Not as expensive as union labour though!!

          • The Realist

            Yep, sure is as tough as working 12 hours per day in 50 degree heat in the Pilbara sun.

  • Gyc

    So after cutting staff they will increase the pay using a taxpayer funded scheme??

    How productive

  • jim

    Such a waste of money for govt to give to these guys.  I have worked there and i can tell you – it’s a black hole there, where money dissappears with nothing to show for it.

  • john

    “This new pay agreement which runs past 2020 flies in the face of those who think there is a decline in the auto industry in Oz”. Who are you kidding? Any company which has a direct link to the Bank of Taxpayer will survive as long as said bank keeps the taps on. Turn the taps off and bye bye auto industry. Without life support the industry is as dead as the DODO. This new agreement does’nt fly in the face of anybody. Everybody knows it only exists because of continual handouts. Nice to see our money put to good use by giving pay increases. Howabout putting the money into cars that people might actually want to buy. Whoops theres an idea. Better keep quiet on that one!

    • Dave S

      Check the numbers. Number 2 and 5 best selling cars from last year. Number 1 selling luxury car (Caprice) and very popular 4×2 ute.

      I would say they are building cars peple actually want. As you know they can’t build every type of car in australia.

      • Tomas79

        Caprice, a luxury car? don’t make me laugh…

        The commodore sales numbers are generated from below cost sales to fleets, which is  one of the main reasons Holden isn’t viable to build cars in Australia without government funding…

        • Dave S

          The Caprice sits in the luxury segment. Our PM and other ministers ride in them, and why not with great features and huge amounts of interior space.

          Secondly, I doubt you are familiar with Holden’s cost structure.

  • Anthony

    the haters on this website will twist everything to make holden, ford and toyota out to be the bad guy.
    If you don’t like the product don’t buy it.
    But don’t come on all the forums and spread your vermin. get on a plane. fly to germany where their grass is supposedly soo green and don’t bloody come back. Let the rest of this country enjoy and support our local product without listening to your negative spin.

    • john

      Funny you say that Anthony. Alot of people don’t like the product and that is why nobody is buying it in numbers that the business can sustain itself on it’s own. Before I sold my business my motto was “Sell my product at a higher price than all my costs and I will end up ahead”. Unfortunately the Aussie car makers don’t follow that motto. They just ask the Bank of Taxpayer for a handout. I was unable to do that so had to flourish on my own which I am happy that I did. You learn nothing from being given things or money!

      • Karl

        Yep, the local manufacturers just HATE making money!

      • Anthony

        I understand that the days of falcadore domminence is over. the businuss cannot survive on the same formula.
        but this is no reason to kill such an important industry. the manufacturers are modernising and diversifying. (cruze, territory, hybrid camry, possibly corolloa) new tech (hybrid, turbo falcon and cruze, diesels and more to come) production process are being updated to world class. these factors will eventually make local manufacturing a profiable indusry. the returns to the economy will be far greater then the co-investment being made. stop thinking soo small. think big. think long term. the government is doing the right thing by assisting the industry in it’s weak times. they would not be doing it if they did not see the long term viability. Perhaps the government has seen whats in the pipeline to come out of our factories in the next 10 yrs and they find those products worth investing it.

        • john

          Good points Anthony. You’ve sold me.  I just hate seeing bad business decisions put companies in trouble and then because of their size and importance to an economy they come begging like Oliver “Please Sir Some More” which gets irritating when small business owners are not as priveliged!

        • Phil

          By the time they’ve “updated to world class”, the actual world class standard will have moved up, so they’ll still be behind.

          • Anthony

            Phil. unfortunatly your one of the people that will never buy a aussie built car. Thats o.k there are millions of other people out there who care for our economy. could you do me one favor though?  I’d like to know what car you drive and proof that it is built in a more advanced way than what we have available to us here in australia. I’d be fascinated to know where the most advanced plants in the world are and how much it would cost me to buy a car from there. you seem to know what your talking about. please share you knowladge…

          • Tomas79

            Good for the economy is letting the forces of supply and
            demand control the price, not in the name of patriotism to pay extra in order to
            subsidise  inefficient union labour, or
            even worse having an uninterested taxpayer prop them up. 

      • Dave S

        I thionk the term is ‘co – investment’. As you know from business, you have to spend money to make money. That’s what is going on. The govt spends money to help manufacturing and it returns are many.

        We are not the only country that assists it’s manufacturing, but we do have one of the lowest tariffs for imported cars, compared to other countries.

      • Frenchie

        So when you filled in your taxation form etc, you didn’t claim any thing for business purposes? I assume you have a vehicle that you claim business Kms, and/or novate a lease. If you got a commercial vehicle I bet you even got it cheaper via tax payers. So don’t feed us this BS!!!!

  • Knight

    I have a real problem with a company accepting a government bailout or whatever you want to call it and then paying wage rises and bonuses to staff. We know this type of manufacturing in Australia is not going to go the distance.

    • Anthony

       unfortunatly wage rises in this country are inevitable.
      if they dont offer more they will not only loose the best people they have, they will also potentially face inustrial action from those that hang around. the government needs to fix its industrial relations laws. but we all decided to kick Howard out for trying to do that.