GM Holden chairman and managing director Gerry Dorizas has warned the Australian car industry and the nearly 50,000 jobs it directly supports could shut down earlier than planned if the Federal Government’s proposed funding cuts go ahead.
The proposed funding cuts, announced in the Federal Budget last May, would see about $500 million cut from the previous government’s Automotive Transformation Scheme in 2015-17, and the abolition of the fund altogether from the end of local manufacturing at the end of 2017, saving around $400m.
As we know, Ford will stop making cars here near the end of 2016, while Holden and Toyota plan to push through to the end of 2017. Holden says it will produce the Commodore and the current-generation Cruze all the way through to the end, though the latter vehicle will be a previous-generation model by then.
Speaking with local media this week, Dorizas said the situation for local parts makers that supply components to all three Australian manufacturers was “dire”, though when asked if Holden could make it to 2017 without key suppliers, he insisted that for all this conjecture, “logic will prevail” and it wouldn’t come down to the worst possible scenario.
The Labor Party, Greens, the independents and the Palmer United Party have all vowed to block the ATS cuts in the Senate.
With sales of locally made cars much lower now that in years past — despite a sales bump this year for the well-received VF Commodore and a possible lift for the struggling Falcon with the launch of an upgraded model by year’s end — it is hard for them to derive the necessary scale to stay viable without drawing from the federal fund available to them.
And, should these parts makers fall off the perch ahead of 2017 — a point in time at which they will have to diversify, export or perish — then the car makers won’t have the parts they need to assemble their cars.
“This is the reason why we’re actually very focused on the supplier base, because if that happens then nobody will be able produce cars, especially for the parts that are specific to Australia,” Dorizas said.
“At this particular time, we work very closely with the suppliers. We don’t foresee a problem, but you never know. There’s always a risk.
“That’s the reason why we would like to see the Federal Government act. I think the whole industry, or everybody involved – especially the suppliers – would like to see the ATS cuts reversed.”
Speaking with CarAdvice today, a Toyota Australia spokesperson said the company’s intention was to build cars until 2017 and that this had in no way changed. We’ve also contacted Ford Australia for comment.