Holden has reportedly asked the federal government to double its investment in building its next generation Holden Commodore and Holden Cruze here, otherwise it will close its local manufacturing operations in 2016.
The Australian writes that Holden wants a further $265 million of taxpayer money, in addition to the $275 million already promised by the federal, and Victorian and South Australian state governments to continue local manufacturing.
A source close to CarAdvice yesterday confirmed that the changing economy has meant Holden has had to revise its business plan and renegoitate with government for an increased amount of “coinvestement”. The Australian further claims that Holden executives saw a strategic opportunity in Ford’s withdrawal from the local manufacturing scene from late 2016 (read more here) as the ideal time to renegotiate the agreement that would keep Holden’s Adelaide production plant open until at least 2022.
“Since the Ford closure announcement, Holden believes it can apply a lot of pressure to get more money,” the source told The Australian.
The news comes weeks after Holden admitted it was costing the company $3750 more to build a Commodore or Cruze in Australia, compared with GM facilities in other markets, including Korea, where the Cruze was previously made, and the wagon remains built (read more here).
That figure was delivered in a statement made by Holden managing director Mike Devereux (below) on June 18th
as a reason for announcing the company’s plans to renegotiate pay with its workforce. Holden is currently in talks with unions to reduce the wages of its workers to help the local manufacturing base stem the red ink.
Holden has admitted that currently the locally built Cruze and Commodore are loss-makers for the company, compensated only by the popular, and profitable, Thailand-built Colorado ute and Korean-made Captiva SUV.
This year’s federal election is likely to be an ultimate decider on the fate of Holden’s Australian manufacturing operations.
As reported by CarAdvice last week, Kim Carr (below), the incoming federal Minister for Industry, Innovation, Science and Research under the new Rudd Labor government, is a staunch advocate for retaining a local manufacturing base (read more here).
Prime minister Kevin Rudd is due to speak at a National Press Club address today, where a plan for the future of manufacturing in Australia is expected to feature prominently.
The Labor government has started a Facebook campaign showing Rudd’s support for manufacturing, the ad reading as a quote from the PM saying, “I never want to be PM of a country that doesn’t make things anymore..
By contrast, the coalition is committed to referring future motoring industry assistance to the Productivity Commission, with shadow industry minister Sophie Mirabella (below) pledging to cut $500 million of assistance from the car industry if elected this year.
“We do believe in supporting the car sector but we are reducing it [taxpayer funding] by $500 million a year,” she said on the ABC’s Q&A program in April.
Holden MD Devereux is committed to retaining Holden’s manufacturing base, but, it seems, only under the condition that more taxpayer money is given.