The Chairman and Managing Director of GM Holden, Mark Reuss, told a news conference this morning that the US moves would have no effect on Australian design, engineering and manufacturing operations, and that no local jobs would be lost.
Mr Reuss said Holden will continue normal operations in Australia and New Zealand and did not expect changes to its business after General Motors announced it has taken court action in the US to launch a competitive New GM.
The fact that Gm Holden has a taxpayer-funded deal in place to build a new small car, based on the Delta 2 platform used for the recently launched Korean-built Cruze, is believed to have played a big part in ensuring that Holden was saved.
“Operations at Holden are unchanged in Australia and New Zealand and we expect it to remain that way,” Mr Reuss, said today.
“GM has clearly stated that all of its businesses in the Asia Pacific region – and that includes Holden – continue normal operations and are not directly impacted by this process in the US.
“No operations outside the US are included in the court filing or court supervised process.
there had been speculation that Holden, like other GM corporate entities such as Saab, Hummer and even the GM Europe operation, would be sold off.
“Holden is a subsidiary of GM but we are a corporate entity in our own right – an independent company under Australian law," Mr Reuss said.
“Beyond that, GM has indicated that Holden will be an important part of the New GM and we intend to maintain our focus on Holden product programs and activities.
“That means technology improvements to our best selling Commodore range, launching the all-new Holden Cruze this month, and the introduction of our locally-built fuel efficient, four-cylinder small car next year.
“We continue to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network."
However, the loss of a $1 billion deal to supply Commodores to the US, as the Pontiac G8, when GM decided to axe that brand in the US, has lead to production being cut in half at Elizabeth and workers being put on reduced rosters.
Hammering home the message that it’s business as usual in Australia, Mr Reuss said; “We don’t anticipate this decision will have any direct impact on Holden’s workforce, dealers, or suppliers.
“Holden customer warranties are not affected and we continue to deliver the sales and service experience that our customers expect.
“We wouldn’t normally issue statements to highlight nothing has changed, but we appreciate that customers will naturally ask questions about this sort of announcement from the US.”
Mr Reuss said Holden would remain informed of developments in the US, a process that had been determined to reinvent General Motors.
“The process being used in the US is unlike Australian and New Zealand law. It is a fast, court supervised process that permits the sale of selected assets to a new entity,” Mr Reuss said.
“Unlike court-controlled processes in many other countries, US chapter 11 allows GM to deal with the financial issues that have built up over many years and for New GM to emerge as a healthier business, better able to deal with the challenges of today and tomorrow.
“It does not mean ceasing to trade.”
He said that pending approvals, the New GM is expected to launch in about 60 to 90 days as a separate and independent company from the current GM, with two distinct advantages: it will be built from only GM’s best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before.
GM has previously indicated it is negotiating with prospective buyers for the Saab and Hummer brands. GM is working closely with dealers, including those in Australia and New Zealand, to continue delivering vehicles and maintaining after sales and servicing requirements.
Asked if GM Holden would move to remove these brands from sale in Australia Mr Reuss said that to the contrary it would support the brands until they were sold and then would seek to work with the new owners to continue to provide support for them in the future.
GM Group Vice President and President of GM Asia Pacific, Nick Reilly, said: “We believe this step – which was taken with the support of the US Government – is the most efficient and effective means for New GM to emerge with substantially less debt and lower operating costs, and with our operations positioned for long-term success.”
Mr Reuss admitted that GM Holden, through its ownership of the GM Daewoo operation in Korea had an exposure to about 50 per cent of the debt accrued by that operation.
He declined to specify exactly how much that debt was.
Mr Reuss also said that from December, when the New GM came into being GM Holden would effectively be ‘fenced off” and would operate by itself.
He said this would mean that the company would receive operating capital from GM but would need to generate a positive cash flow, which he said the company was doing.
Mr Reus said the recently launched Holden Cruze, which is imported from Korea, and a similar but different Cruze model, which will be built in Australia from late next year, were significant steps in the future of Holden in Australia.
He also signalled a change in the model development of the company’s long-running large car, the Commodore, saying that the company would be doing business in a different way in the future, with ongoing development of the model replacing major model revisions.
“Next month’s Commodore will be the new Commodore and the month after’s Commodore will then be the new Commodore,” Mr Reuss said.