The federal government will actively support talks between General Motors and the Belgian entrepreneur who wants to save GM Holden’s South Australian car plant from closure.

Holden Elizabeth

Industry minister Christopher Pyne has written a letter of support for Guido Dumarey, of Punch International, to use in negotiations with GM to buy the Elizabeth plant and thereby secure its operational future beyond the end of 2017.

Speaking to ABC Radio National this morning, Pyne — also the member for Sturt — said any potential deal to save the South Australian car-making industry, no matter how tempered his expectations might be, would be welcomed.

Pyne also re-iterated that Punch International would be entitled to federal government support until at least 2021. Legislation triggers funding from the $800 million Automotive Transportation Scheme be available to any company making 30,000 units annually.

Holden Manufacturing Elizabeth SA - 3

Dumarey’s Punch Corp. has form, having revived a GM site in Strasbourg slated for closure. The site now very productively makes transmissions for German giant ZF. Additionally, Punch already supplies six-speed automatic transmissions for the Commodore.

But Dumarey’s plan would see full vehicle production carried out at Elizabeth, another thing altogether. The prospective vehicles would be based on the locally developed, and world class, rear-drive Zeta architecture that underpins the Commodore.

Minister Pyne said the government would “love” such a plan for the Elizabeth plant, and would “clear the way” for Dumarey to engage in high-level talks with GM both here and in the US. But the minister also tempered expectations.

“A lot would have to happen for it to work, GM in Detroit would have to decide they want to sell it to Dumarey’s business,” he told the ABC. “And that’s what I’m trying to help him with.”

Holden Elizabeth 2

“… [There are] very significant costs to GM in reclaiming that site from decades of being an industrial site and automotive pant. If they were able to come to an arrangement with Punch to take over those costs it might become attractive to GM.”

Pyne re-iterated that the parties wanted to know one way or the other by mid-2016. GM has slated Elizabeth for closure by the end of 2017. He also said any potential to save local manufacturing would be invaluable for the wider economy, on account of its knock-on effects in the areas of innovation.

It is understood that Dumarey is prepared to invest around $US150 million ($A216) of initial funds into the project, according to a report from Motoring.com.au. 

Dumarey’s support has previously attracted the support of high profile independent SA senator Nick Xenophon and opposition industry spokesman Kim Carr.