General Motors and Toyota are preparing to ask the Australian government for funding to support their local manufacturing operations.
The Australian Financial Review newspaper reports plans for revamping their engine plants and building new local models could see the two auto makers requesting additional financial help from both the federal government and the South Australian and Victorian state governments.
The companies have yet to reveal the amount of money they are seeking. However, GM Holden says it is considering requesting funding for its V-6 engine plant in Port Melbourne, Victoria. The auto maker last year received A$275 million ($290.3 million) in public money to continue manufacturing cars in Adelaide.
“With the A$275 million, I understand why some people found that distasteful,” Matt Hobbs, GM Holden director-corporate and government affairs, tells the newspaper. “However, it is the way automotive investment gets attracted to any country – there are either tariff barriers or there is co-investment.”
Toyota is considering adding a third model to its local manufacturing operation after having received A$63 million ($66.5 million) in federal funds to build a A$300 million ($316.6 million) engine plant.
A Toyota spokeswoman tells the newspaper adding a third model to its Camry and Aurion lineup would require more government funding. “First we have to do the planning, and then we would look at funding,” she is quoted as saying.
Opposition treasury spokesman Joe Hockey says the government has wasted enough taxpayer funds on industry assistance for manufacturing while contributing to higher costs. “That is just a waste of taxpayers’ money,” he tells the newspaper. “The fact is, Australia is becoming an incredibly expensive place to produce things.”
A spokeswoman for federal Industry Minister Greg Combet says any discussions with the three car companies – including Ford – are commercial and in confidence.
The federal government has a A$5.4 billion ($5.7 billion) assistance plan in place that targets the automotive industry until 2020.
The latest subsidy talk started at the North American International Auto Show in Detroit last week, when GM Holden chief Mike Devereux told the Canberra Times that the push for fuel efficiency and the high Australian dollar could force the closure of the auto maker’s decade-old Port Melbourne engine plant by the end of the decade.
Hobbs tells the Australian Financial Review the auto maker has been in talks with the Victorian and federal governments about the future of the engine plant. “We are working through options at this point in time,” he is quoted as saying. “When we get to a more final stage, we will continue our discussions with the government.”
The A$275 million in subsidies announced last year covered two new GM global models to be assembled in Australia until 2022, but did not cover the engine plant.
GM Holden is expanding its Adelaide body shop to accommodate the machinery to produce the two new models. It has confirmed it will build a successor to the Cruze small car but has given no details of the second vehicle that will replace its iconic Commodore large car.
Toyota’s third model has been mulled for a decade. The idea was revived in December at the opening of its new engine plant, when Manufacturing Executive Director Chris Harrod said the auto maker would announce a decision this year or next.
“That third model would enable us to get to the volumes we are looking for to be sustainable, which is around 100,000 units per year,” he says.
