Oz Government Vows to Help Ford, GM Holden Suppliers

The Australian government says the close of Ford and GM Holden car manufacturing threatens to gut the auto-components sector.

Prime Minister Tony Abbott says within days he will announce an assistance package for communities affected by the impending loss of Ford in 2016 and GM Holden in 2017.

“The advice we have from those components suppliers is that they will need every second of that period between now and 2017 to make the adjustment,” he tells a news conference.

“Chillingly for us, those same components suppliers say that only about 25% of them will make that journey to the end of that period and being able to survive beyond that period,” he says.

“And that 25% are going to have their own challenges. They're going to have to find something to actually replace the automotive work. There are 75% of those other companies that are unlikely to make it.”

A transcript of the news conference posted on Abbott’s website quotes the prime minister as saying the announcement he will make early this week will help restore confidence in the areas hit hardest by the impending departures of Ford and Holden.

“We’ll make an announcement because I don’t believe for a second that these are areas without fundamental economic strengths,” he says. “And I don’t believe that the staff at Ford and Holden are in any way incapable of being redeployed to really sustainable, satisfying employment in the future.”

“Our objective is to transition people from one good job to another good job, not simply to help them out of a job and into retirement. That’s not our objective.”

Abbott held the news conference after a meeting of the Council of Australian Governments where the heads of states and territories discussed government response to the auto industry’s situation.

“We are agreed that as well as trying to ensure that there are specific initiatives put in place to respond to the particular difficulties that Adelaide will face and that parts of Victoria will face, it is very important that we improve efficiency in our manufacturing sector generally and that means…getting taxes down, getting regulation down and getting productivity up,” he says.

Asked if assistance to South Australia and Victoria would come out of funding that otherwise would have gone to the auto industry, Abbott says there is a level of support for Ford and GM Holden that will continue at least for a couple of years.

“We all want Toyota (manufacturing) to continue and expand, and we note that Toyota has a rather different business model to the other manufacturers,” he says. “And we think that gives Toyota a much more realistic chance of a long-term, viable future as a manufacturer in this country.”

“Nevertheless, we accept that support at current levels will be necessary for Toyota. Obviously there have been budget allocations for the automotive industry and there will be funding available to respond appropriately to the immediate difficulties of the regions that will be impacted by the close-down of Ford in 2016 and Holden in 2017.”

Abbott declined to comment on media reports GM Holden wanted the government to pay only an extra A$80 million ($71.5 million) a year to stay.

“I’m not sure that it profits us now to rake over the coals of what may or may not have been said, in whatever context, between Holden and the federal government,” he says.

“Since all of those discussions, Holden has said that they’re leaving because they’ve been hit by a perfect storm of high costs, high dollar (and) low volumes, and they’ve said that there was no action or inaction of government which is responsible for that decision.”