GM Holden Playing Hardball With Governments, Union

GM Holden calls a report it is demanding an additional A$265 million ($244 million) to continue manufacturing in Australia “purely speculative,” but it stops short of an outright denial.

The Australian reports the auto maker wants the money on top of A$275 million ($253.2 million) already committed by the federal government and two state governments, South Australia and Victoria.

The newspaper says GM Holden wants to complete the deal with the federal government before the scheduled Sept. 14 general election in case, as is widely forecast, Labor loses and the incoming Coalition government refers the question of industry assistance to the Productivity Commission.

A further complication is reported by the Adelaide Advertiser, which quotes John Camillo, South Australian secretary of the Australian Mfg. Workers Union, as saying GM Holden factory workers are prepared to consider flexibility and help the auto maker as they have in the past, “but it is a bridge too far in regards to taking wage cuts.”

GM Holden wants wage reductions of up to A$200 ($184) a week from its employees. A senior insider with the auto maker reacted by saying if the workers voted to oppose pay cuts: “We will shut (Australian operations) down.

“Just look at what General Motors did in Germany. Workers said no to wage cuts there, and that particular factory (Bochum) is closing next year.

“Some people think GM won’t shut down Holden because of some emotional ties," the insider says. “But GM has been through hell and back since the (global financial crisis) and there is no room left in the new GM for loss-making operations.”

The Advertiser reports GM Holden is preparing for a September board meeting in Detroit that is expected to decide the long-term future of the auto maker's Elizabeth plant outside Adelaide.

A GM Holden news release says its plan remains to introduce two new global platforms at Elizabeth.

“To execute this next-generation program there are several milestones we must achieve – the two most crucial being reducing our structural costs and improving productivity in our factory, along with the implementation of clear, consistent and globally competitive industry policy,” it says.

“We are in close and constant discussions with both sides of politics – at a state and federal level – but are not in a position to publicly comment on the details of those discussions.

“Holden is doing everything in its power to secure the future of our manufacturing plant and lay the long-term foundations necessary to achieve the next-generation program.”

Federal Industry Minister Kim Carr tells the Australian Broadcasting Corp. that while he is unable to confirm the details of conversations between the government and GM Holden, he is surprised at the size of the figure the auto maker reportedly is seeking.

“I think those figures are quite extraordinary,” Carr says. “I think what Holden's concerned about is that there's been a breakdown in what has been the traditional bipartisan approach to co-investment for the automotive industry in Australia.”

GM Holden says its plan to introduce two new models at its Elizabeth facility in 2016 carries several preconditions. “The two most crucial being reducing our structural costs and improving productivity in our factory, along with the implementation of clear, consistent and globally competitive industry policy,” the company source tells the Advertiser.

Opposition Treasury spokesman Joe Hockey says on Sky News that there must be limits to government handouts to the automotive sector.

“There comes a point where you need to say ‘enough is enough,’” Hockey says. “The fact (is) that there is already a massive amount of money being provided to the automotive industry. Unless there is a very compelling case put forward by Holden, then you'd need to think twice about throwing more money at a single manufacturer.”

Opposition leader Tony Abbott tells the Australian Broadcasting Corp. that if elected, his government would consider generous assistance to GM Holden, but the auto maker would need to show its intent to reduce production costs and raise volumes, “and the only way to boost their volumes is to have a serious export strategy.”

The Advertiser quotes an unnamed source familiar with the negotiations as saying Ford’s decision to end Australian production in 2016 has bolstered GM Holden's case for more funds.

“Since the Ford closure announcement, Holden believes it can apply a lot of pressure to get more money,” the source is quoted as saying.

The Advertiser says GM Holden is understood to be lobbying state and federal governments for more assistance across the entire industry, not just for itself, if it is to maintain manufacturing operations beyond 2016.