GM Holden Rejects Oz Government’s 30% Export Target

GM Holden is reported to have rejected as unrealistic an Australian government demand to double its exports in exchange for more federal subsidies.

Industry Minister Ian Macfarlane is said to have set a 30% export target for the General Motors subsidiary, double its current rate, the Australian Associated Press reports.

But the Australian Financial Review says the GM Holden dismissed the demand, saying locally-made cars are too expensive to sell overseas, especially with the high value of the Australian dollar.

The newspaper says the rejection puts the new government of Prime Minister Tony Abbott in a difficult position, with the Cabinet split on whether to cut or expand existing subsidies.

Finance Minister Mathias Cormann says on Sky News, “If we are looking at ongoing support (for GM Holden), at least through a further transitional period, there has got to be a plan to ensure that the car industry can be on a sustainable, viable footing in the medium to long term.”

An important part of this is strengthening the capacity to export Australian-made cars, he says.

Labor Member of Parliament Amanda Rishworth tells reporters Macfarlane made an arbitrary demand on GM Holden, saying the 30% target was a number plucked out of a hat.

Macfarlane says the government is determined to boost Australia’s manufacturing export base and help domestic automakers become self-sufficient, but it first wants to review an upcoming Productivity Commission review of the industry.

The minister says visits to GM Holden, Toyota Australia and Ford Australia provided him with valuable insights into the issues facing Australia’s automotive industry. He hopes to see a draft of the commission review by Christmas.

“While I understand the industry wants policy certainty to plan long-term investments, I need to ensure that government has all available information before any future decisions are made,” Macfarlane says in a statement.

Macfarlane congratulates Toyota Australia on the strength of its export program, with more than 70,000 vehicles exported in 2012, helping the automaker maintain production volumes of 100,000 or more cars a year.

“We want to see Australia have an internationally competitive car industry,” he tells the Australian Financial Review. “We want to see Australia exporting cars all over the world.”

He also wants to see Ford maintain long-term operations in the country.

“Ford Australia’s designers and engineers have been central to developing Ford Motor Co.’s global vehicles like the Figo small car, the Ranger pickup and the forthcoming Everest SUV,” he says after a visit to the company’s global design center.

“They have designed the innovative Control Blade independent rear suspension for the 2015 Mustang.”

Ford is to end local production in 2016.

Ironically, as debate swirls about the viability of Australian production, Toyota announces it has built and sold its 2 millionth Australian-built car for the domestic market.

The manufacturing milestone coincides with the 50th anniversary of Toyota production in Australia. The Japanese automaker also has built more than 1 million cars for export since 1986.

Late last year, total production of Toyota cars in Australia passed the 3 million mark, including 1.03 million for overseas customers and almost 1.98 million sold locally.

Sales and Marketing Executive Director Tony Cramb says the milestone underlines Toyota’s contribution to the Australian economy, manufacturing sector, jobs and the future.

Macfarlane says his visits to the three domestic automakers are part of industrywide discussions on the sector, its issues and solutions. “We are trying to put together a process where we can assess through the Productivity Commission whether or not we can make the car industry viable,” he says.

But in something of a breakthrough, Macfarlane tells AAP he will ask the Cabinet to use money in the Automotive Transformation Scheme to keep the industry afloat, if needed.

“If I have to use money that's already in the (scheme) to keep the industry going between now and then, bearing in mind that those cuts start basically now, then I will ask Cabinet to do that,” he says.

The priority, he says, is to protect the jobs of thousands of Australians by keeping local car production going.

Victoria state Premier Denis Napthine, before meeting with Macfarlane, says he would strongly emphasize the importance of the vehicle-manufacturing industry to jobs and the economy of the state.

“Particularly the importance of the supply chain to the vehicle manufacturing industry and how important it is not only to jobs, not only to the economy, but also the engineering and design capacity of our state, which I believe is an essential component of the future of Victoria.”