GM Holden Restructuring Production Operations

GM Holden is restructuring its vehicle-manufacturing operations in South Australia to improve productivity and manage the impact of the high Australian dollar.

While most Holden Vehicle Operations will continue to operate on two shifts, the General Motors subsidiary will introduce a single shift in general assembly that will maintain volume while reducing build time and cutting costs on each vehicle.

GM Holden also is moving to a new 60-second production cycle by May, giving the auto maker the capability to build up to 400 vehicles a day.

“(The new cycle) is about 40 seconds shorter – it was about 102 seconds – which means there will be more stations and more people, and each person will do less on the car at their station,” External Communications Director Emily Perry says in an email to WardsAuto.

“The operators have to remember less, which is very important and reduces the complexity of their task and helps improve quality.”

However, GM Holden is not reducing production.

“Our line rate gave us the capacity to build up to 440 or 460 cars a day,” Perry says. “But we weren't building these numbers. So we're building the same number, but reducing the excess capacity to match the line rate to match the actual production levels.”

GM Holden Chairman and Managing Director Mike Devereux says the general-assembly change is critical to ensure the auto maker remains globally competitive.

“Holden has set a very clear business strategy to grow sustainably, lower its cost base and make a small car in Elizabeth to ensure we are profitable on domestic production,” he says in a statement.

“Our results show what a success this has been for the industry. In 2011, Holden made around 90,000 vehicles, up more than 35% or 24,000 units compared to the previous year, with the growth driven largely by the Cruze hatch and sedan.

“At the current exchange rate, we won’t be able to realize further growth in our export programs, so the shift changes allow us to maintain production levels and do it more efficiently.”

Devereux says the reconfiguration is designed to minimize impact on employees who have been advised of the changes being introduced.

“Holden currently draws on a small pool of fixed-term contractors and casual labor to help manage peaks and troughs in production, and these will be gradually reduced over the next 12 months,” he says.

No voluntary or forced redundancies for permanent Holden employees are expected as result of the shift changes.

The Age newspaper says the job reductions involve about 100 casual workers and up to 100 fixed-term contracts.

GM Holden increased its casual workforce in anticipation of export deals to North America and the Middle East, but the high Australian dollar means the forecast export growth is not going to materialize.

The latest worker reduction comes just days after Toyota Australia announces it is cutting 350 jobs at its Melbourne factory.

Manufacturing Minister Kim Carr says GM Holden’s shift change is an unfortunate but understandable strategy given the negative impact of the high Australian dollar on automotive exports.

“GM Holden has gone to great lengths in the past to keep its skilled workforce intact, even when it seemed like large-scale redundancies were unavoidable,” he says in a statement.

“I know that they have also tried hard on this occasion to avoid any job losses, but there's comes a point where difficult decisions have to be made.”

Carr says because there will be minimal impact on GM Holden's overall output, he does not expect any adverse impact on its suppliers.

Carr and Industry Minister Greg Combet remain engaged in talks with the auto maker about its longer-term operations in Australia and say those discussions are close to being finalized.