GM Holden Threatens to Halt Production Without Australian Aid

General Motors is reported threatening to halt production in Australia if the new Coalition government does not commit to fresh subsidies within two months.

The Australian Financial Review reports the new threat comes because the A$275 million ($258.1 million) in government support for GM Holden's Adelaide manufacturing operations until at least 2022 now is off the table with the defeat of the Labor government.

GM Holden is concerned because the new government headed by Prime Minister Tony Abbott has yet to commit to any specific arrangements for the industry that would allow for manufacturing to continue beyond 2015.

New Industry Minister Ian Macfarlane tells the newspaper he plans to visit GM Holden's Adelaide plant and Toyota's Melbourne factory in early October.

“I'll ask the opposition shadow minister to come along so there's no politics,” Macfarlane is quoted as saying. “It's about everyone doing what needs to be done. I want to see Holden bring out a new model. Now whether that's possible or not, let's see. But let's not die wondering.”

The Australian newspaper says the new government will ask the Productivity Commission to provide a draft report on the auto industry by Christmas to help Macfarlane create a plan that would prop up GM Holden's local operations.

The Australian Associated Press quotes Macfarlane as sayings the federal government will do all it can to support GM Holden, but he doesn't have a “pocket full of money.”

The agency reports South Australia Premier Jay Weatherill has written to Abbott pleading for him to commit to the A$275 million co-investment package for the General Motors subsidiary.

Weatherill says if GM Holden doesn't have an answer by Christmas, it will cease producing cars in Australia.

Before the election, the Coalition said it would cut A$500 million ($469.5 million) annually from auto industry funding to 2015, but Macfarlane hedges his answer when asked about this in an Australian Broadcasting Corp. interview.

“There are massive more issues than the $500 million,” he says. “I know money is important, but ...we've put a lot of money into that industry. If everyone wants to be flexible, I'll be flexible, (but) I'm not able to say what will happen until I actually get (to Adelaide) and have a look.”