Group Calls for Aid to GM Holden

The Victoria Automotive Chamber of Commerce says talks on the future of the Australian auto industry should focus on how – not if – the sector can be retained.

The chamber, representing more than 5,000 businesses in the auto repair, service and retail sector in the state of Victoria, says Victoria Premier Denis Napthine and South Australian state Premier Jay Weatherill will meet Prime Minister Tony Abbott on Thursday.

It wants the discussions to focus on how Australia can maintain its automotive manufacturing industry, saying it supports the principle that Canberra should provide financial assistance to ensure the continuation of GM Holden production.

GM Holden says it is in discussions with the government, but it refused to comment last week on a broadcast report it would end production in Australia as early as 2016.

“We absolutely need automotive manufacturing in Australia and it should be further fostered with targeted government financial assistance,” VACC Executive Director David Purchase says in a statement.

“I am not suggesting we throw bags of money at every manufacturer, but governments need to financially assist local automotive manufacturers.”

By doing so, Purchase says, governments support not only car makers but also job security in communities, training, education, auto-apprenticeships, parts suppliers, auxiliary industries and the repair, service and retail sector.

By supporting their local automotive manufacturing, the Victorian and South Australian governments are sending a message to GM Holden’s American owner General Motors in Detroit, Purchase says.

“We call on the federal government to support the states and send the same message to the U.S. that it also wants automotive manufacturing to continue in Australia and to ensure jobs are secure,” he says. “It is a complex situation, but a solution can be found.”

But that could be difficult given the competitive market environment caused by dozens of brands competing for annual sales of only about 1 million vehicles.

“It is hand-to-hand combat,” notes GM North America President Mark Reuss, who held the top job at GM Holden in 2008. “It was like that when I was there and it is the same now. It’s a great place. Great engineers, great factories. I loved it with all my heart.”

Meantime, former Labor government industry minister Kim Carr says the Abbott government has confidential documents showing it would cost less than A$150 million ($136.3 million) extra a year to keep GM Holden in Australia until 2025.

Carr tells the Sydney Morning Herald the documents were drafted by senior officials in the Department of Industry and Innovation for the then-Labor government cabinet, and they indicate for A$300 million ($272.6 million) extra annually, the government could ensure GM Holden, Toyota and more than 160 auto parts manufacturers stay in Australia.

This, Carr says, was the basis of Labor's election policy.

The claim comes as a dominant group of Coalition ministers says nothing can be done to keep Holden in Australia because the automaker has made up its mind and “doesn't want to be saved.”

Carr says he will not breach confidences by revealing the amount agreed to in the previous government's GM Holden deal, but it was “less than half” of the A$300 million extra a year required to keep the entire car industry in Australia until 2025.

“There's absolutely no doubt that departmental officials…know the detail of the amounts required to satisfy the business case for General Motors Holden to stay in Australia,” Carr is quoted as saying.

A spokesman for Industry Minister Ian Macfarlane refuses to comment, telling the newspaper “the advice the minister receives is confidential.”

Ford is ending manufacturing in Australia in 2016. Analysts believe if GM Holden halts production, the costs of being the sole local automaker would force Toyota to do the same.