Oz Government May Give GM Holden Short-Term Bailout

Political tempers are fraying as Australia’s new Coalition government methodically prepares its next steps on the future of the country’s struggling auto-manufacturing industry.

South Australian Labor Premier Jay Weatherill wants an end to “dillydallying” over GM Holden's future, saying he and the automaker’s workers are losing patience with the drawn-out process.

Federal Industry Minister Ian Macfarlane, who will visit Toyota and Ford factories this week after touring GM Holden's plant last week, is reported by the Australian Financial Review to be ready to give the General Motors subsidiary a short-term injection of funding before Christmas, while the government finalizes long-term plans for the industry.

The newspaper says the federal government basically has agreed to the terms of references for a Productivity Commission inquiry into the industry and will aim to present an interim report by year’s end. A full report may not arrive until next year.

The Advertiser newspaper in Adelaide says the new aid for GM Holden may be released from existing funds to ensure the automaker’s medium-term viability.

Weatherill tells the newspaper he has grave fears for the future of the state's automotive sector, if industry policy is left to the direction of the Productivity Commission.

“I don't think if we're relying on the Productivity Commission, we're going to have any further co-investment with Holden,” he says.

Weatherill says the ball is in the federal government's court.

“I think it's a bit much for people to be dillydallying about making decisions of this sort,” he says. “We're giving them the space to have a think about that because they're a new government, but it's not going to be endless.

“We need an answer soon so that those workers and their families know where they're going, so the South Australian economy knows where it's going.”

Ford Australia President and CEO Bob Graziano says while he welcomes the visit from Macfarlane, there’s no chance the automaker will change its mind about ending local production by October 2016.

Macfarlane, newly installed as minister, has said he wants to persuade Ford to stay in Australia as a manufacturer.

“I'd like to think I can do something with Ford," he is quoted as saying. “I'm going to see what I can do over there.”

But Graziano tells the Australian website motoring.com.au the end to production is set in stone. “We are not going to reverse the decision we have taken,” he says.

Graziano also says there’s no guarantee Ford can continue to build the Falcon and Territory at its two Victorian plants until 2016.

“We have always talked about it as our intent to go to 2016, and we are committed to getting there if we can,” he tells the website. “But I cannot predict what would happen externally that may prevent us from doing that."

Macfarlane's visit to Toyota Australia also will be important. If the government can’t reach a deal to keep GM Holden building cars, it will leave the Japanese automaker’s subsidiary as the only local manufacturer.

Analysts say this would be a tough road for Toyota Australia, because supplier economies-of-scale issues would send local parts prices soaring.