Australian Auto Industry’s Future Contentious Political Issue

GM Holden Chairman and Managing Director Mike Devereux lays down something of an ultimatum, declaring Australia will have to decide next year whether or not it wants an automotive industry.

Speaking at the local launch of the Colorado 7 SUV, Devereux tells media the future of local car manufacturing may hinge on next year’s federal election. “My hope is the auto industry is not an election issue. It is a bipartisan issue. Either way, there needs to be another broad-based review.”

GM Holden spokesman Craig Cheetham confirms the remarks in an email to WardsAuto.

The influential Australian Financial Review says statements by senior industry executives and Industry Minister Greg Combet that the election will be a de facto referendum on the future of the local car industry show conclusively the government does not expect the industry to stand on its own two feet, despite decades of massive government assistance.

Devereux says Australia is among the most expensive places in the world for General Motors to build vehicles. “Walking away is easier for GM, (but) the right thing for our brand is to make things in this country.”

"We are not doing that to be nice to this country; we are doing it because it is the best thing for our brand and our business in this country. That is why we want to make things here. I think it also happens to be good for the country.”

GM has promised to spend A$1 billion ($1.04 billion) to continue production in Australia until 2022, but Devereux says at the SUV launch that investment is dependent on federal policies that support co-investment by local auto makers.

The Labor government’s policy is to invest in the auto industry. But in a reversal of its long-term attitude, the opposition Liberal-National coalition is questioning the rationale of federal support for the three local manufacturers GM Holden, Ford and Toyota.

Despite the opposing views of the two political sides, Devereux says he isn’t advocating for any political party. However, the Oz chief says GM needs certainty to continue investing.

“I don’t want to be part of the political debate in this country,” Devereux says. “I need to understand very clearly in a forward-looking sense what each party’s policy is on auto manufacturing. Are they committed to making things in this country?

“We need an intelligent approach to a bipartisan policy. If this becomes a ‘he said/she said’ thing – literally – it is going to be very difficult. Whatever one says, the other refutes...We need to move beyond the political rhetoric.”

Answering questions in the House of Parliament, Industry Minister Combet says there are about a quarter of a million Australians employed in the automotive industry, and it is unquestionably the bedrock of Australia’s manufacturing sector.

“This Labor government is supporting the car industry through difficult times with our A$5.4 billion ($5.6 billion) new-car plan,” he says, according to an official transcript.

“Let's make something absolutely clear: This side, Labor, supports the car industry and supports the people who work within it. And on that side, the Coalition, do not support the industry and will not support the people who are employed in it. All of their claims are completely unbelievable. They are going to cost people their jobs.”

Citing the sort of government involvement he wants to see, Devereux says the U.K. government’s policies have resulted in A$10 billion ($10.4 billion) of auto investment in the past two years.

In the U.S., he says, “The issue of making things in the U.S.A., and the auto industry, was certainly a large factor in the re-election of President Barack Obama. It became an election issue; it was front and center.”

However, the Financial Review in an editorial takes a different view. “(Labor) doesn’t consider the taxpayer money that could be saved by withholding subsidies, or the cheaper car prices that could be paid by consumers of all political persuasions, or how resources now used by car manufacturing might be better used elsewhere in the economy.”

“The point of industry assistance is to help industries to adjust to changed conditions. Unfortunately, in the case of the car companies, this assistance has become a crutch, and the government should end protection of the Australian car industry.”