Holden boss Mike Devereux says costs may chop its future cars program

[jpd80]

Holden boss Mike Devereux says costs may chop its future cars program

Holden boss Mike Devereux says costs may chop its future cars program

19 June 2013

By BARRY PARK

http://www.goauto.com.au/mellor/mell...257B8F0008207B

HOLDEN’S next crop of locally made cars is under direct threat from high costs that make it uncompetitive to build them in Australia.

Holden managing director Mike Devereux said if the company could not trim costs from its cars,
future plans for extending its manufacturing future in Australia were unviable.

“We know that our next-gen business case is challenged with the current economic environment,” Mr Devereux said yesterday after announcing the car-maker wanted to open up talks with unions in a bid to cut labour costs.

“We know that it costs too much per car to make the cars here right now, and we have to reduce that,” he said.

Holden is already planning for the next-generation Commodore replacement, with speculation rife that it will move to a more compact global front-wheel-drive platform.

In the meantime, Holden has received $275 million in state and federal grants, as well as a $1 billion commitment from its US parent to develop the next Australian Cruze small car and, potentially, an as yet undisclosed model based on the same architecture.

“We definitely have some decision points from a vehicle development standpoint for those two vehicle architectures,” Mr Devereux said.

“I’ll obviously keep those confidential for GM, I’m just focussed on between now and August when we want the workforce to vote on what they want to do going forward,” he said.

Holden revealed yesterday that each car that rolls off its Adelaide production line costs $3750 more than the average across all General Motors’ international car-making factories.

It said it wanted to open up talks with unions representing 1600 blue-collar Holden workers that will remain after the end of next month – the car-maker currently has 400 voluntary redundancies on the table – and called for a vote on accepting whatever new terms are thrashed out by an August 1 deadline.

Meanwhile, Mr Devereux also flagged more pain for the Australian parts supply industry, saying the Commodore’s half-in-half mix of imported to locally made components was creating its own set of problems.

“There are logistical cost differences because of how far we are,” he said.

“When you’re shipping components on boats rather than shipping a fully made car, it is less efficient to ship a component than a car – it is quite efficiently packaged.

“You don’t have boxes, you don’t have wood, you don’t have crates. You just have every part already assembled into a car.”

Mr Devereux said the difference in labour costs between Australia and South-East Asia, and even parts of Europe.

“There’s also the cost impost that buying parts from local parts makers in Australia than equivalent parts purchased overseas,” he said. “These are the things that add up to that ($3750 figure). “I think that the costs to make every single part of the car have to go down in order for the manufacturing business to be viable in this country,” Mr Devereux said.

“It just can’t sustain at the cost per car that we have.”

[Archilino]

Sounds like he is Planting the seeds of withdrawal.

[Joe5619]

This whole thing is so sad. How did we get to this point

[Road_Warrior]

Originally Posted by Joe5619

This whole thing is so sad. How did we get to this point

Here's a start:

Originally Posted by mik

“It’s nothing to do with this Labor government but the combined policies of both the Labor and Liberal parties to push for a free market in Australia and New Zealand when nobody else is,” Mr Katter said.
Twitter @fleur_anderson

Add shifting consumer tastes and a bit of corporate indecision into the mix and you've got the perfect storm.

[Franco Cozzo]

Is it just me or that Holden who can-do-no-wrong is all the sudden getting a assload of negative press?

Now that Ford admitted defeat, they have their sights on the last two standing?

[Gadgetman]

Originally Posted by Big Damo

Is it just me or that Holden who can-do-no-wrong is all the sudden getting a assload of negative press?

Now that Ford admitted defeat, they have their sights on the last two standing?

Ford made their decision as soon as they could. Holden will wait till the liberals get in and then blame Sophie Mirabella and Tony Abott for not supporting local auto industry by lack of funding. Clever from Holden I think. If you can get out of a decision which has a negative effect with the blame laid on someone else, why wouldnt you do it?

[LeadFoot81]

Typical Holden/GM double talk.

[fte50]

The HFV6 being Euro6 compliant will see through Commodores life to the end. There is no further 'local made' future car as they will no longer invest in HFV6 nor its plant & equipment.
So in theory we have a car with an approx. model life of 8yrs.
We most likely will see the departure of Holden around this time. Any earlier doesn't make sense as they have already outlaid $$ for VF so they need return on investment though depending on future projected losses it can be sooner.

[Nikked]

Originally Posted by fte50

Any earlier doesn't make sense as they have already outlaid $$ for VF so they need return on investment though depending on future projected losses it can be sooner.

Make's little difference...


There was already substantial money spent for the Falcon upgrade, and the plant improvements that suggested a longer stay, but in the end...



Holden must be really worried, the whole tone has changed. They are not as jovial as you would expect for a company that has just released its latest and greatest...

The VF order book (here and in the US) must not match the projected amount of what the upgrade would have been budgeted against. The dollar and increasing energy costs must be hitting hard...

They did promise 2 new models in the future, but I cant see that happening now.

[fte50]

Its also a very smart business decision, creating fear in order to secure a govt cash grab knowing full well govco cant allow another car major fall so quickly.
The consequences will be horrendous.

[Nikked]

Originally Posted by fte50

Its also a very smart business decision, creating fear in order to secure a govt cash grab knowing full well govco cant allow another car major fall so quickly.
The consequences will be horrendous.

TBH, I don't think the government cares. They have gone as far as to ask Ford to "pay back the money" that was used to develop products...


The average Australian doesn't give a hoot either, all they see is their 7 cents a day (or what ever it is) being wasted...

[Mighty Reds]

Sounds like he is going cap in hand to the government.

[GCRXR6]

Originally Posted by Nikked

Make's little difference...


There was already substantial money spent for the Falcon upgrade, and the plant improvements that suggested a longer stay, but in the end...



Holden must be really worried, the whole tone has changed. They are not as jovial as you would expect for a company that has just released its latest and greatest...

The VF order book (here and in the US) must not match the projected amount of what the upgrade would have been budgeted against. The dollar and increasing energy costs must be hitting hard...

They did promise 2 new models in the future, but I cant see that happening now.

I can't find anywhere on the GM US site where the Commie is available ..... Big con job to get dollars for an export plan?

[Wretched]

Originally Posted by GCRXR6

I can't find anywhere on the GM US site where the Commie is available ..... Big con job to get dollars for an export plan?

http://www.chevrolet.com/culture/art...dan-debut.html

[Nikked]

Softening the impact...

[gtxb67]

sounds like he is saying "everything is going to plan"

[Pepscobra]

No, I believe Devereux is actively playing the 'sympathy' card, and why not.

Now is the perfect time for Holden to utilize the anxiety and uncertainty from the recent Ford announcement to Holden's benefit. No way would/should the Oz Govt allow a second Local Manufacturer to go under. He knows this and I believe is utilizing the current publicity to force the hand of the Govt to make a decision on future funding.

[eb2fairmont]

I agree, but its boy who cried wolf. Australia has stopped listening, and that is very dangerous.

[Pepscobra]

^^^ that does look good, much better wearing the bow tie... Hope it does well over there.

[Revolver]

Well this signals alot. Not long before Toyota & Holden will fold due to the expensiveness of building a car here.

Wages are the biggest killer. Not to mention the multimillion dollar salaries for execs. The whole country is the problem. We all want more money, problem is the products & service providers must raise their prices to cover the wages. The government sees that both business & taxpayer are earning bigger dollars & raises or adds more taxes. Then the employees ask for more money again. Rinse & repeat.

Manufacturing has gone down the drain in Oz. we like America are shifting to more technological industries sending manufacturing to other countries. When manufacturing is the back bone of every economy. And I do mean every one. Hence why China is in such a strong position.......

But as long as the employee gets his money....

And that's why it's not viable.

[blueoval]

Originally Posted by Revolver 45

Well this signals alot. Not long before Toyota & Holden will fold due to the expensiveness of building a car here.

Wages are the biggest killer. Not to mention the multimillion dollar salaries for execs. The whole country is the problem. We all want more money, problem is the products & service providers must raise their prices to cover the wages. The government sees that both business & taxpayer are earning bigger dollars & raises or adds more taxes. Then the employees ask for more money again. Rinse & repeat.

Manufacturing has gone down the drain in Oz. we like America are shifting to more technological industries sending manufacturing to other countries. When manufacturing is the back bone of every economy. And I do mean every one. Hence why China is in such a strong position.......

But as long as the employee gets his money....

And that's why it's not viable.

QFT. The cookie will eventually crumble. At the precipice, it will come down to who will win the wage war? The employer looking to ensure the share holders and execs maintain a fat salary, or the employee ensuring their wages, needs/rights are maintained tot he highest level at the risk of losing their job permanently due to their employer going in into foreclosure?

[mik]

one thing to remember about our wages, its not cheap to live in Australia, if memory serves only recently sydney won the honor of being the most expensive city to live in on the planet, Melbourne came in the top ten places, I wouldn't mind betting our energy costs are right up near the pointy end of most expensive also.

[Kable72]

The government didn't ask for the money back, it was the tax payers asking why money was given and now they're withdrawing after the money was already spent.

[mik]

check this article out ..............
http://www.afr.com/Page/Uuid/0866287...2-55485b880409

Katter push to return to protectionism

FLEUR ANDERSON
Crossbench MP Bob Katter has met unionists and local government politicians in vehicle manufacturing regions to organise demonstrations at car plants to demand new trade policies to protect dying industries.
Mr Katter, whose Katter’s Australia Party plans to field as many as 80 candidates at the federal election, wants to organise up to 8000 manufacturing workers in Melbourne to demand a return to tariff protection and currency intervention to protect the car industry.
The accelerating rate of job cuts in the car, food and steel manufacturing industries has triggered a rise in anti-free trade policies among minor parties and independent federal politicians, who have plans to form a voting bloc in Parliament after the federal election.
Democratic Labor Party Senator John Madigan will introduce a private member’s bill on Thursday to encourage “a more level playing field” for Australian manufacturers by insisting importers from countries with which Australia has a trade agreement must comply with the minimum labour standards required by the International Labour Organisation.
“Our companies pay WorkCover, holiday pay, sick pay and superannuation but our competitors do not operate on the same level playing field,” Senator Madigan said.
“Australia does not exist to prop up slave labour markets.”
The Fair Trade (Workers’ Rights) bill will be the first in a series of proposed legislation by the DLP to challenge the competitive pressures facing local companies against foreign exports by focusing on international standards for patent protection, quality standards and biosecurity.
Senator Madigan said trade tariffs did not work and he would not support a reintroduction of tariffs on imports.
The plight of agriculture, manufacturing and the food industry will be a central focus of the DLP for the September 14 election, for which the party says will hold its biggest campaign since 1974.
The DLP expects to run several candidates for House of Representatives and Senate spots in most states.
Mr Katter’s party is campaigning to lower the value of the Australian dollar to improve the competitiveness of manufacturing, He claimed Australians were willing to pay “a bit extra” for locally-made goods to ensure the future of the industry.
“In eight years, there will no longer be a steel industry or a car industry. We will not be able to make a tyre or an electric motor within eight years,” he said.
“We are no longer a technologically advanced nation. We are a backwater – we are a quarry,” Mr Katter said.
Dean Mighell, the former secretary of the Victorian branch of the Electrical Trades Union, is behind the new party’s industrial relations policy and has been in talks with union officials to co-ordinate the proposed protests.
Mr Katter told The Australian Financial Review the manufacturing job cuts proposed by Target, SPC Ardmona, Holden, Ford and Simplot in the past month was evidence of “the complete collapse and unravelling” of Australian manufacturing.
“It’s nothing to do with this Labor government but the combined policies of both the Labor and Liberal parties to push for a free market in Australia and New Zealand when nobody else is,” Mr Katter said.
Twitter @fleur_anderson

[Gadgetman]

Originally Posted by mik

check this article out ..............
http://www.afr.com/Page/Uuid/0866287...2-55485b880409

Katter push to return to protectionism

FLEUR ANDERSON
Crossbench MP Bob Katter has met unionists and local government politicians in vehicle manufacturing regions to organise demonstrations at car plants to demand new trade policies to protect dying industries.
Mr Katter, whose Katter’s Australia Party plans to field as many as 80 candidates at the federal election, wants to organise up to 8000 manufacturing workers in Melbourne to demand a return to tariff protection and currency intervention to protect the car industry.
The accelerating rate of job cuts in the car, food and steel manufacturing industries has triggered a rise in anti-free trade policies among minor parties and independent federal politicians, who have plans to form a voting bloc in Parliament after the federal election.
Democratic Labor Party Senator John Madigan will introduce a private member’s bill on Thursday to encourage “a more level playing field” for Australian manufacturers by insisting importers from countries with which Australia has a trade agreement must comply with the minimum labour standards required by the International Labour Organisation.
“Our companies pay WorkCover, holiday pay, sick pay and superannuation but our competitors do not operate on the same level playing field,” Senator Madigan said.
“Australia does not exist to prop up slave labour markets.”
The Fair Trade (Workers’ Rights) bill will be the first in a series of proposed legislation by the DLP to challenge the competitive pressures facing local companies against foreign exports by focusing on international standards for patent protection, quality standards and biosecurity.
Senator Madigan said trade tariffs did not work and he would not support a reintroduction of tariffs on imports.
The plight of agriculture, manufacturing and the food industry will be a central focus of the DLP for the September 14 election, for which the party says will hold its biggest campaign since 1974.
The DLP expects to run several candidates for House of Representatives and Senate spots in most states.
Mr Katter’s party is campaigning to lower the value of the Australian dollar to improve the competitiveness of manufacturing, He claimed Australians were willing to pay “a bit extra” for locally-made goods to ensure the future of the industry.
“In eight years, there will no longer be a steel industry or a car industry. We will not be able to make a tyre or an electric motor within eight years,” he said.
“We are no longer a technologically advanced nation. We are a backwater – we are a quarry,” Mr Katter said.
Dean Mighell, the former secretary of the Victorian branch of the Electrical Trades Union, is behind the new party’s industrial relations policy and has been in talks with union officials to co-ordinate the proposed protests.
Mr Katter told The Australian Financial Review the manufacturing job cuts proposed by Target, SPC Ardmona, Holden, Ford and Simplot in the past month was evidence of “the complete collapse and unravelling” of Australian manufacturing.
“It’s nothing to do with this Labor government but the combined policies of both the Labor and Liberal parties to push for a free market in Australia and New Zealand when nobody else is,” Mr Katter said.
Twitter @fleur_anderson

Is this the same Bob Katter that demanded to speak to the powers that be at Ford and turned up to Campbellfield to voice his protest at Ford's announement weeks ago. He left soon after in a new Benz. If you're that passionate about it, buy an australian car mate.

[Charliewool]

Probably in a Benz cause he's well and truly missed the bus!
Some reasonable ideas... But about 20 years too bloody late!

[Dr Smith]

The fact Holden has received double the support provided to Ford and Toyota and yet still hasn't made any money on locally produced cars says a whole lot about it's business model. With a possible change in government and most likely less government funding the Holden business model is looking far more red-inked then before. Ford scared the pollies and now Holden has that weapon to point at the politicians. I'm guessing that with reduced Aust. Gov. support and the need to put in a multiple of that grant from it's own funds (or GM USA) as part of this agreement, this is really burning up the financials at Fishy Bend. Holden needs $X to stay and meets it's future obligations, has publicised it's guaranteeing manufacturing to a set date at least and now if the feds give it less, has to put in more of it's own to meet the same costs and can't do it because it means further, greater losses.

[jpd80]

IMO, Ford's pull out has given Holden license to tell the government exactly how it is, support us or we're gone.
Which leader wants to win an election only to have two car makers pull out during the the next term....

Ford is now running at 148 vehicles a day, can anyone see Holden sticking around until their production is that low?

[mik]

The dollar is still going going down.........

On Thursday afternoon the currency fell as low as 92.24 US cents, its lowest level since September 2010.

where will the $$$$ roller coaster go to i wonder??
As far as victoria goes there have been quite a few more reports of companies shedding workers, it is not just car companies in difficulty, it will be interesting to see where the dollar takes us, and to what direction govco X goes from sept 14, hopefully to a better place.

[Nikked]

Did some number crunching...(from 2011 sales)


Over $13.5 billion in new car sales...and the government brings in near 1 billion in taxes generated from new car sales...and that's with the low %5 import duty...


Imagine if all imports had a 20% tariff applied...there is a good $2 billion at least that could be directly applied into subsidies for the Australia's car industry...