HOLDEN has found new hope from an unlikely source. The Coalition Government

[csv8]

HOLDEN has found new hope from an unlikely source. The Coalition Government - widely tipped to spell the death of the Australian car manufacturing industry - has come out fighting to save it.

New Federal Industry Minister Ian Macfarlane, who previously held the portfolio under the Howard Government, said this week he will "arm wrestle" Treasurer Joe Hockey, an opponent of the industry, to secure the required funds.

Mr Macfarlane is yet to meet with Holden but has already spoken with the company at length and has asked his department to expedite a Productivity Commission review and do a forensic check of how much money is left in the $4.3 billion in allocated funds.

When Mr Macfarlane does a walk-through of Holden's Elizabeth factory on Thursday October 3 he will do so with his Coalition colleagues as well as those from unions and the State and Federal Opposition. It's a bipartisan approach to saving the industry we've not seen before.

Holden had secured $275 million from State and Federal Governments in March 2012 but says it needs a new round of funding because "market conditions have changed dramatically".

Mr Macfarlane says he believes in the 1700 factory jobs at Holden and the 16,000 at parts suppliers in SA plus another 28,000 in Victoria. But there is also a fair chance no Government wants to see Holden die on its watch.

By an incredible coincidence, because of the way Holden's model cycles were scheduled a decade ago, if General Motors were to shut down its factories it would be at the end of 2016 - the same time as Ford but, more significantly, on the eve of the next Federal election as the Abbott Government heads to the polls for the first time.

The only thing missing from this week's debate about whether or not to save Holden was Holden itself.

The normally outspoken boss of the company Mike Devereux has been told by his minders to stay quiet.

Which is a shame because among all the noise from economists and so-called industry experts, no-one was pushing Holden's case - except Mr Macfarlane.

Q&A:

1. Why all the fuss?

Holden must make its first big injection of funds for upgrades to the factory during the summer holiday shutdown period. The factory will only be idle three times between now and when the new models are due in 2015 (Cruze) and 2016 (the front-drive car Holden says it will call the Commodore). Holden doesn't want to spend the cash on new equipment if it won't be needing it.

2. Where did it all go wrong?

Australia thought it was doing the grown-up thing when, 20 years ago, it decided to gradually reduce import tariffs and create more free trade. We now have among the lowest import tariffs in the world (5 per cent on most cars and 0 per cent on those imported from Thailand and North America). But the other countries were smarter and had hidden non-tariff barriers that made exporting cars difficult. Add to that mix our high labour costs compared to nearby Asian countries and a strong dollar and exports are all but out.

3. Why are exports crucial?

Because the Australian new-car market is now so fragmented no single brand can sell enough cars to survive on local production alone. There are now more models on sale here (65) than in North America (38) and Europe (42). The top-selling car, the imported Mazda3, led the market with 44,000 sales last year. At its peak Holden sold 94,000 Commodores locally (1998) and exported 60,000 (2005). Last year Holden sold 30,500 Commodores locally and exported 14,500.

4. How does Toyota do it?

Toyota is said to lose about $2500 on every Camry it exports. In other words, the more it builds the more it loses. But the loss is offset by the profits from its imports (aided by the Japanese Yen that's been artificially devalued by the Japanese government). Toyota imports 181,000 cars a year and builds about 100,000 (30,000 sold locally). Holden imports 45,000 cars and builds 80,000 (65,000 sold locally) so General Motors doesn't have the ability to use imports to prop up its struggling manufacturing operations.

5. What happens to Holden factory workers now?

If Holden doesn't go ahead with the new models then the workers revert to their old workplace agreement which has generous and flexible conditions. But they'll be out of a job by the end of 2016. If Holden does strike a deal with the new Federal Government then the workers will forego wage rises for three years, which means they won't be keeping up with the cost of inflation but will still be slightly better paid and have bigger bonuses than Toyota factory workers in Melbourne.

6. What happens to manufacturing workers at auto parts makers?

They're waiting with their colleagues from Holden on the outcome of negotiations over the next three months. If Holden gets over the line as hoped then they'll be safe for at least three years. But the next generation cars will have the least amount of local parts than ever before. The Cruze has 30 per cent local content compared to the Commodore's 50 per cent (and Camry 65 per cent and Ford Falcon 70 per cent). But the next Commodore will likely dip closer to 30 per cent local content.
http://www.couriermail.com.au/busine...-1226724350492
This reporter is on Twitter: @JoshuaDowling
My comment I am suprised there are more models sold here, than America or Europe ?? The Button Plan failed. Tariffs must be increased.
and Ford where did it all go wrong ??? miss read the market ? Dealers ? Service Departments?

[mik]

I agree mate, imo the problem with the button plan was they let it go too far, anyone with a brain would concede you look after your own industry first, we don't need twice as many car makers here than the US does with 10 times our population, as always some will moan and ***** our cars would not be as good without competition, but those days are long gone, we have put our own industry down the toilet to let in the flood of imports.
I think like holden, ford oz probably hoped the conditions might change or get better , but consecutive oz guvmits have continually made things worse and we now pay the price..

[1TUFFUTE]

if the falcon has 70% local parts.....and the commodore only 50%........why shouldn't the focusfrom the government be on saving and supporting falcon?
Cruize is only 30% Australian.....that's sad. It has to be asked.....Why do they bother taking the hit.

[2011G6E]

I heard a comment on the ABC radio a month or so ago, regarding having a car industry here, which said (about a comment from some politician that there was nothing magical or special about being able to build a car in your country), words to the effect that "I'd agree there's nothing special about having the capacity to build a car in your country...but you also have to agree when you have a small population it can cost an awful lot to do so and sooner or later the sums have to be looked at as to whether it's worth it".

In other words, countries like the USA and Europe can do it because of vast populations...Asia can do it because of cheap labour. To be blunt, we seem to do it out of tradition.

[1TUFFUTE]

Originally Posted by 2011G6E

I heard a comment on the ABC radio a month or so ago, regarding having a car industry here, which said (about a comment from some politician that there was nothing magical or special about being able to build a car in your country), words to the effect that "I'd agree there's nothing special about having the capacity to build a car in your country...but you also have to agree when you have a small population it can cost an awful lot to do so and sooner or later the sums have to be looked at as to whether it's worth it".

In other words, countries like the USA and Europe can do it because of vast populations...Asia can do it because of cheap labour. To be blunt, we seem to do it out of tradition.

this opinion is uneducated.....ive seen quoted many times hear the amount per capita that countries put in to their car industries. We have the population to easily support even half of what some countries pay to help keep people employed and money turning over. sorry but I have to because its been covered many times and it makes plain sense for a country to be able to support itself.......certainly not go BACKWARDS.

[eb2fairmont]

Originally Posted by 1TUFFUTE

if the falcon has 70% local parts.....and the commodore only 50%........why shouldn't the focusfrom the government be on saving and supporting falcon?
Cruize is only 30% Australian.....that's sad. It has to be asked.....Why do they bother taking the hit.

Because it made sense when 1/3 rd the tooling and R&D was paid for by the federal govt. Given the price a cruze sells for, and the fact its more epxensive to make than a commodore really proved toyota and ford right when you couldnt build a small car profitably in this country.

Cruze only exists to get more volume through the plant to reduce unit costs to make commodore more profitable. Vf is cheaper to build than VE too.

[BENT_8]

Originally Posted by 1TUFFUTE

if the falcon has 70% local parts.....and the commodore only 50%........why shouldn't the focusfrom the government be on saving and supporting falcon?
Cruize is only 30% Australian.....that's sad. It has to be asked.....Why do they bother taking the hit.

The Government tried, they asked Ford to sit down and discuss what they would need in terms of funding to secure manufacturing further.

Ford said, no thanks, our business case dictates we can earn more money building elsewhere, you can all have 3 years to get your things in order.

Holden have asked the question, and if its not viable will cut and run too.

The means to the end is irrelevant unless you hang your hat on ethics, and that is debateable.
Is it more ethical to cut some ones livelihood albeit giving them 3 years to take it all in, or fight to save jobs whilst informing your workforce that nothing is certain.
There is argument for and against on both counts.

If Holden had declared and Ford asked the question would we honestly be as savage, as some in these threads, in our disgust of tax payer handouts...

[pursuit2359]

So much nonsense in this article.

The Coalition plan is to take $500 million out of the "transformation fund". Macfarlane can talk all he likes about "arm wrestling" Hockey, but he won't be making funding decisions.

And if Toyota is losing $2500 on every export Camry, I'll eat my hat. Unlike Holden, Toyota Australia isn't burdened by the $1 billion plus spent developing Zeta.

[kennyboy]

Originally Posted by pursuit2359

So much nonsense in this article.

The Coalition plan is to take $500 million out of the "transformation fund". Macfarlane can talk all he likes about "arm wrestling" Hockey, but he won't be making funding decisions.

And if Toyota is losing $2500 on every export Camry, I'll eat my hat. Unlike Holden, Toyota Australia isn't burdened by the $1 billion plus spent developing Zeta.

The zeta program is a GLOBAL GM platform - why should we pay for that, also holden got funding equal to both ford & toyota over the last 10 years & still can't make a profit, yet friends of mine were getting quotes for holdens less than what ford employees get from ford dealers for equivalent cars, pre VE - ???????. It's quite likely Toyota is making losses on camry to maintain competitiveness, they say its the profits from imported cars keeping their heads above water - look at sales of corolla & hi-lux & you can see why!

[LightningStrike]

Free trade agreement with Thailand is a perfect snapshot of where we failed. They send cars to us tariff free, we export a territory to them and it gets slugged with a 40% tariff. Where is the freedom of trade in that? Even at 0% tariff our product would still be expensive, and the volumes commensurately small, so why not throw us a tokenistic bone? ?

[1TUFFUTE]

Originally Posted by kennyboy

The zeta program is a GLOBAL GM platform - why should we pay for that, also holden got funding equal to both ford & toyota over the last 10 years & still can't make a profit, yet friends of mine were getting quotes for holdens less than what ford employees get from ford dealers for equivalent cars, pre VE - ???????. It's quite likely Toyota is making losses on camry to maintain competitiveness, they say its the profits from imported cars keeping their heads above water - look at sales of corolla & hi-lux & you can see why!

Funny thing is i agree with you how its weird such big companies need help .but I do see the flow on effect of having such a big presence of said companies in Australia ........hence helping them makes total sense.......just like everyother car building country in the world....it's how it is.just not here.....for ford.....anymore......despite the best cars

[Road_Warrior]

The problem wasnt the Button Car Plan at all.

The problem is that no substantive review of its effectiveness and the longer term future of the industry was done since.

[Buntz]

Originally Posted by Road_Warrior

The problem wasnt the Button Car Plan at all.

The problem is that no substantive review of its effectiveness and the longer term future of the industry was done since.

Yes. The problem is the morons in Government.

[jpd80]

Holden probably needs to secure between $150 million and $200 million in funding for the next Cruze.,
it's something the new government is going to have to come to terms with if they want Holden to stay.

Auto makers have been at this a lot longer than politicians and the only thing keeping them here is "easy money"
for cars they intend selling in our market....

[NAK302]

i'm still trying to get my head around the fact that a private company relies on tax payer funding to manufacture a product to make profit.
i'm sure there are quite a few manufacturing companies out there that would love this luxury.

[Hulsty]

Originally Posted by GT-0733

i'm still trying to get my head around the fact that a private company relies on tax payer funding to manufacture a product to make profit.
i'm sure there are quite a few manufacturing companies out there that would love this luxury.

There are plenty of companies that get government funding. The government is not stupid, they are not giving away money for nothing. They get more than they invest back in revenue. When/if all these companies leave Australia and all the job losses hit there will be a drop in government revenue, whats going to happen then? There will be heaps of unemployed people and a drop in revenue coming in to help them out? We will be right royally screwed.

Doesnt help the government has no balls in regard to all the FTA that are at our disadvantage and local content in the manufacturing. But I guess most of it is consumer driven, wanting high and higher wages and to pay less and less for everything.

[stazza]

Originally Posted by Hulsty

The government is not stupid, they are not giving away money for nothing

Doesnt help the government has no balls in regard to all the FTA that are at our disadvantage and local content in the manufacturing

Ummm... what? The government is not stupid?

[jpblue1000]

Originally Posted by stazza

Ummm... what? The government is not stupid?

Stazza, did you stand for election, Did you vote?
Irrespective of what we think I'm pretty sure running a country, balancing all the competing and ever changing demands, pleaseing most of the people some of the time and doing what their world view dictates is the right thing is not an easy task. Im pretty sure the 'average punter' couldn't do it, despite what they write on the internet.

JP

[stazza]

Originally Posted by jpblue1000

Stazza, did you stand for election, Did you vote?
Irrespective of what we think I'm pretty sure running a country, balancing all the competing and ever changing demands, pleaseing most of the people some of the time and doing what their world view dictates is the right thing is not an easy task. Im pretty sure the 'average punter' couldn't do it, despite what they write on the internet.

JP

So because someone is in parliament they must automatically be smarter than the "average punter"? That's insulting. Depending on their credentials, intellectually smart maybe. Have you heard Abbott speak publicly? It's embarrassing. He can't string a sentence together without pausing 57 times or completely changing direction. His party as a whole isn't exactly inspiring to listen to. How can you expect this douche to make conscious educated decisions? He is stupid.

[Gobes32]

I find it amazing that in just one week in office the Coalition is talking about where the problems exist (exports and FTA) and how to fix them. Labor had six years and all they did was throw money at the problem..........

[Joe5619]

Originally Posted by Gobes32

I find it amazing that in just one week in office the Coalition is talking about where the problems exist (exports and FTA) and how to fix them. Labor had six years and all they did was throw money at the problem..........

Here's hoping they have some real & different solutions for the industry other than throwing money at them!!


Is there any chance, that "if" the coalition makes some real, quick & substantial chances, Ford might change their mind & build a global car here??

[jpblue1000]

I don't know the ins and outs of the particular request, the Free Trade issues or how to fix the problems.
What I have learnt this year is that Government investment in large companies seems to have a greater return than many other investments they could make.
I think we should stop looking at it as handouts but more as that investment.
How many of you have shares...do you consider them a handout to the company you hold shares in.
Admittedly the Government doesnt get dividends, the return on investment comes in taxes and employment.
Also it would seem, to perhaps a lesser than satisfactory degree as co-investor the government gets a say in the direction or at least prod or push the manufacturer to meet certain targets.

JP

[BHDOGS]

Both of which the coalition can do nothing about

[GCRXR6]

Originally Posted by BHDOGS

Both of which the coalition can do nothing about

This problem goes back years. The coalition had ample time to do something about it before 07, but did diddly squat. Now, I'm trying not to be political here, but although I'm not a Labour supporter, I see no reason to pile all of the guilt on them. End of political rant ....

[mik]

Originally Posted by GCRXR6

This problem goes back years. The coalition had ample time to do something about it before 07, but did diddly squat. Now, I'm trying not to be political here, but although I'm not a Labour supporter, I see no reason to pile all of the guilt on them. End of political rant ....

perhaps but one party kept right on lowering tariffs right to the end......guess which one ??

[BENT_8]

The article is in regards to high end models which are in big demand, it would take longer to tool up for the particular model wheel than it would to have a load sent over from the current supplier.
The fact that they are coming airmail supports this.

These are alloy wheels, not steelies.

Its about getting the cars out there sooner.

All local manufacturers use imported parts, some more than others.

What they actually use is subject to supply costs, obviously in Ford and Holden's case, ROH weren't competitive.

The article fails to mention Mullins Wheels which is 5k from Holden's front door, obviously they couldn't make the cut either.

[Gobes32]

I think Mr Rudd was so worried about offending our Asian neighbours that the issues were never raised. Sadly though, Ford's curtain is drawn irregardless of what happens from here.

[uranium_death]

No chance that Ford will backflip.
From a purely financial point of view, stopping manufacturing here is a smart decision. Any government support is a short-term fix. Manufacturing here is slowly dying across all industries due to the relatively high costs.

I will miss Australian-built Falcons/large passenger vehicles, but I am hoping that a global model will result in better quality control, more swift response to issues, and a better quality vehicle.

[XBGTFGGTP]

Originally Posted by uranium_death

No chance that Ford will backflip.
From a purely financial point of view, stopping manufacturing here is a smart decision. Any government support is a short-term fix. Manufacturing here is slowly dying across all industries due to the relatively high costs.

I will miss Australian-built Falcons/large passenger vehicles, but I am hoping that a global model will result in better quality control, more swift response to issues, and a better quality vehicle.

In NZ we have the most diverse car market in the world. When imports first arrived they closed our local assembly plants and suppliers but out of that came new opportunities for business with the added benefit of vehicles offering better value for money.

It's about adapting to change and in all honesty when you can buy a E63 AMG for the same price as a GTS or a GTP what would you rather drive?

[Rodge]

Originally Posted by XBGTFGGTP

In NZ we have the most diverse car market in the world. When imports first arrived they closed our local assembly plants and suppliers but out of that came new opportunities for business with the added benefit of vehicles offering better value for money.

It's about adapting to change and in all honesty when you can buy a E63 AMG for the same price as a GTS or a GTP what would you rather drive?

Exactly mate. Jaguar XFR, E63AMG or CLS63AMG.