Second car line ‘saved Holden’

[vztrt]

Second car line ‘saved Holden’

http://www.goauto.com.au/mellor/mell...25760F0031B5A2

SA minister claims Holden cheated death with mix of nifty footwork and federal aid

By JAMES STANFORD 11 August 2009

HOLDEN would have died if it failed to secure a second car line, a prominent state minister has claimed.

South Australian deputy premier and treasurer Kevin Foley spoke at last week’s V6 engine announcement about how close Holden came to death, while GM Holden chairman and managing director Mark Reuss has declared the company “never wants to be in that position again”.

“It has been a near-death experience for Holden, but it has bounced back in the most aggressive and the most successful manner possible,” Mr Foley said.

He singled out Mr Reuss and federal industry minister Senator Kim Carr for praise, saying he doubted Holden would still exist without them.

“If it had not been for the stroke of luck that an industry minister like Kim Carr came along with the ability to secure half a billion dollars in funding out of his federal colleagues, and the arrival of somebody as talented and as driven as capable as Mark Reuss, we would not be here today,” Mr Foley said.

“You have a managing director in Mark Reuss who has been able to convince Detroit, in its darkest days, to invest in a new vehicle in Australia – an incredibly remarkable achievement. I’m still not sure to this day how Mark was able to pull that off, but pull it off he did.”

Mr Reuss, who will return to the US to take up his new role of GM global engineering vice president in Detroit at the end of this month, told GoAuto it wasn’t clear exactly how close Holden came to failing, but indicated the company had been in a precarious position after its exports dropped 70 per cent and its parent company headed towards bankruptcy in June.

“No one has done this (GM going through chapter 11 bankruptcy) before on a scope with our global operations, so you don’t know, but you leave nothing on the table to prevent anything from happening to an entity like this and that’s what this team did,” he said.

“We left nothing on the table and that is why you are seeing re-investment projects, you are seeing the new car and you are going to see exports programs come back to that plant, you are going to see things that we work incredibly hard on come to blossom here in the next few years because we never want to be in that place again.”

Asked by GoAuto if there was a point at which Holden might go under, Mr Reuss said: “No, I never let myself mentally get there because the minute you get there, this 6500-people team, which is relying on you, see it, so no, no way.”

Mr Reuss said the previous production plan, which meant Holden’s Adelaide production line was overly reliant on exports, was risky.

Mr Reuss and Mr Foley commented on Holden’s survival before news of a $200 million line of credit made available by the Australian Export Finance and Insurance Corporation after Holden requested surety from the federal government (see separate story).

Holden will begin producing a small car alongside its large car and ute range at its Elizabeth plant from the third quarter of next year.

Based on the GM’s Delta II platform that spawned the Cruze, the new car will be available as a sedan and a hatch.

[The Snout]

"“It has been a near-death experience for Holden, but it has bounced back in the most aggressive and the most successful manner possible,” Mr Foley said."

I didn't know begging for money from the Government cause the banks won't lend to you was considered 'the most successful manner possible'.

[ChemicalHorizon]

Originally Posted by The Snout

"“It has been a near-death experience for Holden, but it has bounced back in the most aggressive and the most successful manner possible,” Mr Foley said."

I didn't know begging for money from the Government cause the banks won't lend to you was considered 'the most successful manner possible'.

Actually i think it is.

Possible measures of success:

1. Selling GM bonds (they have been worth bugger all for a long time)
2. Selling stock (bugger all again)
3. Loan against assets (note that #1 and #2 are effectively this, but its more explicit)
4. Selling assets
5. Begging for money
6. File for protection
7. Shutdown company.

So, i think that in the literal sense, it was the most successful, cos they managed to not make it to #7.

Plx note, my list is just off the top of my head...not completly sure of its accuracy.

[Joe5619]

One does have to wonder why Holden have the opinion that a small car is profitable (& a saver) & Ford has the opinion it is unprofitable (& irresponsible). One of the two is wrong, but I guess time will tell which one has it right?

[R-Design]

Originally Posted by Joe5619

One does have to wonder why Holden have the opinion that a small car is profitable (& a saver) & Ford has the opinion it is unprofitable (& irresponsible). One of the two is wrong, but I guess time will tell which one has it right?

Holden's thinking local. Doing the best to keep the doors open on GM's Australian operations, beg, borrow, or steal.

Ford's thinking Global. There's no point in building a car here when it can be done elsewhere for less.

You can guess which will be more profitable long term, but having said that, it doesn't help justify the Australian Auto Industry.

[Falc'man]

Why am I surprised.

[ehast13]

How much cheaper is a small car to produce than big car?

Phtt!

How much cheaper is a small car to buy than a big car?
Similar production costs (probably les r & d tho) and lower profit margin. See John Carey (dep Ed of Wheels for his scathing analysis of Holdens' optomistic plans)

I have nothing but derision for this idea. Either the car will be built down to a price (methinkso) or will not be profitable in the longer term.

[Falc'man]

Originally Posted by ehast13

Similar production costs (probably les r & d tho) and lower profit margin. See John Carey (dep Ed of Wheels for his scathing analysis of Holdens' optomistic plans)

Actually, I did hear that Holden ran out of sponsorship money

[z80]

Holden's reliance on federal funds, the export program, the model lineup.


Smells like another Mitsubishi prop-up to me.

They can always become a net importer like all the other failed car companies in Aus i suppose.

[Raptor]

Got to hand it to their marketing dept though.

Second car line ‘saved Holden’

That's a great headline to have a few weeks after Ford dump their second (small) car plans. Subliminal message to public - Holden will survive, Ford will not. Time will tell but Holden have again won the immediate PR war.

[LeadFoot81]

Assuming Ford Oz's plans work (I think they will), I wonder how long it will be before Holden's PR spin becomes irrelevant?