Friday, March 23, 2012

$275 million buys how many jobs? With Holden we don't know

Okay. Here's what we do know:

Holden will continue to make cars in Australia in return for $275 million, but can promise nothing about jobs.

Standing alongside Prime Minister Julia Gillard after agreeing to launch two new models over the next ten years Holden managing director Mike Devereux said if he knew where the Australian Dollar would be, what his competitors would do and where interest rates would be he might be able to work out how many workers he would need, but if he knew those things he “wouldn't be running a car company”.

Holden will enter into a binding contract with the Australian government to build two new “next generation” cars at its Adelaide plant between now and 2022. It will maintain a design and engineering team, at present employing 900 people at Port Melbourne, but the team will “localise” international designs rather than create Australian designs fromt he ground up.

Mr Devereux would give no guarantee the 900 jobs would remain. The Australian Manufacturing Workers Union said Holden had told it to expect redundancies...

Without the commitment of $215 million from the Commonwealth, $50 million from South Australia and $10 million from Victoria, Holden would have stopped making cars in Australia after 2016.

Ms Gillard told parliament Holden was “part of the Australian identity”. There had been a “real risk” it would go, endangering the futures of all of the 55,500 workers employed making cars in Australia and the more than 200,000 employed in supporting industries.

Premier Ted Baillieu would not confirm Victoria’s payment to Holden, believed to be $10 million, along with another grant of $10 million to a separate fund to develop new markets to automotive suppliers - because it would set a precedent that could be used to lever funds out of the government on future occasions.

He said the government was concerned about the 900 staff at Port Melbourne and also about engine plant employing 400 people which services manufacturers all aroudn the world.

Asked if the Port Melbourne jobs had been guaranteed, Mr Baillieu said he would leave it to Holden “to go into the further detail”.

Ian Jones, national secretary of the AMWU vehicles division, said Holden had begun a study to decide the future of the engine plant. It had recently rebuilt, and its performance was ‘‘outstanding’’.

‘‘I would be surprised if we weren’t able to map a future,” he said.

Coalition industry spokeswoman Sophie Mirabella said she was not "averse" to support for the car industry, but couldn’t support the deal until she knew the details.

Other Coalition members have questioned continued support for the industry and it has an official position of refering questions about future support to the Productivity Commission.

Mr Devereux said “regardless of what you hear” both sides of politics understood the importance of maintaining a car industry.

When signed, the “binding contract” with the Australian government would be hard for either party to get out of.

He did not yet know the type of cars that would be built under the contract.

“Today we are working the V8 Commodore which we will launch in 2013. These other cars won’t be launched until the second half of this decade. Frankly the size, the weight, the feel, hasn’t even been invented,” he said.

Holden would invest than $1 billion as a result of the $275 million pledged by the Australian governments.

Ms Gillard said the pledge was a “co-investment” rather than a handout.

Mr Devereux said said it would create $4 billion of economic activity.

“That’s $4 billion injected just by Holden alone - no multiplier effect, no funny math, just straight economic activity that Holden will drive into this country,” he said.

In addition the multiplier effect would be “unmatched”.

“This is the bedrock of basic manufacturing, being able to make a tool, whether that tool is to make a car or is used in the mining industry, these are the type of cornerstone things that make the auto business a very good investment for the Australian people, he said.

In January the Commonwealth and Victorian governments entered into a $103 co-investment deal with Ford to keep the company's Melbourne plant open until 2016.

In today's Canberra Times and Age


. It'd be a brave PM who pulled the plug on Holden - Tim Colebatch

Related Posts

. Australia bets on cars

. If there's one BlueScope they'll be hundreds: Why Treasury shuts its wallet tight