Financial News

  • 11 December 2013, 16:22

GM Puts Brakes On Australia Car Production

Australia's auto industry has taken another step towards extinction following confirmation General Motors (GM) is to shut its Holden manufacturing plants by 2017 with the loss of 2,900 jobs.

The Holden brand - which is GM's Australian equivalent of Vauxhall in the UK - currently operates two plants in Adelaide and in Melbourne.

The move leaves Toyota as the only major car manufacturer in Australia but the Japanese firm confirmed after GM's announcement that it was now reviewing its own future in the country.

Holden's decision to move to a national sales company comes after Ford said in May it would stop making vehicles at its unprofitable Australian factories in 2016, with the loss of 1,200 jobs.

With Mitsubishi closing its Adelaide plant five years ago, only Toyota Australia - which employs more than 4,000 workers - will be left making cars in the country.

"The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country," GM chief executive Dan Akerson said in a statement.

"This includes the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world."

He made the announcement following confirmation he was to be replaced by life-long GM employee, Mary Barra, who was to become the company's first female CEO.

Holden, maker of the iconic Commodore car, said 2,900 jobs would be axed over the next four years - 1,600 from its Elizabeth vehicle manufacturing plant in Adelaide and approximately 1,300 from the workforce in Melbourne.

It spells the end of a long association with Australia. Holdenbegan as a saddlery in 1856 before manufacturing cars in 1948.

Unions have warned of a multi-billion-dollar hole in the economy and the loss of up to 50,000 automotive industry-related jobs if car manufacturing in Australia ends altogether.

Toyota said of GM's decision: "This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia."

"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia."

The Australian Manufacturing Workers Union said it expected Toyota to follow Holden's lead.

"It's now highly likely that Toyota will leave Australia. In fact it's almost certain," AMWU national vehicles division secretary Dave Smith told reporters.

"It's a very bleak day indeed."

Treasurer Joe Hockey said the government would work closely with the state governments and unions to ensure Holden's departure "does not lead to a significant economic downturn in South Australia or Victoria".

"We will do everything to help in this transition," he told parliament.

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