Holden managing director Mike Devereux has told an Australian government commission of inquiry into taxpayer funding for the car industry that “no decision” on the future of the carmaker “has been made.”
Holden needs Australian Government subsidy support to stay in business across the Tasman. But the new Federal government under Prime Minister Tony Abbot has said there would be no more taxpayer dollars for the automotive industry.
Holden has received an average NZ$166 million in Australian taxpayer funding each year for the past 12 years.
Earlier reports from the United States said Holden parent General Motors had already decided to close manufacturing in Australia but was waiting for the right time to announce it.
Holden rival Ford announced in May this year that it would shut down its manufacturing plant in Melbourne in 2016, but would continue with its research and development arm. Speculation about Holden also closing in 2016 has intensified since then.
Devereux declined to answer questions from inquiry members about when Holden would hope to not need government funding.
A commission member asked Devereux if Holden could survive in any forseeable future with no government support.
He replied: “I can’t predict what that future would look like.” Asked what Holden needed to stay in Australia, Devereux said: “The government has the information it needs to answer your question”.
He told the commission that the “business case for having an auto industry is understood all around the world”, and pointed to the Australian mining and property industries, both of which received taxpayer dollars.
He said that the economic activity Holden had generated in 12 years of public funding was A$33 billion (NZ$35.8b). The cost of losing the automotive industry in Australia would “dwarf” the cost of saving it, said Devereux.
Commentators says it looks inevitable that Australia won’t have a carmaking industry after 2016. Holden has admitted that it loses money on every vehicle it builds in Australia.
The announcement in Australia yesterday of a free trade agreement with South Korea means that Holden could lose the Cruze it builds alongside the Commodore in Adelaide The Cruze is also built in South Korea.
Union leaders said Holden workers were ”stressed out to the max at the moment”.
If Holden does close, Toyota’s plant near Melbourne would almost certainly do so too. One compelling reason: the 160 components manufacturers that are vital to the industry would not be able to achieve economies of scale.
As many as 50,000 automotive jobs could go. One Federal Opposition MP said: “Does Mr Abbott really want to be the Prime Minister who oversaw the destruction of an entire industry, and with it tens of thousands of jobs? Does he really want to face an election lead-up in 2016, with hundreds of workers losing their jobs each week throughout the sector?”