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General Motors to Exit Australia

Stephanie Davies Dec 11, 2013
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General Motors announced today that it has plans of bolstering its brands in the mainstream and premium segments in order to accelerate and strengthen progress in Europe. However, as this news was being released, several other news outlets have reported speculation that General Motors has plans to pull production from Australia as early as 2016.

The Australian Broadcasting Corp made an announcement citing unnamed senior government sources stating that the decision for General Motors to exit Australia has been made this week, however a GM spokesman in Detroit declined to comment. Industry Minister Ian Macfarlane and shadow minister Kim Carr explained that a decision had not been made.

If General Motors does indeed decide to pull out of Australia, it won’t be a huge shock. The automotive industry there has been under serious pressure for years due to high costs, a strong local dollar, weak exports, and tough international competition. The industry has been kept afloat by billions of government dollars, but since Prime Minster Tony Abbott’s conservative coalition won power in September, continued support has been deemed less than certain.

"The message we are getting from Holden is they are in two minds and I would like them to clarify what their position is," Abbott told local radio as he, along with union officials, is pushing Holden to inform the public of what exactly its game plan is.

"There is not going to be any extra money over and above the generous support taxpayers have been giving for some time," he added.

One must remember and consider the terrifying reality that the loss of a company means the loss of jobs – in this case a percentage of the 50,000 people employed throughout the Australian automotive industry and 200,000 others employed through manufacturing jobs dependent on the industry. "This is an eco-system. If one goes, it's only a matter of time before the whole lot goes," Carr told reporters on Friday.

This news comes just months after Ford Motor Company made announcements that it will shut both of its Australian auto plants come October 2016, and Mitsubishi Motors’ exit from the country in 2008.

Holden claims a 10-percent share of the Australian market and posted a whopping loss of A$153 million last year. Approximately 95,000 vehicles were produced, including the best-selling Commodore and Cruze, however exports made up less than 14,000 of those vehicles.

Although Holden is a brand belonging to GM, its roots can be traced back to an Australian saddle maker in 1856. Now, it makes its vehicles in South Australia at its Elizabeth plant and its engines in Port Melbourne, Victoria with a total employee count of almost 4,000.

On Thursday, Australia signed a free trade deal with South Korea, a major auto producer, a most likely to put considerable pressure on the domestic auto industry. Even before the agreement, vehicles were the country’s second-largest import from South Korea, worth more than A$2 billion last year alone. About 1.1 million new vehicles are sold each year in Australia with less than one quarter of those are now produced locally, in comparison to the almost 389,000 locally-manufactured in 2005.

Only time will tell what General Motors plans to do in regards to its Australian market, so stay tuned to for updates.

Update (12/11/13): General Motors announced today that it will transition to a national sales company in Australia and New Zealand, and discontinue vehicle and engine manufacturing while significantly reducing its engineering operations in Australia by the end of 2017. Approximately 2,900 positions will be impacted over the next four years, comprised of 1,600 from the Elizabeth vehicle manufacturing plant and approximately 1,300 from Holden’s Victorian workforce.General Motors assures Australians that Holden will continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution center, and a global design studio.

“We are completely dedicated to strengthening our global operations while meeting the needs of our customers,” said GM Chairman and CEO Dan Akerson. “The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including 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.”



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