Holden announced it will restructure its South Australian manufacturing and product development operations in Melbourne, because of lower demand for the locally-built Cruze compact model.
As a consequence of the restructuring, the Holden Vehicle Operations facility in South Australia will cut its output by 16 percent, from 400 cars per day to 335 by August 1, 2013. This means that approximately 400 employees from the Elizabeth production facility will be sent home. Holden has around 2,200 employees in Australia.
Full-time permanent employees affected by this decision will receive Voluntary Separation Packages. The company will also reduce approximately 100 hourly positions at its hourly product development workforce in Victoria, due to “challenging economic factors.”
“This is a very difficult decision because people and their families are involved, ” said Holden’s chairman and managing director Mike Devereux. “These are hard-working Australian men and women and we will be doing everything in our power to help them make informed decisions about their future.”
Holden blames the drop in demand for the Cruze on the high Australian dollar and the highly competitive domestic car market. Devereux said restructuring is needed in order to protect Holden’s long-term future.
“The Australian automotive industry is heavily trade exposed. The appreciation of the currency means that making things in this country is 60 percent more expensive than it was 10 years ago. The currency is the strongest it’s been in more than 30 years,” Devereux commented.
He added that the strong Australian dollar and extremely low tariffs favor importers, putting “intense pressure on the local industry.” Devereux explained that since 2009, Holden’s pricing has been reduced by up to 2,500 AUD ($2,615) for the same vehicle in order to compete with imported brands, while production costs have continued to rise.
Between June and July 2012 Holden Cruze sales dropped 38 percent without recovering the loss ever since.
By Dan Mihalascu
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