The Australian automotive manufacturing industry has been hit hard with Ford’s announcement that it is dropping manufacturing the country, and closing down its two plants in 2016. Now fears have risen that GM may do the same as well, taking Holden with it.
Apparently, the cost of manufacturing cars in Australia is simply too high, due to a combination of factors including a strengthening of the local currency, high wages and their geographic position that can make sourcing parts more difficult. In fact, GM says it spends AU$3,750 ($3,548/€2,686) more for every car they make in the country, most of it being accounted for by the workers’ pay.
A bit more light is shed by GM Holden Chairman and Managing Director Mike Devereux, who said: “Our geographic isolation, the cost of sourcing local components and our high labor rates mean we pay a significant premium to manufacture cars here compared to importing,” while adding that “we are more expensive than Germany, the U.K. and Spain – let alone Asia.”
Financially speaking, Holden pumped $32.7 (€24.8) billion into the Australian economy, over the last 12 years, while receiving $1.8 (€1.36) billion in aid from the government. Last month they posted losses in excess of $150 (€113) million, so the situation is clearly not great…
The bottom line is that talks will be commenced with the union on ways to cut costs, increase productivity and generally make the whole operation a more profitable one, so that GM’s presence remains a constant one. The idea is to get them to sing an agreement that would force them to remain in Aussie until at least 2022.
By Andrei Nedelea
Story References: Wards Auto and The Age
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