Holden signs similar to Mitsubishi before closure

Carsguide ·

20 May 2013

Holden signs similar to Mitsubishi before closure
"The difference between us and Mitsubishi is we have a plan for the future,'' says Holden.

Holden is in danger of shutting its manufacturing operations and could bring the rest of the car industry down with it.

That's the warning from University of Adelaide Associate Professor John Spoehr, who says he is seeing similar signs to the lead-up of Mitsubishi's Adelaide factory closure in 2008.

"I'm very concerned about the possibility that GMH will close in South Australia in the medium term,'' said Prof Spoehr, who is executive director of the Australian Workplace Innovation and Social Research Centre and has studied the automotive manufacturing industry for 20 years.

"I see similarities and some significant differences [between Mitsubishi and Holden]. But what troubles me most is that combination of the [high] dollar and [cheaper] production costs offshore are a powerful cocktail that make it difficult for the industry to survive here. The likelihood of further job losses in manufacturing is very high.''

The initial report, funded by the South Australian Government, said if Holden was to shut its factory in the Adelaide suburb of Elizabeth it would lead to the loss of up to 16,000 jobs across the community, wipe $1.5 billion of economic activity from the state and lead to a loss of $83 million in tax revenue each year in a "worst case'' scenario.

An updated report on the latest round of 400 redundancies said $187.5 million would be removed yearly from the SA economy and result in up to 2000 job cuts across the rest of the community.

Prof Spoehr also warned "about one-third'' of blue-collar workers would likely become long-term unemployed. "We know from the research that a high proportion of manufacturing employees go on to be long term unemployed when a closure occurs during an economically difficult time like the one we're going through,'' he said.

"When Mitsubishi closed, far fewer workers went on to be unemployed. But [current economic conditions] are qualitatively different to when Mitsubishi closed. We're in much more difficult times.'' Prof Spoehr said 30,000 manufacturing jobs had been lost in SA since the Global Financial Crisis.

Holden's director of government relations Matt Hobbs said: "The difference between us and Mitsubishi is we have a plan for the future''

However, Holden supports the findings of the report because "it demonstrates that the impact of our manufacturing operations go way beyond the factory gate''

Holden's decision to cut 100 engineering jobs in Melbourne - announced at the same time as the 400 blue-collar redundancies at Elizabeth - is also a significant pointer to General Motors winding back its Australian operations.

"The loss of engineering capability in Melbourne is an indicator that they're consolidating their engineering design capabilities offshore,'' Prof Spoehr said.

After the job cuts Holden will have 1750 factory workers, while engineering will shrink from 675 positions to 575. By comparison, Ford Australia employs 1700 factory workers, and about 1100 engineers, most of whom work on overseas vehicle programs even though they are based locally.

The University of Adelaide report was released as Holden started production of the new VF Commodore at its Elizabeth car factory yesterday.

After months of slowdowns, Holden expects production will ramp up in the second half of the year as the new model and its sharp prices - some are $10,000 less than before - revive interest in the Commodore.

Additional reporting by Ben Pike.

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Written by

Joshua Dowling

Published 20 May 2013