Holden job cuts no surprise

Holden has been planning for the downturn in demand for the Commodore for some time. The sales graph for the past 10 years looks like a slippery dip. But what’s really thrown sand in Holden’s face -- and now cost the jobs of 500 workers -- is the unexpected shift away from its Cruze small car.

The Cruze, which was imported from South Korea until Holden did a deal to build it locally from 2010, was supposed to be the company’s saviour and help it prop up production at the Elizabeth car assembly line. But despite the Cruze overtaking the Holden Commodore in the sales race on several months -- it had a neck-and-neck finish to 2011 – not enough Australians are buying it.

There are more than 26 rivals in the small-car class. Holden reacted last month by introducing a revised version of the Cruze starting at $19,490 -- the cheapest locally-made car in 21 years -- and loaded it with extra equipment. But it may have been a case of too little too late, having had its hopes crushed by a massively undervalued Japanese Yen.

The Japanese-made Mazda3 has been Australia’s top selling car for the past two years and is still market leader so far this year. For the past two months, Japanese car makers filled the top-three selling positions for the first time in Australian automotive history.

As harsh as this sounds, Holden had little choice but to announce these job cuts today, because it is trying to make the company viable for a manufacturing future which it says will run at least to 2022. Sadly, there are more cuts likely in the coming years -- on the production line and in the engineering ranks – until it finds the right size of workforce to match genuine consumer demand.

This reporter is on Twitter: @JoshuaDowling