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EXCLUSIVE Holden close to deal for extra $200m

The new deal will not require Holden to guarantee job numbers.

Holden is close to securing a secret new deal for a further $200 million in taxpayer money -- almost as much as it was pledged a little more than a year ago to maintain its manufacturing operations until 2022.

The struggling car-maker, whose sales are at a 20-year low, is trying to ink the agreement before the Federal election is called to avoid the freeze on new contracts during the “caretaker period”.

The details of Holden’s latest rescue package was discussed at the Federal Government’s Expenditure Review Committee last Friday, sources close to the negotiations have told News Corp.

This new round of funding is in addition to the $275 million pledged to Holden in March 2012 -- $215 million from the Federal government, $50 million from the SA government and $10 million from the Victorian government, to be paid over three financial years.

That deal was supposed to save Holden from any further taxpayer funding for the next 10 years. The then Prime Minister Julia Gillard said at the time there was “a real risk that there would be no more Holden in Australia [and that] would've been a knockout blow for manufacturing in this country”.

Since then Holden has sacked 400 factory workers and 100 engineers -- its biggest round of job losses since the Global Financial Crisis -- and its manufacturing workforce has shrunk to 1700 from a peak of more than 7000 in 2004.

The new deal -- to be handled under the Automotive Transformation Scheme as opposed to the previous “co-investment” program -- also will not require Holden to guarantee job numbers.

Ford’s announcement in May about its factory shutdowns in 2016 delivered Holden massive bargaining power because if Holden closes it means Toyota -- the biggest car manufacturer and employer -- will almost certainly follow, industry analysts have warned.

General Motors has been secretly lobbying government for more taxpayer dollars since Ford’s announcement. Holden boss Mike Devereux says market conditions “have changed dramatically” since the $275 million deal was signed in March 2012.

For the past two months Holden has been in tense negotiations with unions and factory workers to find $15 million in annual savings on its production lines -- including cuts to wages and future redundancy payouts.

Last week union officials confirmed workers had found $9 million in savings but were $6 million short of Holden’s target. Holden is due to finalise its proposal on August 2 and factory workers will vote on the new terms on August 9.

Holden has been trying to keep the new Federal funding deal a secret because the company had previously said if factory workers don’t take a pay cut the manufacturing facilities would close.

But the new $200 million taxpayer deal -- if approved -- means some of the pressure will come off the negotiations with Holden’s factory workers. Among the terms Holden put to workers during preliminary discussions was a 12-year cap on redundancy payouts. The average length of service of a Holden factory worker after the latest round of redundancies is 16 years.

“Regardless of how much new funding Holden gets from the Federal Government, Holden still wants [worker] flexibility,” said John Camillo, the SA secretary for the Australian Manufacturing Workers Union.

“The workers are prepared to give up their 3 per cent pay rise due in November and make other changes to assist Holden with flexibility, but further pay cuts are a bridge too far.”

Mr Camillo said the union was in favour of further funding from government “but there should be strings attached -- if Holden shuts shop in three, four or five years then that money should go back to taxpayers”.

The secret funding deal also explains why Holden has been so silent on the Rudd Government’s controversial changes to Fringe Benefits Tax rules on company cars.

Mr Devereux, who returned from leave a week ago, is reportedly furious about the new FBT regulations because it will dent sales of Holden’s locally-made and imported vehicles by an estimated 10 per cent.

But Holden insiders told News Corp that Mr Devereux doesn’t want to jeopardise the new $200 million deal -- even though 3000 jobs are under threat in the salary packaging and car leasing sectors.

Federal shadow treasurer Joe Hockey told News Corp: "If the report is true, this would be a government band-aid solution for one company for all the damage Labor is doing to the entire automotive sector through its changes to the FBT."

Holden declined comment on the new Federal funding deal, expected to be announced within weeks. Holden spokesman Sean Poppitt said: “We are in close and constant discussions with both sides of politics -- at a state and federal level -- but are not in a position to publicly comment on the details of those discussions.”

This reporter is on Twitter: @JoshuaDowling