Future of Holden starts today

A new round of negotiations to secure the manufacturing future of Holden starts today, with the car maker hosting a factory tour attended by more than a dozen State and Federal ministers from both sides of politics.

In a rare display of bi-partisan support for the car industry, Federal Coalition Industry Minister Ian Macfarlane will lead a tour of Holden’s car making facility in Elizabeth near Adelaide with SA Labor Premier Jay Weatherill, flanked by a contingent of colleagues from both parties.

Holden was pledged $275 million in State and Federal taxpayer support in March 2012 to build cars until 2022.

But even though Holden sales are at a 20-year low and Commodore deliveries are at a historical 35-year low, the struggling car maker has since come back for more money because it says market conditions have "changed dramatically" since the March 2012 deal was signed.

When Ford announced in May this year that it will shut its Australian factories in October 2016, it handed Holden more bargaining power. Without General Motors-Holden, Toyota Australia's manufacturing operations may not be viable and the entire automotive manufacturing industry could collapse.

After this morning’s two-hour inspection of the day shift, where 1400 of Holden’s remaining 1700 factory workers will be on duty (after 400 redundancies two months ago), a smaller contingent of senior politicians will have a further two-hour meeting behind closed doors with Holden boss Mike Devereux.

"We’re hosting a tour and there is an opportunity to commence formal discussions about the future," said Holden spokesman Sean Poppitt. "This is the beginning of ongoing discussions with the new government."

Holden says it could be some months before a resolution is reached. General Motors was hoping for a decision before the summer shutdown period when expensive upgrades to make way for future vehicles was due to commence.

But Mr Macfarlane has said he may need six months before reaching a new agreement, if any. "In terms of stabilising (Holden) I hope to do that before March next year," he told News Corp last week. "The challenge is to get them breathing by themselves without life support." Mr Macfarlane warned that if Holden were to get any more money it would be a once-only deal, "a long term plan which will be 'The End', in capital letters, in black, six feet high, 'This is all we're ever going to give you'."

Today will mark the first visit to the Holden factory for Mr Macfarlane since he was the Federal Industry Minister in the Howard Government, in 2007. But he has been in close contact with Holden’s Mike Devereux since then and has already had several phone conversations in his first few weeks in office in the Abbott Government.

"Holden faces the biggest challenge in terms of remaining internationally competitive and keeping to build cars in Australia," Mr Macfarlane told ABC Radio in Adelaide last month. "So I spoke to Mike (Devereux) and said I was keen to come down and have a chat to him and have a walk through the plant."

"I haven't been through it since I was Industry Minister in 2007 so I wanted to see what sort of modernisation they've done. I think there's a great opportunity to make sure we make cars in Australia in 20 years time." Mr Macfarlane has warned any deal with Holden would be contingent on an export deal for 30 per cent of the car maker’s production.

This is a tall order given that Holden currently exports only 17 per cent of its locally-made cars because overseas demand is blunted by the strong Australian dollar. Last month, Holden factory workers agreed to a three-year wage freeze to help Holden cut its production costs -- but the new wage deal only kicks-in if Holden signs a new contract to build cars until at least 2022. Aside from the tour it will be a normal day for Holden factory workers, with the car maker planning to build 335 Commodores and Cruzes today.

This reporter is on Twitter: @JoshuaDowling