Holden cuts back production

The Adelaide-based car maker will add extra "market response" days to its production schedule between now and the end of the year to avoid producing excess stock.

Holden's SA spokesman Sean Poppitt said the company was implementing a small number of what the workplace agreement with staff calls "market response days" between now and the end of the year in response to reduced demand, but declined to put a number on it. "We're not saying specifically - it's less than four per cent of our total production volume for the year," he said.

The plant, which employs around 2400 people, is producing 400 Caprice, Cruze and Commodore vehicles - 45 models in total - per day. The plant was scheduled to run up to around 240 production days this year, with a target of 90,000 for 2012 - a four per cent reduction would reduce the vehicle production by 3600 units, or as many as nine production days.

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"Would we prefer not to be doing it, absolutely, but it's not an enormous number and it’s crucial to us, being a small-volume manufacturer, that we are able to respond to the market and stay lean, because having excess inventory for us is the worst position we could be in at this point," Mr Poppitt said.

The large car segment continues to reduce in size - so far this year it is down more than 20 per cent on last year's lack-lustre figures (although Commodore continues to outsell the Falcon by 2:1). The 2011 tally for large car sales was a 20 per cent fall on the previous year.

The small car segment - which includes the Adelaide-built Cruze - has grown by more than two per cent, although the Cruze sales are down by 7.7 per cent so far this year. Mr Poppitt said the schedule changes had been worked through with union representatives to identify the best days for no vehicle production.

"It is in the agreement for these exact situations, employees are aware of them - we don't make these decisions lightly, we understand that people not required to work that day are on 60 per cent pay - they have the opportunity to top that up with leave entitlements, but we don't take it lightly, we know that it effects people," he says.

No plans have been made to change the ratio of Cruze and Commodore model production and Mr Poppitt said the production down days allowed then to make line and equipment upgrades for the upcoming 2014 VF Commodore. "It's not as though the place is a ghost town - there are all sorts of engineering upgrades and critical maintenance that we can't do when we have the line running, so it's an opportunity to do these things in the lead up to VF," he said.