Holden needs another $60m handout

South Australia's Labor government yesterday warned the carmaker could announce the closure of its northern Adelaide plant by the end of the year, with Holden understood to be demanding more than the $275m it was promised last year to secure its operations in Australia until 2022.

Holden also wants to revise an enterprise bargaining agreement with the unions, involving pay cuts of up to $200 a week for production workers. The carmaker's behind-the-scenes push for increased taxpayer assistance will reopen a policy divide between the Rudd government and the Coalition, which wants to reduce auto industry assistance by $500m.

The Australian understands the company is now seeking up to $60m more from the state and federal governments to honour the commitment to build the new models. The initial $50m from the SA government is also under review since the company announced in April it was shedding almost a quarter of its workforce.

Holden would not comment. Australian Manufacturing Workers' Union SA secretary John Camillo would not reveal how much additional funding was being sought, but confirmed the co-investment was under review.

“They are seeking more funds in regards to replacing the Cruze and the Commodore,” he said. “They have made it quite clear that no matter what the workers do, if they do not get more support from the government they will not go forward with the Cruze and the Commodore.”

Mr Camillo said workers were unlikely to accept a company proposal to significantly reduce wages for production workers at the company's Elizabeth factory, where 400 job cuts were being finalised. There are now just 1700 workers at the northern Adelaide factory, down from 5700 in 2005, and the company is asking workers to take pay cuts of up to $200 a week to help keep the plant open.

Industry Minister Kim Carr said he was in discussions with Holden about the company's future operations. “We remain committed to supporting car manufacturing,” he said. Mr Carr's office refused to provide details on talks with Holden to finalise a funding contract.

Holden also refused to reveal the amount of funding required to guarantee its Australian presence under present conditions. South Australian Manufacturing Minister Tom Kenyon said the company could announce the closure of its Elizabeth plant before the end of the year. “I am taking the possibility of a closure very, very seriously,” he said.