Government demands Holden doubles exports

The Federal Government will call on Holden to almost double its vehicle exports in return for more taxpayer assistance -- and any further cash injection will be its last.

Holden is yet to formally meet with the Abbott Government but the Coalition’s new Industry Minister Ian Macfarlane says he wants Holden to export “at least 30 per cent” of its annual production.

Holden currently exports just 17 per cent of the cars its makes locally, compared to Toyota which exports 72 per cent of its Australian production.

“The challenge is to get (Holden) breathing by themselves without life support … for the rest of this model,” said Mr Macfarlane, referring to the current version of the Commodore which comes to an end in 2016. “Then let’s work on the rest.”

Holden was pledged $275 million by state and federal governments in March 2012 but it has asked for further funding assistance because it says market conditions have “changed significantly since then”.

However the Coalition says it will make good on its pre-election promise to cut $500 million from the $5.4 billion set aside for car manufacturing industry assistance.

“We’re not giving back the $500 million, so I’ve got to come up with a solution there,” said Mr Macfarlane. “And then we’ve got to have 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’. That’ll be the end. I won’t be seeing car companies after that.”

Exports have become a key focus for the car industry because the Australian new-car market is now so fragmented that no single model can sell in high enough numbers to justify local production. “I’m hoping to get (an export) commitment from Holden and if they can’t give it, well I guess I don’t know,” said Mr Macfarlane.

However Mr Macfarlane, the former Industry Minister under the Howard Government from 2001 to 2007, who was instrumental in delaying the shutdown of Mitsubishi’s SA factory until 2008, said a Holden factory closure was “not inevitable”.

“We’re not going to have an Australian car any more, I want a car that everyone in the world wants to drive, not just Australians,” said Mr Macfarlane.

“I am going to ask Holden to export 30 per cent of their cars and that’s the bottom line. So it could be a short discussion or a long discussion. But that’s the bottom line.”

Mr Macfarlane said Holden should look at the example set by Toyota, which has overtaken Holden as Australia’s biggest exporter of cars. This month Toyota shipped its 1 millionth Camry to the Middle East. “I know (Toyota is) doing it at a loss, I’d like to stop that happening,” said Mr Macfarlane. “But that shows real dedication to me to Australia. That’s what Toyota are about.”

Holden would not comment on Mr Macfarlane’s export demands but they are likely to be viewed as a tall order for the struggling car-maker. Holden’s best export year was in 2005 when it shipped 60,500 cars to the US and the Middle East, representing 38 per cent of Holden’s annual production.

But in 2005 $AUD 1 bought 77 US cents. The exchange rate this week has hovered around 93 US cents. The strong Australian dollar makes exports unprofitable and the two new globally-developed cars that Holden will build from 2016 onwards will be built in other General Motors factories at a cheaper cost.

Mr Macfarlane will lead a contingent of state and federal politicians from both sides of politics on a tour of the Holden car assembly line in Elizabeth near Adelaide next Wednesday. It was planned for Thursday but was rescheduled because Cabinet is sitting.

Expected to join the tour are SA Labor Premier Jay Weatherill, the minister for manufacturing Tom Kenyon, the SA Liberal Opposition Leader Steven Marshall and shadow industry minister Martin Hamilton-Smith.

Former Federal Industry Minister and secretary of the Australian Council of Trade Unions Greg Combet has also been invited. “(Mr Combet’s) not in politics any more but I always got on well with Greg, he’s a good guy,” said Mr Macfarlane.

“There are a lot of issues that’ll have to be resolved around the union award. I’m not going to get involved in that. That’s for (Holden) management to sort out but if Greg (Combet) can give us a hand and share some of his wisdom as the ex-Industry Minister that’d be great.”

Mr Macfarlane has even found support from an old foe. The Federal Industry Minister under the previous Rudd Government, Senator Kim Carr, said: “I would welcome Ian Macfarlane’s appointment to that portfolio given that he would have a better understanding than any serving members of the Coalition of the issues confronting the automotive industry.”

Mr Carr has not yet been announced as the Shadow Industry Minister but he told News Corp: “I’m keen to continue my work in this area.”

Mr Macfarlane said he hoped to have a decision on Holden finalised by next March; Holden is pushing for a deadline of December because it is due to make upgrades to the factory over the summer break, to start early preparations for the 2016 models. “In terms of stabilising (Holden) I hope to do that before March next year,” said Mr Macfarlane. “It’s six months away and I would hope to resolve this issue before the (state) election campaign starts in South Australia.”

This reporter is on Twitter: @JoshuaDowling