EXCLUSIVE Holden to follow Ford?

The boss of Holden Mike Devereux says the company will follow Ford and shut its Australian factories if it doesn’t get a commitment for enough taxpayer support to maintain its local loss-making operations.

The anxiety in the car industry has reached new levels in the lead-up to the Federal election given that the coalition has vowed to slash $500 million in assistance to automotive manufacturing, said to be a deal-breaker for Holden.

Holden’s head of government affairs Matt Hobbs said at the weekend that any reduction in support to the industry would prompt the company to “cease manufacturing”.

When asked today if that was true, Devereux told News Limited: “Absolutely true. If there is no comprehensive competitive approach to automotive policy … no question [we will cease manufacturing].”

Devereux said shutting the Holden factories is a last resort and a decision he hopes not to make. “How would it make me feel emotionally [to shut the factories]? I don’t have the luxury of emotion in this. I think it would be the wrong decision for the country because I think Australia will not always have the exact same set of combined economic circumstances that it’s dealing with right now,” he said, referring to the record high Australian dollar, low tariffs and overall economic strength due to the mining boom.

“To mortgage your future as a country of making things, because of a particular point in time right now, to assume that this set of conditions will be true in 10 to 15 years from now, I think is illogical,” he said.

Devereux said Holden had no preference over which government will lead the country after the federal election, but he said a commitment needed to be made “sooner rather than later”.

“We’re having very specific dialogue with both sides of government every week,” he said. “We need clear, consistent and competitive policy over long periods of time to make billion-dollar investments, or you can’t make cars in this country. I think there is a common sense component in both parties. I think people understand what’s at stake.”

Devereux’s comments comes as the Productivity Commission’s Annual Report on trade and assistance for 2011 to 2012 found that the car industry receives more support than other manufacturing sectors, and other industries.

The report found the “effective rate of assistance” for manufacturers is about 4 per cent and for agriculture is about 3 per cent -- but the level of assistance for motor vehicle manufacturers was more than 9 per cent.

Devereux defended the taxpayer assistance, pointing out that it had come down over the past six years and received less in tax concessions than other sectors such as coal mining, petroleum, tobacco, food and beverage industries.

“Plus, the multiplier effect in the economy is greater than it is in other sectors. You buy more when you give [the car industry] $100 million. In many of these other sectors there aren’t any multiplier effects.”

Government assistance to car manufacturers was a “fact of life everywhere in the world,” Devereux said. “I wish the country would make up its mind. Do you want to be an integrated hi-tech manufacturing base or not? Once you give away this industry, it’s a slow march to not making things that matter after that.”

When Holden announced its $152.8 million loss for the 2012 calendar year it admitted that it loses money on locally-made cars but makes money on imports.

If Holden were to shut its car-making factory at Elizabeth in South Australia and the engine factory in Port Melbourne, it says it would remain in Australia selling imported cars -- as Ford plans to do after 2016 when it closes its Broadmeadows and Geelong manufacturing facilities.

The Federal Industry minister Greg Combet told News Limited: "The Coalition’s policy would kill the auto manufacturing industry in Australia stone dead. It would mean the loss of tens of thousands of jobs with serious consequences for local communities and the wider manufacturing sector. The automotive manufacturers need long-term certainty on Government support so they can make the critical investment decisions which will determine the future of this important industry.”

This reporter is on Twitter: @JoshuaDowling