Rumours abound today that Holden is set to close down its Australian assembly operations in 2016, but that it has postponed an announcement until early next year. From The Australian:
The Australian understands that General Motors was poised to announce it was ending its Australian manufacturing operations in 2016 as early as yesterday, but a decision in Beijing the night before has delayed the decision.
Sources say that General Motors is delaying the announcement for commercial reasons, but the decision to quit Australia has already been signed off by the carmaker’s Detroit-based headquarters.
It is understood some Coalition ministers, including Industry Minister Ian Macfarlane, have not been advised of General Motors’ decision, because the company “does not want to be saved”, sources told The Australian last night.
“An announcement was well advanced and was ready to go,” a senior Coalition minister said.
However, Industry Minister, Ian Macfarlane, and Shadow Industry Minister, Kim Carr, have put on a brave face, quickly hosing down suggestions that Holden will close, claiming that no decisions have yet been made.
The closure of Holden, along with the previous decision by Ford to cease operations by 2016, would most certainly spell the death of the Australian car industry. While Toyota would remain as the last assembler in the country, feeder industries such as automotive parts makers would lack the necessary scale to continue viable production, leading to higher input costs and most likely resulting in Toyota’s closure as well.
For mine, the closure of the Australian car industry is possibly the biggest threat to the Abbott Government. Not only are some 45,000 to 50,000 manufacturing jobs at risk in assembly and associated industries, but the hit to employment and growth would arrive just as Australia heads off the mining investment cliff (see next chart).
While it may not seem apparent at the moment, these are desperate times for the Abbott Government, with Australia facing the prospect of both the failure of its biggest manufacturing industry and a steep and prolonged decline in mining investment from record highs.
