Manufacturing News

$275m investment keeps Holden on-shore to 2022

The Federal, South Australian and Victorian Governments have announced a $275 million co-investment that will help keep GM Holden’s car making operations in Australia.

The investment, arguably a last attempt by the Australian Government to keep the automotive manufacturing giant on-shore. Last December, news surfaced that GM Holden reconsidering the manufacturing future of its Commodore car beyond 2018.

In February this year, GM Holden made a “final” proposal to the South Australian state government for a bail-out deal worth over $200 million which would secure Holden’s future in SA until at least 2022.

The $275 million co-investment, which was announced yesterday, will see Holden inject over $1 billion into car manufacturing in Australia, and to produce two next generation vehicles locally that will reportedly be cheaper to run and more environmentally friendly.

This partnership will see GM Holden continue making cars in Australia for at least 10 years, until at least 2022.

GM Holden said the high Australian dollar and strong competition from other countries in the region have put a strain the local automotive industry as well as the company’s design and manufacturing operations in Australia.

Of the $275 million, the Federal Government will contribute $215 million, funded under the existing $5.4 billion New Car Plan for a Greener Future.

Prime Minister Julia Gillard said the funding is not a hand-out, but a strategic investment aimed to boost the local economy, foster innovation, build new business opportunities and promote adoption of new fuel-saving and safety technologies.

The co-investment will also support thousands of jobs at Holden that would have been lost if the company had stopped making cars in Australia as well as thousands of secondary jobs in key automotive component manufacturers who supply parts to GM Holden, many of which are in regional Australia, Gillard said.

Holden estimates that the new investment package will return around $4 billion to the Australian economy.

The Australian automotive industry employs 55,500 people across every State and the ACT and supports around 200,000 additional jobs nationally.

As part of the agreement, Holden will also create a new Suppliers’ Working Group to help Australian suppliers sell into its world-wide supply chains.

The Federal and Victorian Governments will provide an extra $35 million for the Automotive New Markets Initiative, a new program to help firms in the automotive supply chain move into export markets and supply their products to other industries. Federal contribution will be $25 million.

It is expected that pressures on the Australian auto sector will likely see restructuring to occur the near future. The Federal Government has also committed to a $15.6 million to extend the labour market element of the Automotive Industry Structural Adjustment Program to provide training and employment services for workers leaving the auto sector in response to real and possible future restructures for the industry.

To read the Prime Minister’s Canberra speech to GM Holden, click here.

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