Manufacturing News

Holden is safe – Carr

Holden is safe, that’s the key message from industry minister Kim Carr, following General Motors filing for Chapter XI bankruptcy in the US this week.

“Holden has not been included, meaning the jobs of over 6000 Australian workers are secure,” the Senator said.

“Holden has told the Government that there will be: No change for employees or for Holden supplier payment arrangements; No change to Holden dealer and warranty arrangements; No direct impact on local design, engineering and manufacturing operations; and No change to Holden’s plans to produce a new, four-cylinder, fuel-efficient car in Australia,” Carr said.

While General Motors has set the stage to emerge swiftly from bankruptcy protection as a smaller, more focused automaker, US analysts say its success remains hostage to the weak economy and stability of a fragile supply base.

GM entered the bankruptcy process with a detailed restructuring plan, billions in government financing and agreements already in place to restructure the bulk of its debt and slash labor costs.

The plan is to sell GM’s best performing assets to a new company in a matter of 60 to 90 days so the long, costly process of winding down its liabilities will not hamper its operations.

That process allowed Chrysler to win approval for the sale of its assets on June 1 after just a month in court protection.

While GM is a far more complex company than Chrysler, the legal structure allows for a speedy process, analysts believe they will ultimately push through this sale quite quickly and leave a lot of the difficult parts for later so they can get the good parts of GM running again very quickly.

While this is a process that’s going to cause some pain especially in the short term to dealers and some employees the pain would have been much greater in liquidation.

The new GM will emerge as a significantly smaller company, shedding several major brands, 14 factories, 47,000 workers worldwide, and 40% of its US dealer network.

The aim is to slash operating costs so that GM’s break even point will be lowered by 40% so it can be profitable when overall US industry sales reach 10 million vehicles per year.

The market is currently running at a rate of about 9.3 million vehicles after topping 15 million from 1996 through 2007.

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