End of Holden’s manufacturing operations in Australia would cost $600 million

GM Holden has reportedly attached a price of $600 million to shutting down its car making in Australia.

The Australian reports that the amount, disclosed by unnamed sources, was mentioned in Holden’s discussions with federal industry minister Ian Macfarlane last week. Holden would not comment when asked to confirm the figure.

Holden is currently seeking additional funding, following the $275 million of federal and state funding it received last year to continue making cars up to 2022.

The car company is currently weighing up the cost of shutting down its manufacturing operations against subsidies and the current loss-making business. The $600 million figure is mainly made up of redundancy payments, and would also include decommissioning and decontaminating its factory sites.

“There is a huge cost associated with closing down the business and as long as they are still covering that cost, even if they are still making a loss, it doesn’t pay for them to close,” Professor Sinclair Davidson from RMIT told The Australian.

“It pays them to keep going, even as a loss-making operation. (But) the calculation is . . . how much are you going to lose if you shut down now, compared to how much do you lose if you keep on going. At some point it will pay them to shut down.”

Holden has lost money for six of the last eight years, with these losses adding up to $730 million.

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