Bruce Newton•15 Jan 2013
NEWS
Holden engine plant doubt
Diminishing demand for V6 engines could see Holden's Port Melbourne engine factory closeThe future of Holden’s engine plant in Port Melbourne is in doubt.
Diminishing demand for the V6 engines built at the plant means Holden must soon decide whether to convert to production of a four-cylinder engine, or close the facility.
Built only in 2003 at a cost of $400 million, the plant currently employs between 300 and 400 people and builds about 100,000 V6 engines annually for both domestic use in the Commodore, or for export to various GM assembly plants around the world.
That’s less than half of the factory’s original capacity of 240,000 and Holden managing director Mike Deverux told motoring.com.au at the Detroit show overnight that Holden was facing a “tough business case” to continue building engines in Australia long term.
“We have very separate and distinct decisions to make about the future of engine building in Australia,” he said. “A significant amount of capital would be required to upgrade that plant.”
Mr Devereux confirmed Holden had already entered discussions with both the federal and Victorian government to develop a co-investment scheme to save the plant.
“We have to build a business case and it is a tough business case.”
This situation is entirely separate to Holden’s $275 million deal with the federal and South Australian governments, which guarantees production of at least two vehicles until 2022 at the Elizabeth assembly plant.
The engine plant is thought to be secure only until 2017, when the Commodore is expected to end production and be replaced by a vehicle powered by a four-cylinder engine.
However, General Motors already has plenty of global four-cylinder production sites, including in Korea where the Elizabeth-built Cruze is also built.
Overseas demand for the HF V6 engine is also falling as customers and manufacturers opt to downsize to more fuel-efficient turbocharged and naturally-aspirated four-, three- and even two-cylinder cars.
The Holden plant was also hit by a 2011 Chinese government decision to source from 100 per cent locally owned manufacturers, costing 10,000-15,000 export sales because the Buick GL8 people-mover – which uses a Melbourne-built V6 engine – had been popular with officials.
That drop in exports led to a slowing of production rates and a small amount of redundancies from the engine plant last year.
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Written byBruce Newton
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