Holden factory bid: 150,000 annual production target

Would-be Commodore savior Guido Dumarey intends to ramp production at GM Holden's Adelaide plant back up as high as 150,000 vehicles per annum with most of them bound for export.

That’s the latest piece of the Punch Corporation’s business plan to be publicly revealed as it prepares to enter negotiations with General Motors for the Elizabeth plant and the Commodore's Zeta architecture.

The figure was uttered publicly for the first time by shadow industry minister senator Kim Carr on Adelaide radio station 5AA yesterday as he spoke in support of the Punch bid, which now has the backing of the federal government and opposition and the Victorian and South Australian state governments.

That support includes a letter from federal industry and innovation minister Christopher Pyne, which was tabled at senate estimates in Canberra last week. Letters of support are also understood to have been supplied to Punch by the South Australian and Victorian governments.

Victorian interest is understood to have been increased because part of the Punch proposal is to also keep the Port Melbourne V6 engine plant open to service Elizabeth.

Influential South Australian independent senator Nick Xenophon has also been a key supporter of the bid.

The 150,000 number is significant because it is far in excess of what Dumarey has spoken of publicly previously; 30,000 vehicles per annum had been the most common figure, although 70,000 vehicles per annum had also been mooted.

Industry observers had questioned how Dumarey could possibly hope to make money on a 30,000 annual production run. But clearly, if Senator Carr’s figures are accurate then Punch has set that as a starting point only.

“The intention of the Punch bid is to take over the Elizabeth plant, to continue to make what are known as Commodores now, to do so for a couple of years before they develop a new vehicle, and to produce up to 150,000 vehicles, predominantly for export,” Carr told host Leon Byner.

“That’s the essence of the plan. In the first instance, under licence from General Motors, to continue to make the cars, and then to adapt the platform, which is now an orphan platform.

“It’s a rear-wheel drive, premium vehicle, and the Punch people believe there is an international market for that vehicle, particularly for commercial and high-end vehicles. They would continue to produce vehicles in Australia.”

Elizabeth hasn’t built up around 150,000 vehicles per annum since the early 2000s when it briefly ran a three-shift pattern with the aim of eventually climbing to an output of 180,000 vehicles per annum.

That never happened and the plant dropped back to two shifts as sales and therefore production of the Commodore slowed and a rising Aussie dollar limited exports.

With the Aussie now at around 70c US, Punch’s export plan makes more sense than back in 2013 when there was Aussie-greenback equivalency and GM Holden announced the late 2017 closure of the plant and the end of the locally-built Commodore.

Carr, who told senate estimates last week that Dumarey intends to eventually spin 15 to 30 models off the Zeta architecture, was asked by Byner why General Motors should back the bid.

“Good will. Legacy,” Carr replied. “There is a continuing interest in selling cars in Australia.

“The reality is that the automotive companies made a decision when the government was withdrawing support. It would appear that the government seems to have changed its mind in regard to that.

“We want to test that proposition, but it would appear, on the basis of the letter that Minister Pyne has written, that the government now wants to attract investment. So I can understand why General Motors might be a little confused by the attitude of the Commonwealth.

“I want to go beyond all that. I want to be able to attract new investment and create new jobs in Australia. And I know that the automotive industry in this country will continue even if this bid fails. There will be an automotive industry.”

Carr also urged the Commonwealth to join a South Australian and Victorian state government delegation that is said to be headed for Detroit to meet with GM over the Punch proposal.

“I expect that there will be a delegation to Detroit from the South Australian and Victorian governments. I’m calling on the Commonwealth to join that delegation, but more importantly to translate their good intentions in those various letters that you’ve got there into action.

“It requires the Commonwealth to use the power of government to coordinate its efforts across all Commonwealth departments interested in the preserving of jobs, in attracting new investment to the automotive industry, and also coordinating with the states.

“And that means going to Detroit and talking to General Motors about how importantly Australians regard this project.”

Dumarey is also expected in Detroit soon for detailed discussions with GM. All parties involved in the negotiation agree a resolution must be found by mid-year for the proposal to have any chance of success.

“There’s got to be a proper business case put forward by Punch, and that’s what’s happening right now,” Carr said.

“The next meeting with General Motors will be attending directly to that issue. But there also have to be proper commercial negotiations about the use of the IP from General Motors, and also the way in which we’re able to develop the supply chain, particularly in Victoria.

“That’s extremely important to attract Victorian government support, because there are so many jobs tied up in the small companies that feed the manufacturing industry.”