Holden telegraphs more labour cuts

GM Holden has warned it needs to reduce costs and increase productivity if it is to continue manufacturing in Australia.

Managing Director Mike Devereux told reporters today in Melbourne that he is looking to AMWU award employees at the company’s Elizabeth plant in Adelaide to sustain its manufacturing operations.

The added costs Holden faces building cars in Australia was placed at $3750 per unit by Devereux during the press conference.

The news follows Ford’s announcement on May 23 that it will cease manufacturing in Australia and shed 1200 jobs in Broadmeadows and Geelong by October 2016, citing a fragmented marketplace and production costs many times higher than in other countries.

Last year just 12.6 per cent of the 1.1 million new cars sold were built locally – down from almost one third in 2002.

On the same day, Ford announced a 2012 after-tax operating loss of $141 million, bringing its total losses over the past five years to about $600 million.

Today’s announcement by Holden follows the April 8 confirmation of 400 job cuts in Adelaide and 100 in Melbourne by August 1, when production will reduce from 400 vehicles per day to 335.

At the time, before the release of its vital new VF Commodore this month, Holden cited the high value of the Australian dollar and reduced sales of the Cruze small car.

On May 8, Holden announced a $153 million operating loss for 2012 -– its first red ink since the 2008 GFC.

Holden has made a conditional commitment to continue manufacturing in Australia until 2022, including a new Cruze family in 2015 and a redesigned Commodore by 2017.

However, it has also stated that such plans would be threatened if an elected Coalition federal government reduced the level of automotive industry funding currently planned.

Talks between Holden and the AMWU to look at further ways to reduce costs associated with building cars at Elizabeth will commence from August.

However, in a press release issued today Holden said those negotiations will remain confidential until its workforce votes on a range of unstated options.

Citing “unprecedented economic challenges”, Holden said it is seeking support from its manufacturing workforce at Elizabeth to help achieve significant annual cost savings.

It said Executive Director of Manufacturing Richard Phillips today joined union leadership and representatives at Holden Vehicle Operations to speak to employees about the necessary cost savings, but that any changes to employees’ conditions will require a vote by the workforce.

Devereux was unable to travel to Adelaide for the meeting due to poor weather, but told a press conference in Melbourne that opening discussions was “a difficult but critical step towards securing the future of automotive manufacturing in Australia”.

“The ongoing speculation about the future of the industry affects our employees and their families; they’re doing it tough right now and we appreciate their resilience and commitment.

“This is about giving Holden employees a direct say in their future. We can’t survive as a local manufacturer if we’re not competitive and we don’t reduce our costs.

“All options for improving productivity are on the table. We will work closely with the unions and our people to develop a fair and reasonable proposal in line with other local manufacturers across all industries.

“Every person in this company is doing everything they can to secure Holden’s future as a local manufacturer. We’ve re-rated the production line at Elizabeth and made significant investments in our locally-made vehicles like the new VF Commodore, which is the most advanced car ever created in Australia.

“Holden is aggressively pricing and marketing its cars to compete against imports which benefit from the high Australian dollar and the country’s internationally low tariff levels.

“Holden has to be globally competitive, and so does the country’s industry policy. As a local manufacturer Holden is asking for a fair go -- Australia must be able to compete fairly on the world stage.

“We need clear, consistent and competitive government policy to help secure a long-term future for manufacturing.”

According to Devereux, some Holden employees -- including executive staff -- are earning below the national industry median, but award workers at Elizabeth are the exception to the rule.

After the voluntary separation packages announced a couple of months ago, Holden expects to be left with 1700 workers at Elizabeth, of which only 100 are not award workers.

Workers taking VSPs will leave the company at the end of July, leaving those remaining to negotiate with Holden once talks start in August.

Devereux's presentation was carefully couched in non-threatening terms but appeared to be a coded message to the workers ahead of negotiations.

Coming as it does just four weeks after Ford’s announcement, the Holden press conference hints at a tactic to focus the minds of union officials and award workers employed at the plant.

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