CANBERRA, Australia - General Motors Co. said Wednesday that it will stop making cars and engines in Australia by the end of 2017, with nearly 2,900 jobs to be lost, because of high production costs and competition.
The decision could mean the end of car manufacturing in Australia, because the industry will be too small for supporting businesses such as parts-makers to remain economical. Toyota Motor Corp. announced it is also reassessing its future in Australia. And a union said 50,000 jobs in the auto industry are in jeopardy.
GM’s Australian subsidiary, Holden, once dominated Australian auto sales, but has lost market share to imported cars. Ford Motor Co., once Holden’s major rival in Australia, announced in May thatit was ending production in the country in 2016. Toyota is the only other auto manufacturer in Australia.
Australia had four car manufacturers before Mitsubishi Motors Corp. shut its doors in 2008.
GM’s announcement has been anticipated for months. The Australian government has been under mounting pressure to offer increased subsidies to the Detroit-based company to keep it manufacturing in Australia.
The decision reflected the “perfect storm of negative influences” that Australia’s auto industry faces, GM’s Chief Executive Officer Dan Akerson said in a statement. Describing Australia as “arguably the most competitive and fragmented auto market in the world,” he also cited the sustained strength of the Australian dollar, high costs of production and a small population.
Holden, which has manufactured cars in Australia for 65 years, will become a sales company, he said.
GM’s Australia chairman, Mike Devereux, said GM cars relabeled as Holdens would continue to be sold and serviced in Australia after 2017.
GM sells the Australia-built Chevrolet SS in the United States. The 6.2-liter V-8 muscle car is called the Holden VF Commodore in Australia.
Industry Minister Ian Macfarlane said he was “floored” when Devereux called him and broke the news.
“The task for the industry has got measurably more difficult as a result of Holden’s decision, but it is not impossible to maintain a component and car industry in Australia,” Macfarlane told reporters.
Toyota said GM’s decision put its own ability to make Australian cars under “unprecedented pressure.”
“We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia,” Toyota said in a statement.
The Australian Manufacturing Workers’ Union, which represents most of the auto industry’s workforce, predicted that Toyota would also shut its Australian plant.
“Toyota have told me that they won’t be able to survive in Australia because of the lack of volume in the component industry,” union vehicle division secretary Dave Smith told reporters.
“This will spell the end of 50,000 automotive jobs,” said Smith, blaming a lack of federal government support for GM’s decision.
Business, Pages 29 on 12/12/2013