The future of Australian manufacturing potentially hangs in the balance of power, with the federal opposition still non-committal to long-term support for local car making.
The Coalition has confirmed that if elected to power following this year’s federal election it would honour the co-investment agreement created by the current Labor government, which would see Holdens built locally until at least 2022. Beyond that agreement, however, the Tony Abbott-led side has not given support to local car manufacturing.
Holden confirmed that it is in talks with the federal opposition – specifically citing Sophie Mirabella, shadow minister for industry, innovation and science, and Joe Hockey, shadow finance minister – to shore up support for local manufacturing.
At the Detroit auto show, General Motors’ Vice President of Global Manufacturing, and President, International Operations, Tim Lee, said that if there were changes to the current, decade-long agreement then the company would need to re-evaluate its commitment to local manufacturing.
Echoing comments made last year by Holden Managing Director, Mike Deveraux, Lee went further by adding that “non-contractual” changes may also impact on local manufacturing plans.
“We have a contractual agreement with the government of Australia,” said Lee. “We expect both sides [Liberal and Labor] to live up to the agreement.”
“If there is a change in that pre-condition, I guarantee you, we will re-think our position as well.
“And really a dramatic change in the non-contractual side of the legislation environment as well, with regards to tariffs, with regards to the automotive transformation scheme.
“When I said pre-conditions, I meant the entire landscape of things that are in position today, that centred us to make some decisions that I asserted to the board were good business decisions.
“If those pre-conditions were to change materially, I would have an obligation to go back to our most senior leaders and reconstruct the deal.”
Lee says that GM has changed its attitude towards product development and portioning resources since it faced bankruptcy, and was bailed out by the US government, in 2009.
“We are looking at capital allocations quite, quite differently. And those capital allocations are a function of not who tells the best story, or who sees the boss last, but … what’s gonna pay? What is the best use of investment capital.
“Our board is very, very sensitive to our responsibility to our shareholders. Look at the CVs of all our shareholders… really capable people. They all have the same interest at heart, to make the company successful and to represent the interest of the shareholders.
“If there is a change that would see our return on invested capital in that particular program was to be different to what we asserted to our board … then obviously we would have to go back and re-think should we allocate that capital to Australia? Or should we allocate that capital to Russia? Korea? Poland?
“That’s just the nature of business.”
