Disastrous GMH closing

Born in SA, my father worked in the car industry as did his father and my cousins as well, but with scholarships available I went to the University, but after that worked as a union official for years defending car manufacturing.

So, GMH pullS out of Australia after years of financial assistance and, reportedly exporting on average profits at $50 million per year. All of those dollars originate in the muscle and brain power of the workforce as a whole across 3 or 4 generations. The Australian people deserve some recompense. What will GMH do with the sophisticated tooling that the Australian people have paid for, at least in part?

ABSOLUTELY ESSENTIAL THAT IT GOES NOWHERE AND INSTEAD EVERY EFFORT IS MARSHALLED FOR IT TO BE RE-ENGINEERED INTO NEW MANUFACTURING CAPACITY. That’s what transition must mean in essence and in principle.
Let’s make GMH expendable not our nation’s manufacturing capacity.
What’s more any new production units that can be developed must be owned and run by worker cooperatives.The above comment is from Don Sutherland.

Catastrophic outcome from the Government’s biggest economic decision yet
Dave Oliver http://www.theage.com.au/comment/holden-jobs–sacrificed-on-the-alter-of-the-free-market-20131212-2z8cr.html

Update: Melbourne rally: It’s been a black week for Australian manufacturing.
The future of Australia’s entire industry is now at risk.
We are holding a rally for the future of Australia’s manufacturing and we NEED YOU THERE!
11:30 AM this Monday 16th, outside Liberal Party HQ in Melb, 104-110 Exhibition St, Melbourne VIC.
Holden assembly line An appalling lack of leadership from Government will cost up to 50,000 Australian workers their jobs following the announcement by Holden that it will cease production in 2017, unions said today.

ACTU Secretary Dave Oliver said the Liberal Government has comprehensively failed its first test.

“As a result of Government inaction Australia will lose up to 50,000 direct skilled jobs in the automotive industry, $21 billion will be wiped from the economy and regions will go into recession,” Mr Oliver said.

“This is the most significant economic decision the Abbott Government has made and it’s going to have catastrophic consequences for our country.

“Tony Abbott has played politics with this issue and this is the result.”

Mr Oliver said it was the Government’s job to save jobs, not sink jobs. But faced with the choice of supporting an iconic industry that generates billions of dollars of economic activity, or adhering to a free market ideology, Mr Abbott chose the latter, he said.

“Mr Abbott has made it clear that he has no jobs plan for the future,” Mr Oliver said.

“The departure of Holden will sink the car industry in this county and the flow on effects for jobs and manufacturing will be cataclysmic. “Tony Abbott’s legacy will be as the Unemployment Prime Minister.

“The Liberal Government has no plan for future industries beyond the mining boom and under their watch the car manufacturing industry has been demolished.

“This is devastating news for car manufacturing in Australia and for the tens of thousands of workers who will be left without a job.

“The indifference that the Coalition has displayed towards Holden and the workers who rely on them is astonishing. It begs serious questions about the Government’s ability to protect jobs and its commitment to this vital task.

“This will be a legacy this Government will carry and be judged upon: the death of the car industry in Australia due to mismanagement, politicising and a fundamental lack of care for people’s jobs.

“Australia’s claim to be a modern growing productive economy is in serious doubt under this Government.
“The question for Tony Abbott is – why didn’t he fight to protect Australian jobs?”

ACTU Secretary Dave Oliver has described Holden’s decision to stop producing vehicles in Australia as ‘catastrophic,’ saying the Federal Government should have done more.
http://www.abc.net.au/radionational/programs/breakfast/holden-departure-actu-secretary-dave-oliver/5151426

SA Premier Weatherill says Abbott has no idea, no plan http://www.theguardian.com/business/2013/dec/12/holden-south-australian-premier-accuses-government-of-having-no-plan

http://www.theage.com.au/federal-politics/political-opinion/economists-dont-create-cars–people-do-people-like-my-dad-20131213-2zbjs.html

Commentary by economics Professor Bill Mitchell with a differing perspective

http://bilbo.economicoutlook.net/blog/?p=26502

Background:
Holden is one piece in GM’s global restructuring puzzle 11 December, 2013
John Spoehr,
Associate Professor, University of Adelaide
In the wake of the global financial crisis, Holden’s parent company, General Motors was placed on life support. Its fortunes collapsed along with the US economy, leading the United States government to bail it out as part of an $80 billion automotive industry assistance package.

On the back of this public support the auto giant recovered. It now appears to be aggressively repositioning itself in the global automotive industry – a fact that has largely been ignored in the unfolding crisis surrounding the future of Holden in Australia.Debate around whether Holden plans to withdraw from Australia reached fever pitch, with Holden boss Mike Devereux telling a Productivity Commission inquiry no decision had been made.

But offshore reporting has drawn attention to major restructuring of GM’s Asian operations. To rein in costs at its plants in Korea, GM recently announced that it would phase out export of its Chevrolet Cruze model to Europe. It seems it plans to consolidate around its Opel and Vauxhall brands.

While the scale of GM’s Korean operations dwarfs its Australian presence, it is clearly not immune to global auto industry pressures. The Wall Street Journal recently reported that GM Korea “last year produced more than 2 million car-kits and vehicles, mostly for export”.

What does all this mean for GM in Australia? While Holden is an icon in Australia, it is a very small player in the global automotive industry – an industry rapidly being relocated to low cost manufacturing nations. To survive in Australia there is no doubt that it will need substantial co-investment from the Coalition government. There is nothing unusual about this.

The automotive industry is one of many that receives government assistance, joining the agricultural and mining sectors as major beneficiaries of government support. The key questions for policymakers remain – is there significant public benefit from continuing to support the industry and what level and form of investment would help to secure GMH till early 2020?

Let’s look at the cost of keeping GMH in Australia relative to the cost of losing it. The price of keeping GMH is appears to be around $150 million per year of government co-investment.

Research commissioned by my organisation to verify recent modelling we undertook on the impact of closure on South Australia and wider impacts on the nation provides a sobering perspective. The research undertaken by one of Australia’s leading economic modellers, Dr Peter Brain from the National Institute for Economic and Industry Research, examined impacts on economic activity and employment from closure of GMH in 2016.

It estimates that around $4 billion in lost economic activity would flow from closure of Holden nationally.

The impacts would be widespread with Victoria, New South Wales and South Australia worst affected. Employment losses of up to 65,000 were projected reflecting assumptions that the vast majority of large automotive suppliers to Holden would not be able to continue their operation, affecting hundreds of other companies that form part of the automotive supply chain and others that benefit in the wider economy.

These are very substantial losses that cannot be easily absorbed by other sectors experiencing growth. Automotive industry skills are not readily transferable into health and community services. Where might the jobs losses be concentrated? The majority would be in Victoria (24,000), New South Wales (15,000), South Australia (12,000) and Queensland (8,000).

So the future of Holden in Australia is tied to GM’s global automotive restructuring ambitions and the willingness of the present federal government to continue funding an industry that, like many others, makes decisions about where it operates based on national and state government assistance regimes.

For its part Holden has been quite transparent about what it needs from government to remain in Australia. A key reason for the present crisis is a major policy discontinuity arising from the change of government nationally.

The Coalition has clearly been divided in its view about what level of assistance is appropriate. Industry minister, Ian Macfarlane has appeared to be eager to strike a deal that was attractive to Holden. Some of his colleagues, including prime minister Tony Abbott have sent mixed messages about the value of investing in the car maker.

The nail in the automotive industry coffin appeared to be rammed home last week when Abbott indicated there would be no more extra money for GMH. In doing so he pre-empted the report of the Productivity Commission inquiry he initiated.

The Commission is expected to provide interim findings on relative international levels of support for the industry by December 20. Given the lack of consensus about support for the automotive industry in Australia, GMH has probably already concluded that closure is the only course of action it can take now. A formal decision may not have been made, but expectations that it will be a negative one, abound.

http://www.manmonthly.com.au/features/holden-is-one-piece-in-gm-s-global-restructuring-p?fb_action_ids=10151853498751448&fb_action_types=og.likes&fb_ref=.UqhG7Lwomu4.like&fb_source=other_multiline&action_object_map=%7B%2210151853498751448%22%3A177693199105630%7D&action_type_map=%7B%2210151853498751448%22%3A%22og.likes%22%7D&action_ref_map=%7B%2210151853498751448%22%3A%22.UqhG7Lwomu4.like%22%7D

From John Quiggan Another day, another stuffup from what already looks like the most incompetent government in Australian history. The Abbott government’s treatment of the car industry has been a disaster in policy terms, and just as bad as far as process is concerned. The key policy failure was the decision to retain fringe benefits tax breaks for cars (90 per cent of which are imported) at a cost of $1.8 billion over the forward estimates, while withdrawing Labor’s promise to give a much smaller amount in additional assistance to the remaining domestic manufacturers GMH and Toyota. Assuming Toyota also pulls out, every bit of the FBT concession will be public money sent overseas, with the exception of the slice creamed off by the salary packaging industry.

The policy process was even worse, announcing an inquiry, then pre-empting the result with a combination of leaks (of course, ABC stenographer Chris Uhlmann was happy to provide anonymity for the source) and Parliamentary taunts. Unsurprisingly, the new GM management in the US was sufficiently unimpressed to pull the plug immediately.

For the diehard fans of microeconomic reform, I guess this counts as a win. But even for them, it’s primarily a matter of cultural symbolism. The protection given to the car industry was so small that on a standard economic analysis, the welfare costs are utterly negligible. And of course, the benefits of protection were swamped by the costs of a chronically overvalued $A, which in turn reflects all manner of policy failures, from global financial deregulation to the subsidisation of the coal industry.

http://johnquiggin.com/2013/12/12/the-end-of-gmh/

MUA Warns Holden Closure Will Also Impact Jobs In Industries That Support The Australian Manufacturing Sector

Australian stevedores, seafarers and workers elsewhere in the transport sector will suffer as a result of the decision by Holden to cease manufacturing vehicles in Australia in 2017, with reduced demand for steel, components and other associated materials, according to the Maritime Union of Australia.

The union has accused the Abbott Government of selling out Australian workers through its short-sighted attitude towards the Australian manufacturing industry and associated sectors.

MUA National Secretary Paddy Crumlin said the Abbott Government needed to take responsibility for the devastating impact of the closure, with Holden management having their hand forced by the government’s refusal to extend assistance for the industry which directly and indirectly supports tens of thousands of Australian jobs.

“The end of automotive manufacturing by Holden, caused by the Abbott Government’s economic vandalism, affects many more people than the company’s direct employees, with an industry that provides billions of dollars in economic activity allowed to collapse,” Mr Crumlin said.

“This closure will flow through into the component manufacturing sector, transport industries, other supply chain businesses and even the broader business and community service sectors in the region.

“In our own industry — where workers in the Australian stevedoring and freight forwarding sectors have worked hard over many years to build a productive, safe and sustainable industry to support manufacturing — we will see the impact of this closure through reduced transportation of steel, components, and other products linked to the automotive trade.

“While many countries are using sovereign wealth to build communities that can grow and function with a strong employment base, the Abbott Government is championing a reckless free market approach.

“The long-term sustainability of the Australian community must be built on education, productivity, research and development and a healthy national consumption of goods and services.

“Vandalizing our manufacturing sector undermines every one of these values and demonstrates a negligence and ignorance of economic nation building.”

MUA South Australian Branch secretary Jamie Newlyn said the union was joining with the ACTU, SA Premier Jay Weatherill, and other industry unions in condemning the Abbott-led Coalition for failing to support the Australian automotive manufacturing industry.

“The decision not to support the Australian vehicle manufacturing centre, and the resulting decision by Holden to cease making cars in Australia from 2016, will see tens of thousands of workers in South Australia losing their jobs,” Mr Newlyn said.

“The Abbott Government’s aggressive attacks on Holden and refusal to support the local vehicle manufacturing sector has exposed the fact that they do not have the best interests of working people at heart and they are willing to see the demise of our nation’s manufacturing sector.”

Mr Newlyn also accused the SA Liberal Opposition of being lapdogs to their federal leadership.

“If the Liberal Opposition is serious about representing the people of South Australia, the first thing they need to do is stand up to their party colleagues in Canberra,” he said.

“If they can’t demand the Federal Government support the future of Australian car manufacturing, which is so central to the South Australian economy, they are clearly unfit to lead our state.”

http://mua.org.au/news-story/3771/

And from Socialist Alliance
Nationalise General Motors-Holden plants & retool them to create green jobs! Thursday, December 12, 2013

In response to the announcement by General Motors from its corporate headquarters in Detroit that it will discontinue vehicle and engine manufacturing and significantly reduce its engineering operations in Australia by the end of 2017, the Socialist Alliance calls for the immediate nationalisation of GM-Holden plants under workers’ and community control.

This process should be extended to Ford as well as Toyota, which has already warned it cannot survive if the other two car companies close down. Under public ownership and control, the entire car industry should be re-tooled to manufacture public transport vehicles, electric cars and infrastructure for a rapid shift to renewable energy.

The GM statement admitted that 2,900 jobs would be lost over the next four years, including 1,600 from the Elizabeth, South Australia, car plant and around 1,300 from Holden’s Victorian workforce. Even more jobs in dependent industries would also be destroyed.

The plants can be re-tooled to produce wind turbines and other equipment for renewable energy production, as well as trams, trains and other vehicles and infrastructure for a sustainable transport system.

This would not only save jobs, it would make these socially and ecologically valuable jobs.

Workers in the car industry have the skills and expertise in logistics, production engineering, designing for production and quality control that could be applied to production which helps us break from a fossil fuel-dependent economy. This is urgently needed to address the climate change crisis.

The crisis in the car industry calls for urgent action by the ACTU and manufacturing unions. There should be emergency meetings of Holden workers to consider strong action to defend jobs and the future of their industry.

Strong industrial action needs to be put on the agenda — including workers refusing to leave the plants, and taking their own measures to ensure the future of their jobs. GM-H has admitted to have been subsidised by the public over the last 12 years by at least $2.2 billion. On this basis the GM-H plants should be considered public property.

If the workers took control of the GM-H plants and ran them for the benefit of the community they would be doing our society a great service.

http://www.socialist-alliance.org/news/nationalise-general-motors-holden-plants-retool-them-create-green-jobs

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One Response to Disastrous GMH closing

  1. Kevin December 14, 2013 at 8:23 am #

    I am not an economist, thank god. My simplistic calculations based on 20,000 people unemployed, a closure of 100 relating businesses and the low prospect of 5% of those losing their jobs being reemployed will cost the Government $12 billion a year. Dumb decision, dumb politics, dumb government.
    Hold an election now and Abbott will be tossed out big time and this is only 3 months in power. Can one imagine what it will be like in 3 years.
    This Liberal government (small caps intentional) will be the most hated ever.