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'No decision' from Holden

Holden managing director Mike Devereux rejects speculation that the company has already decided to leave Australia.

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Holden managing director Mike Devereux has rejected speculation the company has already decided to leave Australia.

"No decision has been made," he told a Productivity Commission inquiry into taxpayer funding for the Australian car industry on Tuesday morning.

Holden chairman and managing director Mike Devereux.

Long wait: Holden boss Mike Devereux. Photo: Luis Enrique Ascui

The news will be little relief for thousands of Holden workers, who, over the past week, have read stories of alleged leaks from unnamed federal government sources and at least one unnamed senior General Motors official in the US asserting that a decision had already been taken internally to close Holden's Australian manufacturing operations.

It will also give little solace to the 50,000 people directly employed by the automotive industry and its network of 160 components suppliers.

Mr Devereux declined to answer questioning from the Productivity Commission, which is looking into public funding for auto manufacturing, about when the firm would hope to not need government funding.

Over the past 12 years, Holden has averaged $153 million in taxpayer funding each year.

Productivity commissioner Philip Weickhardt asked Mr Devereux: "Could Holden survive in any forseeable future with no government support?"

Mr Devereux did not directly answer the question. "I can't predict what that future would look like," he said.

Asked what Holden parent GM needed to stay in Australia, Mr Devereux said that "the government has the information it needs to answer your question".

But Mr Devereux said that the "business case for having an auto industry is understood all around the world", because at least three jobs and perhaps up to six people were employed for every one that Holden gave a job in Australia.

He pointed to the mining and property industries, both of which were heavily taxpayer subsidised.

"The $3 billion a year that goes into mining companies ... I'm not criticising that ... or $5 billion in subsidies for negative gearing. But the budgetary cost of losing this industry would dwarf the cost of losing it," he said.

And he said that the economic activity Holden had generated in that 12-year period of public funding was $33 billion.

"It includes the paying of wages, it includes the buying of bits that we put into cars ... it includes the R&D," he said.

He said this "$32.7 billion of economic activity" was "a very good return for the country. Should we not make things here, we will have to do something else".

And he said local manufacturers were part of a global supply chain for General Motors as well as for Holden in Australia.

"It is inaccurate to say that Australian parts makers do not compete globally because they actually do," he said.

He pointed to Noble Park firm Mett Pty Ltd, and Reservoir's Diver Consolidated Industries, as world-class Australian suppliers that both made for local Holden vehicles, and for General Motors internationally.

No more assistance

Mr Devereux said Mett had won a "GM Supplier of the Year" award eight times at an annual company event held in Detroit each year and which looked at 10,000 GM suppliers globally.

A Holden spokesman earlier on Tuesday morning was adamant there would be no announcement.

''No decision has been made,'' he said of Holden's local future.

''Mr Devereux will be presenting our submission to the Productivity Commission today.''

While the federal government is desperate to force Holden's hand before the end of the year, Holden is following the process set up by the Abbott government, a process that leader Tony Abbott appeared to pre-empt last Friday when he said that the automotive industry would receive no more financial assistance.

The future of the local automotive industry has been the subject of intense speculation for more than a year, something that intensified in May this year when Ford announced it would shut its manufacturing facilities in October 2016.

While Holden previously committed to investing more than $1 billion on two new models – the next generations of the Cruze small car and the Commodore family car – the election of the Liberal government has increased the uncertainty surrounding long-term support and policies for the car industry.

Holden and Toyota have both laid off thousands of workers in recent years as export markets have shrunk and local demand dwindled in light of increased competition and a strong Australian dollar.

Independent Senator for South Australia Nick Xenophon says the admission by Mr Devereux that no decision has been made on Holden’s future should be ‘‘a massive wake-up call to the Prime Minister’’.

“Contrary to those in the government who are trying to undermine Industry Minister Ian Macfarlane, Holden still wants to do business in Australia and that carries with it the future of 50,000 direct jobs in the industry,” Mr Xenophon said.

“Does Mr Abbott really want to be the Prime Minister who oversaw the destruction of an entire industry, and with it tens of thousands of jobs? Does he really want to face an election lead-up in 2016, with hundreds of workers losing their jobs each week throughout the sector?”

“The current energy market rules are stacked in favour of the power companies and the carbon tax is only part of the reason prices have spiked. That’s why I’ll be pushing for deeper reforms to give relief to businesses in the auto sector, which have seen their power bills skyrocket.”

Stressed to the max

Dave Smith, national secretary of the vehicle division of the Australian Manufacturing Workers’ Union, said that Holden workers were ''stressed out to the max at the moment''.

Amid fears that Toyota will follow Holden out of Australia, Mr Smith said as many as 50,000 automotive workers in the broader were anxious about losing their jobs.

The union leader told ABC radio that had not spoken to Holden management for ''some time'' but he still believed no decision had been made on whether the carmarker would leave Australia.

Mr Smith rejected the idea that automotive workers could accept wage cuts to keep Holden and Toyota in Australia. ''You can only get so much blood out of a stone,'' he said.

Australian-made cars make up only 10.3 per cent of the 1.1 million vehicles sold in Australia annually, a record low for an industry on the brink.

More recently Toyota and Holden approached their workers asking them to take pay reductions in an effort to reduce the cost of manufacturing cars by about $3800 per unit to ensure the Australian operations are commercially competitive with other plants from the same car makers around the world.

If Holden were to stop manufacturing cars in Australia, it would almost certainly force Toyota to follow suit because the 160 components manufacturers that are vital to the industry would not be able to achieve economies of scale.

Several senior industry observers and people close to the situation – including opposition industry spokesman Kim Carr – have labelled such a situation ''catastrophic'' for the automotive industry.

The interim Productivity Commission report is due to be released on December 20. The final report is due to be delivered in March.

with Jonathan Swan and Ben Butler