General Motors Co. GM +2.76% is preparing a concerted attack on its most troubled international operations that would entail big output cuts at factories in South Korea and likely an end to production in Australia, said people familiar with the auto maker's plans.
GM intends to close its two Australian plants and separately slash production in South Korea by as much as 20% by 2016, these people said. The moves come on top of a planned factory closing in Germany and last week's decision to end Chevrolet sales in Europe in two years. A portion of the South Korean factory output would be used to feed the Australian market, the people said.
The largest U.S. auto maker has determined that economic changes—including high wages and labor unrest in South Korea, and a strong currency in Australia and shift to imports there—have undercut its manufacturing competitiveness in the two countries.
- Wall Street Journal, 8th Dec 2013
The Wall Street Journal which I suspect is far far far closer to the machinations of business than the Australian Government is, has all but confirmed that Holden's manufacturing in Australia will die. With the two lines in Australia, the Commodore which will be replaced by the global Zeta platform replacement and the Cruze which will continue to be built in the United States and reduce production in South Korea, being made redundant, the future of Holden as a manufacturer in Australia has been snuffed out.
This was also on the back of announcement that the Chevrolet brand in Europe, rather like the experiment of Opel in Australia is going to cease to be except for high end sports cars:
Beginning in 2016, GM will compete in Europe’s volume markets under its respected Opel and Vauxhall brands. The company’s Chevrolet brand will no longer have a mainstream presence in Western and Eastern Europe, largely due to a challenging business model and the difficult economic situation in Europe.
Chevrolet, the fourth-largest global automotive brand, will instead tailor its presence to offering select iconic vehicles – such as the Corvette – in Western and Eastern Europe, and will continue to have a broad presence in Russia and the Commonwealth of Independent States.
- GM News, 5th Dec 2013.
With no export markets for the Cruze and no reason to continue the Commodore, GM have pretty well much by default, taken the knife to their Australian operations. With Ford already confirmed as quitting and Holden probably less than a week from officially announcing it, I wonder what that's going to do for all of the related industries like parts manufacturers.
Not only do I find it utterly galling that basically General Motors is trying to hold the Australian taxpayer to ransom to the tune of another $150m, it's downright insulting that they don't even need it:
General Motors Co.’s stock price hit another all-time high as it topped $40 a share Friday for the first time since the Detroit automaker went public in 2010.
The Detroit automaker’s shares rose 2.8 percent to $40.17 in extremely heavy trading Friday — almost twice typical volumes. The run-up in price comes as the Treasury Department is nearing an exit from the company in which it once held a 61 percent stake as part of a $49.5 billion federal bailout.
Morgan Stanley auto analyst Adam Jonas said he was raising his price target for GM to $47 from $45. He said GM has lots of possible uses for the $27 billion in cash it has on hand.
GM stock rose as the U.S. economy added 203,000 jobs in November and the jobless rate fell to 7 percent. The auto sector added 6,700 jobs to bring the total to 826,700; auto dealers added 6,500 jobs, bringing the total to 1.138 million.
- The Detroit News, 6th Dec 2013.
GM has lots of possible uses for the $27 billion in cash it has on hand? Such as what? I bet that there'll be plenty of bonuses being given out to General Motors' CEOs and upper management, whilst people who actually build their product and generate the things which they sell, get dumped on the kerbside like a Christmas puppy in April.
To some degree, I suspect that both at state and federal level, this is a case of closing the stable door after the horse (power) has bolted. I think it matters naught which side of the political divide you're on in Australia, you can have that Rangers v Celtic shouting match all you like (hooray, boo, hooray, boo) but the decision about Holden staying in Australia either has been or will be made at 100 Renaissance Center Drive, Detroit, Michigan; irrespective of what Tony Abbott, Ian Macfarlane, Bill Shorten, Jay Weatherill or Steven Marshall have to say about it.
The $150m that may or may not be being thrown about by the government is a little over half a percent of the free cash that GM has to play with. It's like turning up at a $100 banquet with a fifty cent coin; yeah, see how far that'll get you.
The most honest statement about this whole affair came from Treasurer Joe Hockey, as reported in the SMH:
In reply, Treasurer Joe Hockey offered workers no reason for comfort heading into Christmas.
‘‘The future of the car industry is in the hands of the car industry, and it’s in the hands of the car industry in the same way that it was under Labor, because it was February 2008, from memory, when Mitsubishi closed when Labor was in government,’’
- The Sydney Morning Herald, 10th Dec 2013
At this point I find myself with a different opinion to both the Liberal Party and Labor. Not only do I think that giving General Motors any more in subsidies is a bad idea but I suspect that there may be a case in attempting to sue for punitive damages, where in this case defendant's conduct has most definitively been 'calculated' to make a profit for themselves.
What's good for General Motors is good General Motors... finagle, flimflam, fleece and fudge Australia.