Holden, South Australian Government to renegotiate funding deal

The South Australian Government will “return to the negotiating table” over its funding deal with Holden after the local car maker earlier this week announced its plan to axe 500 jobs.

Following a three-hour meeting with Holden chairman and managing director Mike Devereux in Adelaide today, South Australian Premier Jay Weatherill said the two parties had “very different views” about the nature of their funding agreement going forward.

“We will not be providing financial assistance to Holden without stringent, and enforceable consequences for failing to meet employment, production and local content targets, as well as other conditions which contribute to a broader economic benefit to the State,” Weatherill said in a statement.

“Given we have not paid any funds yet to Holden, I make it clear that we will not do so unless new acceptable terms are reached with Holden.”

Weatherill said the events of this week had “materially changed” the circumstances of the funding deal, and said that agreement new needed to be revisited.

“We’ve never walked away from our agreement. We’ve, in all respects, honoured our side of this bargain,” Weatherill said, as reported by AAP.

“There’s no doubt that we will be revisiting the nature of our contribution, just as we will be asking for the company to revisit the nature of its contribution to the people of South Australia.”

In March last year, the South Australian Government committed $50 million to Holden as part of a $1 billion-plus co-investment deal between the Elizabeth-based manufacturer and the state and federal governments that was intended to shore up the company’s local vehicle production until 2022.

While acknowledging the difficulties faced by Holden, Weatherill said he wanted the objectives of the original deal to be upheld.

“We accept the reality of the change that’s occurred and we are going to return to the negotiating table with that in mind and we’ll adjust our contribution and we’ll be seeking adjustments to their contribution,” ABC Online reported.

“I wasn’t satisfied with just simply propping up the company for another period, from 2016 to 2022. That’s why we incorporated, within this agreement, matters which are being pursued as we speak, a working party to deal with these important transitional issues.

“There is a future here for South Australia if we’re smart but it’s not going to be the subject of just some slogan about whether we support the car industry.

“The costs associated with losing 16,000 workers in the northern suburbs, the social dislocation, the capabilities and skills that would be lost … is such that it could not be borne by the South Australian community.”

Devereux emerged from the meeting saying he was committed to making sure Holden secured the best path forward for producing its next-generation Commodore and Cruze models from the second half of the decade.

He also called for a review of the automotive industry at a federal level, insisting that the conditions faced by Australia’s automotive manufacturing industry had changed “quiet dramatically” over the past 12 months.

Despite the seriousness of finalising the funding deal, Weatherill said his more immediate concern was finding employment for the 400 Holden workers from South Australia that will be out of a job by August.

“We’ve learnt from previous exercises of this sort that there are measures that can be very effectively deployed in ensuring that those workers are able to find suitable, alternative employment and we want to bring those measures to bear in this particular case,” ABC Online reported.

“We’ve placed a number of matters in front of the company, a number of measures that we think will assist in ensuring these redundancies are voluntary.”