Holden admits Commodore and Cruze are loss-makers, plans to cut workforce

Holden has announced it will open dialogue with its manufacturing workforce to reduce the cost of building vehicles in Australia.

At a press conference in Melbourne today, Holden Chairman and Managing Director, Mike Devereux, admitted the discussion will be a difficult but necessary step to secure the company’s manufacturing future in this country.

“No doubt that we are one of the highest cost places in the world, [the] highest penalty we face is labour costs,” said Devereux. “Today is about labour cost reductions”.

According to the Holden MD, it costs about $3750 more to build a car in Australia than it does to import it.

He also claims that Holden is currently losing money in the local production of the Commodore and Cruze, while making money from imports such as the Captiva and Colorado, a situation that he believes needs to change.

“Our reality is that our cost per car is too high and it needs to come down. [We are having an] open discussion and putting everything on the table,” Devereux (below) added.

Nonetheless Devereux was adamant that Holden is still committed to building cars in Australia. He noted that over the past 12 years, although Holden has received $1.8 billion in government assistance packages, it had pumped $32.7 billion into the Australian economy.

The Holden plant in Elizabeth, South Australia, is already facing voluntary redundancies in August that will affect roughly 400 employees, but today’s announcement has potential to raise that number further.

“We try and price the cars aggressively, but there’s no question that the equation of being able to manage the Adelaide facility has changed even in the last 18 months,” continued Devereux. “We don’t make money making cars in this country, we make money importing cars, and we need to change that equation.”

Devereux also confirmed that Holden was in talks with both the Gillard government and opposition to develop a strategic approach to manufacturing in this country.

Asked if the cost-per-car manufacturing reduction measures will also affect the non-manufacturing workers, such as Holden executives, Devereux said that Holden has not increased the wages of more than half its award-free workers for the last three year. He argues that the company strives to pay average or below average wages for positions across the whole company.

“Our goal is to not to pay anything but the median or average pay,” he said. “Myself included make below average [pay] for the role in this company.”

Devereux said Holden will be open to all ideas and suggestions from the unions and workers, but that ultimately the cost per car has to be reduced to secure the future of local manufacturing.

“Broadly speaking we need to have discussion with the entire workforce. We will be doing these discussions privately. Today is the first step.

“This is about giving Holden employees a direct say in their future. We can’t survive as a local manufacturer if we’re not competitive and we don’t reduce our costs. All options for improving productivity are on the table. We will work closely with the unions and our people to develop a fair and reasonable proposal in line with other local manufacturers across all industries.”

Although ‘discussion’ has commenced today, Holden expects to have agreed to an outcome by August, with Devereux arguing that there’s not a lot of time left to have these discussions.

“It has to be done in August, theres no question that [it must be done in August] in order for us to be able to secure a long term manufacturing future, and bring the program of two new architectures to the Elizabeth plant,” he said.

Holden currently makes the Holden Cruze and Commodore in Australia.