Sydney and Melbourne - The fate of Australian car plants run by General Motors (GM) and Toyota hangs on Saturday’s election that pits a government committed to subsidies against an opposition vowing to scale back support.
GM is waiting on the result before deciding on any investments in the country beyond 2016, as Prime Minister Kevin Rudd styles the contest as a vote on the industry’s future.
Rudd’s government has set aside A$5.4 billion (R49bn) for the car industry until 2020 and pledged another A$700 million during the campaign. Facing a deteriorating budget position, opposition leader Tony Abbott, the opinion poll favourite, wants to cut A$500m from the subsidies by 2015.
“What we aren’t going to do is what Mr Rudd has done over the last few weeks, and basically run down the road after Holden waving a blank cheque at them,” Abbott said last month, referring to GM’s local unit. “It is possible to do sophisticated motor manufacturing in this country without a government handout.”
The election would be “a referendum on whether or not we will keep making cars in Australia”, Kim Carr, Rudd’s Industry Minister, said the same day.
The A$1.2bn gap between the parties was greater than the combined operating profits for GM’s and Toyota’s automotive manufacturing operations over the five years to 2010, researcher Ibisworld estimated.
Ford, set to close its Australian car lines in 2016 after nine decades, said in May that the unit’s costs were four times those of its Asia divisions and would not be sustainable even with a doubling of aid.
Abbott’s policy would not “be enough to keep the manufacturers here long term,” said Tony Lemmo, the chief executive of Autoteam Australia Consulting in Melbourne. “Our market, quite frankly, is not big enough for a manufacturing facility.”
Costs at Holden were up about 60 percent from 10 years ago, making it one of GM’s most expensive operations, the division’s managing director, Mike Devereux, said in April.
The car maker “won’t make any decisions about future investment” in the country “until after the federal election and after we have held detailed discussions with the next government”, Holden spokesman Sean Poppitt said.
The division employs about 4 000 people at plants in Melbourne and Adelaide.
Toyota and Ford declined to comment. The country’s automotive industry employs about 45 000 people, according to a parts supplier group.
In Geelong, about 75km south-west of Melbourne where Ford started assembling its Model T in 1925 and today employs about 1 200 people, there are sharp political repercussions to shuttering the city’s second biggest private sector employer. – Bloomberg