A proposal by a Belgian tycoon to continue manufacturing cars at Holden’s factory in Adelaide’s north has collapsed, just hours after the company announced production of its Cruze model would be axed along with hundreds of jobs.
- Holden to cease production of Cruze from October with hundreds of jobs to go
- Announcement part of Holden wind up
- Belgian businessman’s proposal to save car manufacturing in Australia has also collapsed
Holden’s Elizabeth factory is due to close in 2017, leaving more than 1,000 people directly out of work and devastating component makers supplying the car maker.
Belgian entrepreneur Guido Dumarey, who owns Punch Corporation, had met with both the State and Federal Government earlier this year with a proposal to continue to manufacture cars at the Elizabeth plant.
But in a joint statement between General Motors and the Punch Corporation, the parties said they had concluded the proposal was not a viable business model.
“Both parties concluded that a viable business model was not possible for this case. Therefore the proposal will not be taken forward,” the statement read.
“As discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details of the proposal, nor the assessment.”
Mr Weatherill said despite the proposal falling through, he still intended to travel to General Motors next month.
“The news that the Punch Corporation proposal will not go ahead is further disappointing news for Holden workers and our northern suburbs and comes on top of today’s announcement of the decision to wind down production of the Cruze,” Mr Weatherill said.
“I will be visiting Detroit in coming weeks to discuss with GM their plans to support these workers and to put to them proposals about the future use of the plant at Elizabeth.
“The State Government will continue to stand by the workers in the car industry.”
Federal Minister for Industry Innovation and Science Christopher Pyne said he was shocked and disappointed by the announcement.
“I am surprised and disappointed at the sudden announcement from Punch Corporation and General Motors [on Friday] afternoon,” Mr Pyne said.
“It does not match the statements both Punch and GMH have made to me.”
End of Cruze ‘always part of Holden’s scaling down’
Earlier yesterday, Holden announced it would cease production of its Cruze from October, bringing to an end five and a half years of production, with nearly 125,000 cars built and sold in Australia.
While production of the small Cruze car will stop, the company said its Commodore range would continue to be produced until late 2017.
At its peak, 33,000 Cruze vehicles were sold annually.
Holden managing director and chairman Mark Bernhand said it was a difficult time for employees but the end of Cruze production “was always part of Holden’s gradual scaling down”.
He said the eventual end of Cruze production was first forecast in 2014, and it had been discussed “openly” in weekly staff meetings and forums at the Elizabeth factory.
“I want to acknowledge first and foremost the impact the end of local manufacturing has on people, and their families, across the country and throughout the industry,” Mr Bernhand said.
“As I’ve said since the first day I took up this role last year, my most important job is to support our people and I want to reaffirm that commitment to helping them where we can.
“In the coming months, we will be helping many in our manufacturing workforce transition to new employment, wherever possible.”
Holden’s human resources executive director Ashley Winnett said each worker had access to transition support services and up to $3,000 in approved training, both before and after they left the company.
SA Government calls for release of car industry funds
The South Australian Government has appealed to the Federal Government to free up about $800 million in funding that was originally earmarked to support car industry workers.
Manufacturing Minister Kyam Maher said the funds could be used to help companies who supply to Holden to diversify.
“The one thing that would make a very, very big difference as Holden winds down is for the Federal Government to release funding from the nearly $800 million in the automotive transformation scheme,” Mr Maher said.
“That is critically needed for companies that supply to Holden to diversify, but also to open up [opportunities] for companies that might be looking to do different things.”
Mr Maher also expressed his disappointment at Punch Corporation’s proposal collapsing.
“I think it would have been very difficult if Punch and Holden had kept negotiating for many, many months and leaving in limbo … many of the workers, holding onto false hopes,” he said.
“It is disappointing that this project won’t go ahead, however having an early ‘no’, I think, is a much better outcome.”
Holden received a $30 million grant from the SA Government to help it produce the Cruze model, with the proviso that the plant stayed open until the middle of this year and Cruze production remained online until late last year.
The company said the Cruze would be replaced by 2020 by imported Astra models.