General Motors says Holden will cease building cars in Australia by the end of 2017, with the loss of 2900 jobs at its assembly operations in Adelaide and its engine and engineering plants in Melbourne.
The decision follows Ford's move to end local production by 2016 and could force a similar exit by Toyota, which says there is now "unprecedented" pressure on its own operations. It will also affect component suppliers and other support industries across the country, with the potential to result in the loss of 40,000 jobs or more.
Holden boss Mike Devereux told workers in Adelaide of the company's plans on Wednesday, fulfilling a promise to them that they would be the first to know, after days of speculation. He said the decision was made by senior GM officials on Tuesday afternoon, hours after his appearance at the Productivity Commission at which he said no decision had been made.
Holden workers being told that the company will end manufacturing by 2017.
He insisted on Wednesday that he told the truth at the commission. "Make no mistake, we have looked at every possible option to build our next generation cars here in this country," he told reporters at the Elizabeth plant in Adelaide.
"This is a General Motors decision. We have all the information we need to make a conclusion in relativity to the other economies where we can make cars," he said. "It is more viable to do that in other places than in Australia."
'Perfect storm of negative influences'
General Motors chief executive Dan Akerson said the strong Australian dollar was one of the factors contributing to the "perfect storm of negative influences the automotive industry faces in the country."
In recent days, the federal government had ratcheted up pressure on the company to make a decision on its future, first declaring there was no more money available and then writing to Holden demanding it reveal its hand.
Federal Deputy Opposition Leader Tanya Plibersek says Treasurer Joe Hockey has got his way after "goading and daring" Holden to withdraw from Australia. The Commonwealth said Holden's future was ultimately in its own hands but unions and the South Australian government have laid the blame for its closure directly at Prime Minister Tony Abbott and his government.
"Tony Abbott and his coalition government have turned their backs on this industry and the people in it," SA Premier Jay Weatherill said. "By cutting funding and, in the past week, by attacking Holden, Tony Abbott and the coalition have forced Holden out of Australia."
'Abbott to blame'
|Australia PM Tony Abbott & Treasurer Joe Hockey.|
"The blame for this lies squarely at the foot of the Abbott government," he said. "It's been the federal government that has made a decision that 50,000 people should be put out of work." Mr Devereux said Holdens would continue to be sold and serviced in Australia from 2018.
All cars imported into Australia would continue to be badged as Holdens and he was confident the decision to stop production would not damage the brand, despite its iconic status as a car producer for the past 65 years.
"We remain committed to being a great part of the automotive culture in this country with the Holden brand, through our dealers, for many, many years to come," he said.
Toyota said it would have to determine whether it could continue operating in Australia. "This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota Australia said in a statement.
Political storm erupts
A political storm hit federal parliament as Holden blamed a "perfect storm" of poor business conditions for its decision to stop making vehicles in Australia.
Parliament erupted with Labor blaming the Abbott government and Treasurer Joe Hockey for the loss of 2900 jobs in Victoria and South Australia by 2017, while Mr Hockey angrily rejected Labor's "confected anger".
An emotional Acting Opposition Leader Tanya Plibersek castigated the coalition for withdrawing $500 million of car industry support and not properly engaging with Holden's US owner General Motors since it won the September election.
"It was Joseph Benedict Chifley who watched the first car roll off the production line at Fishermans Bend and it will be Joseph Benedict Hockey who sees the last car roll off the production line," she told reporters.
|Australian made 2014 model-SS Holden.|
Industry Minister Ian Macfarlane had been trying to "arm wrestle" Mr Hockey into providing greater taxpayer assistance to Holden. "Unfortunately the arm wrestle ... was won by the treasurer," Mr O'Connor said.
Mr Hockey said GM was right when it cited a "perfect storm" of "the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world".
But he did add the former Labor government's carbon tax, its now scrapped plan to alter the fringe benefits tax arrangements on cars and high labour costs to the mix.
Mr Hockey appeared to concede the government wasn't willing to give money to Holden. "Ultimately, what it comes down to is prosperity only comes from hard work and enterprise, it doesn't come from the benevolence of taxpayers," he said.
Timeline: Holden's History in Australia
The iconic car maker Holden has today announced an end to its operations in Australia. Look back on the history of the manufacturer, since its early beginnings more than 150 years ago.
Early History: The history of Holden dates back to 1856, when James Alexander Holden started as a saddlery business in Adelaide, South Australia. The firm evolved over the years, progressing from repairing car upholstery to the full-scale production of vehicle body shells.
In 1924, the company became the exclusive supplier of American car manufacturer General Motors in Australia. Throughout the 1920s Holden also supplied tramcars for Melbourne. In 1931, the two companies merged to become General Motors-Holden's Limited (GM-H). In 1936, Holden opened a new HQ and assembly plant at Fishermans Bend in Port Melbourne.
|The very first Holden (1949).|
Toyota overtakes Holden as top-selling brand, a position it has held ever since. Large car sales peak at 203,524, accounting for 34.6 per cent of all new-vehicle sales. The total number of factory workers that year is 7,350.
Holden continued to manufacture motor vehicles in Australia as a subsidiary of General Motors, as well as exporting vehicles and engines to other countries. Its headquarters are still in Port Melbourne, with an engine manufacturing plant on-site and vehicle manufacturing operations in the northern Adelaide suburb of Elizabeth. It is also represented by more than 300 dealerships nationwide.
|A Holden FX-ute.|