Dowling seeks to prove car industry is officially dead

[BroadyFord]

Grim...

http://m.carsguide.com.au/news-and-r...mment_20131106

(sorry for not posting full article- on my phone)

[babyf6]

Govt knows car industry is gone. So when will they tell us?
The Australian car manufacturing industry is officially on death row — and governments know it but are continuing with their facade to try and save it.

A top secret document – leaked to the Adelaide Advertiser – prepared independently for the SA Government using information supplied by Holden has found “our key working assumption is that manufacturing/assembly of mass-market vehicle platforms at GMH (General Motors-Holden) is not sustainable".
The briefing prepared by University of Adelaide Professor Goran Roos has revealed “it is therefore likely that vehicle assembly will eventually cease: 2016 being the earliest likely date".
The report also explores the possibility of a Holden factory shutdown in 2018 and 2022, but these scenarios are much less likely.
A 2016 end date would put Holden’s Elizabeth factory shutdown in South Australia in the same year as Ford’s factory closures in Broadmeadows and Geelong in Victoria.
If Holden goes, well-placed Toyota insiders say the Japanese maker will almost certainly follow in 2017 — the end of the current Camry model cycle.
Toyota’s Altona factory near Melbourne is facing the same highly optimistic cost reduction targets of $3800 per vehicle or $400 million per year.
"If Holden were to close, then the (parts) supply chain would start to fail and this, in turn, may well lead to Toyota ceasing Australian operations," the report said.
"Only 30 per cent of Tier 1 suppliers would survive the closure of GMH and Toyota."
The "cabinet in confidence" document also confirms every Holden fan’s worst nightmare.
In the unlikely scenario that the new generation Holden cars get built from 2016 onwards, the large sedan that replaces the Commodore will be front-wheel-drive.
In a stunning revelation, the report says that Holden will not have a rear-wheel-drive car in its line-up — which also rules out a V8 for the first time since 1968 — and it does not yet have a contingency.
"The true impact of not retaining this offering is not clear. However GMH is likely to experience some sales erosion sand migration to other brands," the report said.
When the Falcon and its performance models bow out in 2016, Ford will import the Mustang coupe from the US to appeal to the enthusiast market.
"The next gen model mix also excludes the ute variant," the government report said, confirming a News Corp Australia exclusive from a fortnight ago.
The briefing paper reveals that Holden’s future manufacturing plans are a basket case that will lose the company money, even with an increase in taxpayer support.
It says Holden’s sales forecast of its front-wheel-drive car "err towards the optimistic".
Meanwhile the assumption of a sales increase for Holden’s next generation small car — the most competitive segment of the market — "have a greater downside risk than upside".
Both of these assessments shoot holes in Holden’s case for an increase in taxpayer funding, as does Holden’s internal forecast of a financial loss over the life of the two new models.
"Of concern is the fact that the current Commodore … is profitable, whilst the Cruze platform is unprofitable," the report said.
"In simple terms (Holden) has chosen to drop a profitable platform and replace it with further platforms that have so far proven to be uncompetitive."
The report believes Holden’s manufacturing cost reduction targets "are aggressive and there is no specific plan in place to achieve these targets".
The local content of Holden’s future models — if they were to be built — is also likely to be severely impacted.
"In many cases, global suppliers have been locked in for global platform contracts," the report says.
"For an Australian-based supplier to gain global share it would have to dislocate a current global competitor.
"Even if an Australian based supplier could offer a cheaper alternative for (Holden) locally it would not be adopted as it could interfere with the broader global GM supplier relations."
Holden is also exploring the "unusual option" of extending the life of the current Commodore until 2018.
But this scenario is unlikely unless Holden goes ahead with the new models that will keep the factory running from 2016 to 2022.
All of the above makes for grim reading for Holden and Toyota workers and their colleagues in the parts supply industry. But it is the reality.
Given that this is a government report, I’d really like to know why State and Federal politicians have been continuing their facade to try and save the car manufacturing industry, when they know it’s doomed.
Next time a politician makes a pledge to bring the car industry back from the brink, remember they’ve read the same poignant facts you just have. It may as well be dead air.

Posted it for you

[Nikked]

Dowling mustn't have got a new VF SS ute for free...

[mik]

Grim indeed, funny part of that article is he mentions the commodore is making a profit, ....... if it is indeed making a profit, then surely holden doesn't need 200 million in tax payer donations a year or what ever the amount is to keep making them?

[BroadyFord]

More info here - eye-opening stuff:

Leaked South Australian Cabinet paper urges action to safeguard car making industry

- See more at: http://www.theaustralian.com.au/news....Bh0Aqi8X.dpuf

SOUTH Australia's top manufacturing adviser has drawn up secret plans to cushion the economic impact of possible closure at Holden's Elizabeth plant as soon as 2016.

Documents prepared by Advanced Manufacturing Council chairman Goran Roos obtained by The Advertiser - marked "cabinet in confidence" - conclude Holden is likely to exit Adelaide between 2016 and 2022 and the state must begin urgent planning to support businesses that will be left in the lurch.

The former Thinker in Residence was enlisted by the State Government in July to undertake an independent analysis of Holden's operations and given rare access to company intelligence.

His Study of GMH in Australia, a draft of which was prepared for Cabinet in August, is a bleak assessment of Holden's local operations and the morale of workers at the plant.

"Our key working assumption is that manufacturing/assembly of mass-market vehicle platforms at GMH is not sustainable," Professor Roos writes.

"The analysis shown ... validates this assumption.

"For a current undiversified supply chain participant to survive the closure of Holden, the participant would need to be significantly diversified away from Holden.

TELL US: How can we save our car making industry?

"We believe that the question of `how long (it will take) to diversify' should be answered with urgency. Further, we believe that the focus of all efforts should be to have Holden and Toyota continue assembly long enough to allow the successful diversification."

The report also reveals Holden must convince its Detroit owners that it can make a before tax profit of five per cent or more to justify continued Adelaide operations beyond 2016.

Professor Roos says "significant government support" would be needed to achieve that and concludes Holden is on track to make before tax losses of at least three per cent without a handout.

A separate recent study by academics Barry Burgan and John Spoehr found up to 13,000 Adelaide jobs were at risk in the fallout from any Holden closure.

Professor Roos warns of lag times between three and ten years to create replacement industries and floats renewable energy, flatpack building construction and defence as possible options.

Professor Roos' study finds little opportunity for local component makers to sell more parts into Holden's international operations as they are locked out by existing supply contracts.

He proposes responses, including support for local component companies that are "agile, prepared and currently active with diversification", while ignoring those tied completely to Holden.

"There is no singular panacea to resolve the impending scenario," Professor Roos states.

"Several approaches are fundamentally required to create jobs and prepare for alternative future business.

READ MORE: Holden needs financial support

"This should be commenced immediately and continue diligently for a continued time frame."

Professor Roos finds Holden's assembly expenses in Adelaide are thousands of dollars higher than for factories in Thailand and Poland due to costs including wages, logistics and component prices.

The high Australian dollar and market conditions are found to threaten the company's business model and Professor Roos finds there are few possible cost savings available other than job cuts.

The report examines the impact of closure in 2016, when manufacture of the current Commodore VF model is due to wind up, and several possibilities for withdrawal by 2022.

One option not previously publicly canvassed is for Holden to continue making the Commodore and Cruze in Adelaide until 2018 but not commit to new car models. This could avoid expensive equipment upgrades and give reliant industries more time to transition.

Professor Roos says this option is technically achievable but requires a taxpayer "inducement".

He says the payment needed to extend the life of the current cars beyond 2016 would be smaller than that required to trigger construction of two next generation models through until 2022.

However, the Government is also advised to treat any promise from Holden with caution.

Professor Roos warns the possibility of a "rushed exit" between 2016 and 2022 must be considered.

"For this scenario to play out, GM would commit to the Next Gen case, the plant and business performance would fall well short of the case developed in 2013 and GM would cease operations at short notice," he writes. "We would recommend that we keep this in our plans as a contingency if the Next Gen case is approved."

The report also suggests investigating the viability of Holden and Toyota both producing cars from the same plant to create economies of scale and maintain demand for components.

The Elizabeth plant is found to be in "below average" condition due to low spending.

"Continued cost pressure is inevitable, therefore improving plant condition is at risk of being deemed as non-essential," the report states.

"No evidence of a long-term vision for manufacturing operations was identified."

Federal Industry Minister Ian Macfarlane has commissioned a Productivity Commission inquiry into the auto sector. An interim report is expected in December and a final study in March.

He has revealed Cabinet is divided over increasing funding and the State Government has warned Holden needs an answer on a bailout before Christmas to avoid closure. A Holden spokesman on Wednesday said: "We are continuing our discussions with the Federal Government".

Premier Jay Weatherill declined to comment. A Government spokesman said it was understood the document had not been presented to Cabinet.

Opposition Leader Steven Marshall said release of the document to The Advertiser appeared to be "yet another leak designed to damage Mr Weatherill's leadership".

"Premier Weatherill can't be trusted to ... deliver what he promises," he said.

"Weatherill in March last year told South Australians that he had saved jobs at Holden - since then, we've lost hundreds upon hundreds of jobs at Holden."

Mr Macfarlane said the Coalition was committed to ensuring car manufacturing was sustainable.

"While there are various reports and data about the automotive industry in the public domain, the Australian Government believes the Productivity Commission is best placed to provide a comprehensive report about the Australian automotive industry," he said.

[GQ_Smooth]

Originally Posted by BroadyFord

More info here - eye-opening stuff:

Great article, thanks for posting it.

Don't blame Dowling for reporting the news. The Media didn't close Mitsubishi or Ford, the Australian public did by not buying their cars, long before the media got a sniff of closure.

[wrongwaynorris]

Originally Posted by GQ_Smooth

Great article, thanks for posting it.

Don't blame Dowling for reporting the news. The Media didn't close Mitsubishi or Ford, the Australian public did by not buying their cars, long before the media got a sniff of closure.

Not quite true , a fair proportion of people would have been put off Ford due to Dowlings endless stream of ill informed and untrue invective about them .

[Bill M]

Originally Posted by GQ_Smooth

Great article, thanks for posting it.

Don't blame Dowling for reporting the news. The Media didn't close Mitsubishi or Ford, the Australian public did by not buying their cars, long before the media got a sniff of closure.

Why not?
J.Dowling is just one of pack constantly baying negativity.
The media did the same even when Mitsu was developing the 380 they did their best to bury it with constant negative speculation.
It becomes a self fulfilling prophecy.

[BennyH]

If there was to be a next gen model ute I picture it to be somewhat of a Proton Jumbuck.

[1TUFFUTE]

Originally Posted by mik

Grim indeed, funny part of that article is he mentions the commodore is making a profit, ....... if it is indeed making a profit, then surely holden doesn't need 200 million in tax payer donations a year or what ever the amount is to keep making them?

No doubt commadore and profit are being used to shed a tiny amount of good light. Also no doubt that if that's how they think you work out profit...by ignoring other local models and future costs...then they really are kidding themselves!

[Wretched]

Well if he is summarising an actual report and paraphrasing it.............

[jpd80]

Unless you've been living on a desert island for the last 20 years, none of this comes as a shock.

The problem with Holden is that it has the facade of success with new car and exports,
anyone who thinks that is any reflection of a company's true health is kidding themselves.

Times are tough everywhere, put a foot wrong and it doesn't take much to go under...

I do feel for Holden fans because I know that many will be in denial for a long time until the anger sets in.
You think Ford fans are bitter, wait till you see the backlash from a bigger more motivated crowd..

[BroadyFord]

Run, Toyota, RUN! Dowling is coming for you next!

[BHDOGS]

Abbot has stopped the electric railways in Adelaide is holding the tonsley park plans to ransom no way will he stump up the cash for Holden till marshal and the liberals are in power as he's a scumbag

[wrongwaynorris]

Considering he was complicit ( admitedly in a small way , but none the lss complicit ) in bringing about the end of manufacturing in Australia it is rich coming from him .

[Bill M]

Unfortunately Mr Dowling is just like all the others who are in a rush to nail the coffin shut on Australian manufacturing, big on toxic keystrokes but short on meaningful action. Our pioneers of industry must be turning in their graves!

[SS_01]

Australian Automotive Manufacturing is dead, if you are in the unfortunate position for working in this industry, you have 3 years to retrain. Is it fair, probably not, but dont play victim when this **** finally comes to a halt.

[Bill M]

Surprise!
Another journo falling over themselves to bury whats left

Sadly for the future health of the country guess some will get this and some won't.

To look at the Auto manufacturing sector in isolation is a mistake.
The engineering Co. I worked for manufactured for the mining industry, Automotive, Defense, Aerospace. medical instruments manufacturing etc.
There are many like it but these don't make the news like some of the high profile plants.

Difficult to build up to and easy to p!$$ away with poor policy and blinkered views. One can go with the flow and let the tide of ignorance wash over you or you can stand up for what you believe in.

The Germans do it well why can't we?
Bill.

[GQ_Smooth]

I think you give him too much credit. Him canning Ford is as effective as him saying the Focus and Ranger are best in class. Neither has a massive impact on Joe Public.


Sent from my iPhone using Tapatalk

[mik]

Govco probably deserves most of the credit for putting in policy that is killing off our manufacturing decades ago, but we are probably also partly to blame for being somewhat ignorant and lazy letting govco take us down this path, as for media , it is like that person you have known forever that constantly talks and never knows when to shut up, but will never change.
The bloke is on the money I think, the car industry has the vultures circling sadly.