500 Holden jobs on the line: Economy roundup

Holden is preparing to make 500 workers at its Melbourne car manufacturing plant redundant, in yet a further sign of the struggle facing the Australian car industry.

According to reports, an official with the Australian Manufacturing Workers Union says around 500 workers at Holden’s Fishermans Bend plant will be out of work from the end of 2009.

Holden has not denied the claim and says it will make an announcement on the matter this afternoon.

The announcement illustrates just how grim the conditions facing the car industry are – and why Holden is defending the Rudd Government’s $500 million green car industry plan so staunchly.

The Productivity Commission yesterday released a report slamming the $500 million plan, arguing it will not be effective in setting up a green car industry in Australia, will result in little additional innovation and effectively involves a cost of about $300,000 for each job saved in the sector.

The Federal Chamber of Automotive Industries has been quick to return fire in strong terms however, claiming it illustrates the Commission’s lack of understanding of the sector.

Whoever is right, the fund will do little to save the 500 Melbourne jobs on the line. No doubt this debate still has some way to run.

In other economic news today, the construction industry is continuing to struggle, with the Australian Industry Group-Housing Industry Association Performance of Construction index experiencing its biggest monthly decline in May since 2005.

The PCI fell 5.7 points to 36.9, well below the 50 point line separating growth from contraction.

“Weakness in the industry has intensified, with reductions in activity extending beyond house building and apartments to commercial and engineering construction,” AIG chief economist Tony Pensabene says. “New orders for the industry as a whole are now at their lowest level in almost three years.”

And on the markets, a resurgence in oil and metal prices this morning has seen the S&P/ASX200 lift 0.8% on yesterday’s close to 5573.3 at 12.30pm, while the Australian dollar is trading at US95.99c.