Holden shutdown hits around 3000 businesses “directly linked” to the car supply chain

Elizabeth is a community like many in Australia, two shopping centres, a golf course, a tip, parklands and grids of mid-20^th century houses.

There are two giant facilities and some smaller industries in the northern Adelaide suburb. There’s a defence base, a hospital and the Holden assembly plant due to shut in 2017.

One of Holden’s assembly lines occupies a few blocks of land here. The workers inside spend their money at the local shops, but one resident of the area who didn’t wish to be named said spending of disposable income in the area would dry up with its closure, crime would increase and residents’ health would deteriorate when Holden closes.

There is a tension in the community after Holden made clear it would close its car manufacturing business in 2017 amid goading from the government during federal question time yesterday for the Australian icon to “come clean” about its future. Holden wanted $150 million a year from the government until 2020 to keep its manufacturing in Australia.

Business owners in the area are cautious about speaking to the media about the closure.

Like small business owners in the community around the Holden plant, the car maker’s suppliers are staring down the barrel as Ford aims to close its manufacturing plants in 2016, leaving Toyota as the only large-scale car manufacturer in Australia.

The Federation of Automotive Products Manufacturers chief executive Richard Reilly said some of its 150-odd members who supply parts to Holden would not survive.

“You can’t just diversify into rail, you have to have an underlying customer base of local components, so if you lose that, the strength of the business isn’t there to diversify,” Reilly said.

He said hundreds of companies, each with a small slice of the market supplying auto parts manufacturers, would also be affected.

The Federal Chamber of Automotive Industries issued a muted response to Holden’s announcement. Chief executive Tony Weber sent two lines in an email saying he was “saddened”.

“Our thoughts are with the workers and their families at this difficult time,” he said.

But the FCAI released research commissioned in September this year which concluded that “the Australian economy would be $21.5 billion smaller if automotive manufacturing leaves the country in 2018. Melbourne and Adelaide will be heavily impacted with significant job losses and a long-term fall in gross regional product”.

The report modelled what would happen if auto manufacturing shut down for two years in 2017-2018. And states that the $500 billion in government subsidies the industry receives amounts to $18 a person, for a $934 a person return on investment.

Adding perspective to the impact of the closure, the Australian Industry Group said around 3000 businesses are “directly linked” to the car supply chain which contributed $5.5 billion to the Australian economy in 2011-12.

About 17,000 people are employed on automotive assembly lines, and 28,000 work on supplying parts to the industry, adding up to 45,000 employees, the Ai Group stated, while another 50,000 people work for manufacturers that supply parts makers.

The Federal Opposition Leader Bill Shorten called Holden’s announcement “sabotage” by the government for not agreeing to continue subsidies. The government forced Shorten to retract the word.