Holden boss keeps them guessing, defends productivity

Mike Devereaux was keeping Australian workers guessing about their futures in fronting the Productivity Commission this morning. The Holden boss didn’t announce the closure of Australian operations — as press reports predicted this morning — while insisting no decision had been made and it’s the company’s philosophy to “build where they sell”.

Devereaux said the cost to the federal government of keeping the Australian car industry “dwarf the costs of losing it”, citing a $32.7 billion return to the Australian economy over the last 12 years as proof.

He said this figure doesn’t include revenue from imported cars, but he refused to speculate further stating Holden had communicated a business forecast to both the former and present governments. He told deputy PC chairman Mike Woods there was “no doubt” the federal government had “all the information to answer [his] question”.

Holden made an average of $50 million in profit per year over the same 12-year period, however six of those years returned a loss. Devereaux said without the $1.8 billion in government assistance from 2001 to 2012 there would have been “continued losses”.

The commission also heard there was a $3750 cost difference for every car produced in Australia, of which $2000 was labour costs. Devereaux said Holden doesn’t “need to close that gap to zero” but declined to comment further on exactly how much assistance the company required.

Commissioner Philip Weickhardt told the hearing it was “very difficult” to provide certainty for industry and government without transparency on such issues. Woods also noted the “great importance” of transparency for the industry.

On these costs, however, Devereaux maintained that Holden was “unequivocally” employing its labour force in a “highly productive way”, claiming Australian production of the Cruze, a model also produced outside of Australia, was the “most productive” worldwide. But he admitted Holden “need[s] to fight” to reduce costs and improve productivity in “every part of the ecosystem”.

Devereaux claimed auto assistance is “understood worldwide”, fending off a statement from Woods that other Australian businesses don’t have access to this kind of government help. He re-iterated several times throughout the hour-long hearing that Holden is committed to continuing to make cars “Australia want”, stating the Cruze and Commodore were ranked the fourth and fifth most popular passenger cars nationwide.

But he admitted: “I sound like a broken record.”

This article first appeared on Crikey.