The future of Australian manufacturing potentially hangs in the balance of power, with the federal opposition still non-committal to long-term support for local car making.
The Coalition has confirmed that if elected to power following this year�??s federal election it would honour the co-investment agreement created by the current Labor government, which would see Holdens built locally until at least 2022. Beyond that agreement, however, the Tony Abbott-led side has not given support to local car manufacturing.
Holden confirmed that it is in talks with the federal opposition �?" specifically citing Sophie Mirabella, shadow minister for industry, innovation and science, and Joe Hockey, shadow finance minister �?" to shore up support for local manufacturing.
At the Detroit auto show, General Motors�?? Vice President of Global Manufacturing, and President, International Operations, Tim Lee, said that if there were changes to the current, decade-long agreement then the company would need to re-evaluate its commitment to local manufacturing.
Echoing comments made last year by Holden Managing Director, Mike Deveraux, Lee went further by adding that �??non-contractual�?� changes may also impact on local manufacturing plans.
�??We have a contractual agreement with the government of Australia,�?� said Lee. �??We expect both sides [Liberal and Labor] to live up to the agreement.�?�
�??If there is a change in that pre-condition, I guarantee you, we will re-think our position as well.
�??And really a dramatic change in the non-contractual side of the legislation environment as well, with regards to tariffs, with regards to the automotive transformation scheme.
�??When I said pre-conditions, I meant the entire landscape of things that are in position today, that centred us to make some decisions that I asserted to the board were good business decisions.
�??If those pre-conditions were to change materially, I would have an obligation to go back to our most senior leaders and reconstruct the deal.�?�
Lee says that GM has changed its attitude towards product development and portioning resources since it faced bankruptcy, and was bailed out by the US government, in 2009.
�??We are looking at capital allocations quite, quite differently. And those capital allocations are a function of not who tells the best story, or who sees the boss last, but �?� what�??s gonna pay? What is the best use of investment capital.
�??Our board is very, very sensitive to our responsibility to our shareholders. Look at the CVs of all our shareholders�?� really capable people. They all have the same interest at heart, to make the company successful and to represent the interest of the shareholders.
�??If there is a change that would see our return on invested capital in that particular program was to be different to what we asserted to our board �?� then obviously we would have to go back and re-think should we allocate that capital to Australia? Or should we allocate that capital to Russia? Korea? Poland?
�??That�??s just the nature of business.�?�
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