GM to Transition to a National Sales Company in Australia and New
Company to cease manufacturing in Australia by 2017
DETROIT As part of its ongoing actions to decisively address the
performance of its global operations, General Motors today announced
it would transition to a national sales company in Australia and New
Zealand. The company also said it would discontinue vehicle and engine
manufacturing and significantly reduce its engineering operations in
Australia by the end of 2017.
"We are completely dedicated to strengthening our global
operations while meeting the needs of our customers," said GM
Chairman and CEO Dan Akerson. "The decision to end manufacturing
in Australia reflects the perfect storm of negative influences the
automotive industry faces in the country, including the sustained
strength of the Australian dollar, high cost of production, small
domestic market and arguably the most competitive and fragmented auto
market in the world."
As a result of the company's actions, approximately 2,900 positions
will be impacted over the next four years. This will comprise 1,600
from the Elizabeth vehicle manufacturing plant and approximately 1,300
from Holden's Victorian workforce.
Holden will continue to have a significant presence in Australia
beyond 2017, comprising a national sales company, a national parts
distribution centre and a global design studio.
GM Holden Chairman and Managing Director Mike Devereux said an
important priority over the next four years would be to ensure the
best possible transition for workers in South Australia and Victoria.
"This has been a difficult decision given Holden's long and proud
history of building vehicles in Australia," said Devereux.
"We are dedicated to working with our teams, unions and the local
communities, along with the federal and state governments, to support
The sale and service of Holden vehicles will be unaffected by this
announcement and will continue through the extensive network of Holden
dealers across Australia and New Zealand. Warranty terms and spare
parts availability will remain unchanged.
"GM remains committed to the automotive industry in Australia and
New Zealand. We recognize the need for change and understand the
government's point of view. Moving forward, our business model will
change significantly however, GM Holden will remain an integral part
of its communities and an important employer both directly and through
our dealers," Devereux said.
Since 2001, the Australian dollar has risen from US$0.50 to as high as
US$1.10 and from as low as 47 to as high as 79 on the Trade Weighted
Index. The Australian automotive industry is heavily trade exposed.
The appreciation of the currency alone means that at the Australian
dollar's peak, making things in Australia was 65 percent more
expensive compared to just a decade earlier.
With the decision to discontinue vehicle and engine manufacturing in
Australia by the end of 2017, GM expects to record pre-tax charges of
$400 million to $600 million in the fourth quarter of 2013. The
charges would consist of approximately $300 million to $500 million
for non-cash asset impairment charges including property, plant and
equipment and approximately $100 million for cash payment of
exit-related costs including certain employee severance related costs.
Additional charges are expected to be incurred through 2017 for
incremental future cash payments of employee severance once
negotiations of the amount are completed with the employees' union.
The asset impairment charges will be considered special for
EBIT-adjusted reporting purposes.