Holden seeks extended warranty
Holden is stepping up pressure on the federal Coalition to commit to funding for the car industry over the next decade, with a warning it could follow Ford out of Australia.
The company announced this week it would attempt to slash wages at its manufacturing plants.
On Wednesday, managing director Mike Devereux also indicated the company's future in the country was not certain if government funding was not locked in over a long period.
Coalition industry spokeswoman Sophie Mirabella, who has been in discussions with Mr Devereux, said if Tony Abbott won the federal election, she was confident the car industry would survive.
Under the Gillard government's assistance scheme, $1.5 billion will be paid out between 2011 and 2015, and a further $1 billion over the following five years.
The Coalition will cut the first round of funding to $1 billion, but it has also pledged to leave the second round of funding in place, while simultaneously promising to hold a Productivity Commission review into car manufacturing. This has caused some doubts within the auto industry over the money.
Ms Mirabella said Labor's plan to save the car industry had not worked.
"Ford has gone under their watch, when they've given more and more money to the car industry," she said.
"We think there can be a viable auto sector, but there needs to be a change in funding guidelines to look at long-term viability of the industry."
She said "no car company has said to me they are going to leave the country because we have reduced the fund by $500 million".
Following a funding pledge from federal and state governments last year, Holden said it would spend $1 billion on its Adelaide plant. But Mr Devereux said this was not certain. "Some people think that we have already been given money to do that investment but that is a prospective investment that we have not made."
He said the long lead-times of the car industry meant Holden needed certainty for the next decade on government funding.
The company is poised to start investing in its new Adelaide plant by the end of this year to help manufacture new-model Cruze and Commodore vehicles, but wants guaranteed funding until about 2022 before it begins spending the money.
Other industry figures said if Holden believed there was a risk to funding from the federal government, the company would simply walk away from production in Australia and import vehicles, because this would be more profitable.
The national secretary of the Australian Manufacturing Workers Union's vehicles division, Dave Smith, said: "If [car makers] can't lock in the required government funding from a Coalition government ... they will leave Australia."
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free