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GM says it will quit building cars in Australia

Dec. 11, 2013 at 9:48 AM   |   Comments

ADELAIDE, Australia, Dec. 11 (UPI) -- General Motors said Wednesday it would quit manufacturing operations in Australia by the end of 2017, ending 2,900 jobs in what it called a challenging market.

"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," said outgoing GM Chairman and Chief Executive Officer Dan Akerson in a statement.

GM said the Australian dollar had more than doubled in strength against the U.S. dollar since 2001, rising from US $0.50 to as high as US $1.10 and jumping from 47 to 79 on the Trade Weighted index.

That makes goods 65 percent more expensive over the past 10 years, GM said.

In addition, with Toyota Motors as the only other automaker producing cars in the country, the burden of maintaining a supply chain of component parts hits GM harder than it otherwise might.

Toyota acknowledged the difficulty of keeping a supply chain going by itself and said the GM decision could push it to drop production in the country as well, the Australia Broadcasting Corporation said.

"This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia," Toyota said in a statement.

Australian Manufacturing Workers Union says it is now "highly likely" Toyota will leave Australia too.

"Toyota have told me they won't be able to survive in Australia because of the lack of volume in the component industry," said national secretary of the Australian Manufacturing Workers Union vehicle division Dave Smith.

"This is a dark day but there will be better days ahead," said Australian Prime Minister Tony Abbott upon his return from South Africa, where he attended a memorial service for former President Nelson Mandela.

South Australia Premier Jay Weatherill said the decision to quit building what is considered the national brand GM Holden, was a "body blow ... not just economically but socially."

"Holden has been an iconic national brand for Australians, a part of our heritage, which meant a great deal to Australians over several generations," said Deputy Prime Minister Warren Truss.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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