The lingering death of Holden: Why the factory really closed ..
Holden died in Australia, officially, in December 2013. But doctors will turn off the life support today - October 20, 2017. There’s a tremendous amount of uninformed speculation about why this has happened - you’ll see that on the news today. If you want to know the truth … let’s roll.
The politicians will blame each other. Carmakers will blame the politicians, and us, and the local market, the high cost of labour (and on this point I’d say: they make cars successfully in Germany, don’t they?) They’ll blame the unions. Whatever.
But if you want to know the truth, you have to listen very hard for what Ford and Holden do not say on this. What’s not being said here - by neither Ford nor Holden - what they will not say - is that they got their manufacturing operations, staggeringly, horribly wrong.
Ford and Holden stopped building the cars that Australians wanted to drive. Therefore, they bought elsewhere. It’s that simple. This process happened over many years. It was identifiable and the operations were salvageable - for a long time. But Ford and Holden luxuriated through a decade of the worst ever product planning decisions, floating on a sea of public money - taxpayer funds. We paid them to get this wrong.
And we did pay them rather a lot. Holden got $2.17 billion of your taxpayer funds from 2001 to 2012 inclusive. That’s an average of $180 million dollars a year. And that means, if you drove past a Holden dealer in 2012 and you saw in the corner of your eye, just one shiny new Holden Commodore on the lot - there was about $2000 of your money built into that car.
Here’s how this worked: This was the Mafia’s business model, Detroit-style. It’s a money-for-jobs extortion-style deal, with some faceless Ford and GM bigwigs as the mafia, and the relevant Australian Federal Industry Minister as the poor bastard gaffer-taped to the chair.
In October 2013 - just two months before pulling the pin - Holden went ‘Mafia 2.0’ on the Australian Government. They have never revealed the size of the additional extortionate demand on the table, to keep the factory open. Reports at the time suggested sums ranging from $150 million to $265 million, which sounds plausible.
Remember - this was five months after Ford announced it was out. There was a great deal of uncertainty about the future of the industry, and a new Government was steering the ship. The new Federal Treasurer at the time - Joe Hockey - famously said, rhetorically, to Holden, in Parliament (quote) “either you’re here or you’re not”.
It was a demand for Holden to reveal its long-term intentions for manufacturing and jobs. Then-Prime Minister Tony Abbott flat-out refused to up the ante, saying:
"There's not going to be any extra money over and above the generous support the taxpayers have been giving the motor industry for a long time."
Holden Boss Mark Bernhard has called for (quote) “dignity and respect” today. He said:
“We don’t want a circus.”
Indeed. Let’s depart from normal Holden operations and not have a circus on this last solemn day, shall we?
Make no mistake, if you are a Holden worker, or if you were a Holden worker, or a worker at one of the component suppliers, or the other two carmakers, then my heart goes out to you, and you have my complete, unreserved respect and sympathy. I don’t think anyone seriously believes the failure of these operations was in any way abetted by the work you did, which was in my view excellent.
You are in this position because of (in my view) shady decisions taken over many years in Detroit, by senior executives far too clever to burden themselves with tailoring the product to suit the market, especially as it was so much fun to float on a sea in life-rafts stuffed with Australian taxpayer’s funds. Your money.
Perhaps you think I’m joking. The pool party in Detroit is still on. On the 29th of January this year the Australian Financial Review published an obscure story entitled:
“Holden sends $150 million back to General Motors in Detroit as closure looms”
That sum equates to $1.5 million returned for each of the 100 shares issued in Holden. In my view, there’s your absolute commitment to Australia, right there. Mark Bernhard wants dignity and respect today - and I agree in relation to the workers and their plight. Personally, however, I find Holden’s behaviour absolutely undignified, and worthy of no respect whatsoever.
If you are a patriotic Australian, I would suggest you take this on board and make an informed decision when the time is right to buy your next new car. A solemn, tragic day today. It would be a far greater tragedy, however, if we do not learn from it.