Gm's Holden to Lay-off 600 Workers

In the news: General Motors Corp.’s GM Australian unit has announced last Monday that it will shed 15% of its workforce at its Elizabeth plant in South Australia State by the end of April. GM Holden Ltd. will offer voluntary redundancy packages to 600 workers who will be included in the 15% labor cut that GM’s Australia subsidiary will implement at its plant, north of Adelaide. Such is the result of improved efficiency of its automated assembly which allows the auto maker to maintain production with fewer workers.

But according to some analysts the cutting down of workers by GM’s Australian unit was due to the decline in sales of Holden’s locally built Commodore range as Australian consumers opt for smaller and more fuel efficient vehicles.

According to Rod Keane Holden executive director, manufacturing operations in an interview with reporters in Adelaide, “If Holden is to remain as one of the worlds most competitive and flexible plants we need to be as efficient as possible. And at this stage we have more resources than we need to achieve that.” Holden announced the job cut at a meeting participated by both white and blue collar workers. The automaker has given the workers until March 21 to decide whether they would accept the redundancy and retraining packages offered by the automaker.

Keane also added that no jobs would be lost at Holden’s Melbourne engine manufacturing plant. It should be noted that Holden has already laid off 1400 jobs at its Elizabeth plant in August of 2005. Holden has currently 4050 employees and will be reduced further by shedding 600 workers resulting to 3450 workers at the plant. Keane also said that it is not guaranteed if there won’t be any more job cuts in the future. “You can’t rule out anything in this business, obviously the market changes. We can never guarantee what the future holds.”

The decision for the job cut was also due to the decision of the company to end its production of the older VZ Commodore range and to focus on the production of its new VE models which according to the automaker is much easier to make.

For the past years Holden has invested A$532 million in the plant which has been described by Holden as one of the world’s most flexible and efficient plants. It is expected that production output will decline after the layoff from the current 620 cars to 520 cars a day and will return to its maximum capacity of 620 cars by October. Keane also said that they are expecting to produce 145,000 cars for this year.

The layoffs will surely humiliate Federal Industry, Tourism and Resources Minister Ian Macfarlane who even went to Detroit early this year just to report to GM—world’s largest automaker and producer of quality GM fuel pumps --- and Ford Motor Co. that Australia is expecting more in return for the A$7.3 billion Automotive Competitiveness and Investment Scheme that would support the industry through 2015. In a statement made by Macfarlane last Monday, “Globally, the automotive industry is going through challenging times and the Australian industry is not immune to this. Holden is recognizing this and is making the difficult commercial decisions it needs to make to stay competitive in a tough environment.”

Similarly the layoff of the 600 workers will definitely hurt the federal Liberal National coalition government during the election in South Australia State where Holden is currently the largest private employer. The Elizabeth plant is situated in the seat of Wakefield which is held with a 0.7% margin while most of the plant’s workers live in nearby Makin electorate which held by a 1% margin. The car making industry of Australia employs about 70,000 workers which represents about 0.8% of Australia’s total workforce as of August of 2006.