Time to stand up to Detroit

Published in Herald Sun (Melbourne), 10 March 2009

THE future of Australia’s famed car maker, Holden, is linked to its American parent General Motors.

When Kevin Rudd goes to Washington later this month, he should make a detour to Detroit with a simple message: “We won’t be blackmailed.”

For six decades cars made by Holden have dominated Australia’s roads.

To generations of Australians the Barinas, Monaros and Commodores of the past have not only been four-wheeled vehicles but almost members of the family.

But, despite Holden’s status as a national icon, we should not be blinded by sentimentality when it comes to making decisions about the company’s future. Especially not if it involves the taxpayer handing out huge sums of money to keep Holden alive.

Holden’s American parent, General Motors, has been troubled for many years, long before the current financial crisis began.

In the US, it produced cars that people no longer wanted to buy. The company also missed out on the trend for smarter and smaller cars.

To make matters worse, General Motors’ costs were much higher than those of its competitors.

In many ways, Holden was a true daughter of her American parent. While we may feel nostalgic about Holden’s cars, the truth is that fewer of us actually bought them.

Holden’s market share has collapsed from more than 50 per cent in the 1950s to just 12.9 per cent last year.

But things are likely to get worse because of the economic crisis. When even oil-rich Middle Eastern countries stop importing fuel-thirsty Holdens, you know the company has a problem.

GM recently handed a restructuring plan to the US Treasury but the 117-page document contained just one paragraph on the future of Holden.

It mentioned “changes in market preferences”, which in plain English means that Australians don’t buy Holden’s cars any more.

It promised “to bring to market a new, more fuel-efficient vehicle”, only admitting that such cars have never been built by Holden.

And it made it very clear that without permanent grants from the Australian Government, the company could not restructure. You could be forgiven for calling this blackmail.

But where was the public outcry in Australia? Did anyone stand up and say “Hang on: Why should we pay for your bad business decisions?”

In fact, in Sweden that’s precisely what happened.

Swedish car Saab is equally in trouble. But Swedish Industry Minister Maud Olofsson remained bold: “Voters elected me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories.” Quite.

It is time our politicians stand up to the highway robbers of General Motors and protect Australian taxpayers.

And it would be far better to help Holden’s workers directly rather than handing out money to an American company on the brink of bankruptcy.