Holden has more bad news for car industry

2 Nov 2012, 6:26 pm   -   Source: AAP

Car maker Holden says it will cut 170 jobs at its Adelaide assembly operations in more bad news for Australia's ailing car industry.

Australia's ailing auto industry has suffered another blow with car maker Holden axing 170 jobs just a day after a key component manufacturer closed its doors and stood down about 400 workers.

Holden said falling demand for its locally built vehicles, due to the high Australian dollar, had forced its hand.

The company said the job losses at its Adelaide assembly plant were necessary to ensure its manufacturing operations in Australia remained viable over the next decade.

"Situations like this are always difficult and this decision has not been made lightly," the company said in a statement on Friday.

"Every effort has been taken to avoid this decision, including the use of market response days.

"However, current new car demand necessitates a reduction to permanent employees."

Holden said it expected to achieve the job cuts through voluntary redundancies by the end of this year.

The bad news came after component supplier Autodom shut its doors on Thursday and stood down workers at plants in Victoria and South Australia.

The company supplies all three local car makers and blamed the shutdown on the failure of restructuring negotiations with its major customers.

Talks were under way to have the company restart production as soon as possible, with Holden and Ford at risk of running out of parts by the middle of next week.

The South Australian government said it believed there would be some good news soon and maintained the component maker was a profitable business and vital to Australia's car manufacturers.

"They need to get up and running very, very quickly and I think you'll see a solution very, very soon," Industry Minister Tom Koutsantonis said.

Mr Koutsantonis said the decision taken by Holden, while disappointing, was only a reaction to the downturn in vehicle sales.

"They will still be manufacturing motor vehicles here. It's not as if they are shutting up shop," he said.

"The important message here is that Holden is alive."

Federal Industry Minister Greg Combet said the commonwealth was also disappointed with Holden's decision, but it reflected the pressures automotive manufacturing was facing from the high dollar and intense competition.

"Employment levels at Holden's operations will depend on a raft of factors over coming years, not least the value of the Australian dollar and the company's ability to pursue export opportunities," Mr Combet said.

He said Holden workers made redundant would be helped to find new positions and the government also pledged similar support for Autodom workers should the company fold completely.

Despite the job cuts, Holden said it remained committed to developing two new cars in Australia to ensure the future of its local manufacturing operations to at least 2022.

The company received a $275 million federal and state government assistance package earlier this year to secure the two-car program.

Mr Koutsantonis said the decision to cut jobs would not impact on that investment package.

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