Holden's 'near-death' fright

[SpoolMan]

Holden's 'near-death' fright Eric Johnston, Clancy Yeates
September 2, 2011 from The Age..
.
Holden its own: The car maker's prospects looked grim at the height of the financial crisis.

HOLDEN Australia's manufacturing business almost collapsed after its US parent cut it adrift at the height of the financial crisis, according to a leaked diplomatic cable.

Cables released by WikiLeaks show that in 2009 Holden Australia's then chairman and managing director, Mark Reuss, reportedly described the situation as ''very dark'' and said the car maker would ''scrape by'' until local production of its mid-sized Cruze model began.

He reportedly made the comments during a meeting with officials at the US consul in Melbourne in June 2009. Holden's parent, General Motors, had filed for bankruptcy two weeks before the meeting.

Advertisement: Story continues below The cable said the Australian government had stepped in to help Holden raise money through banks, including ANZ, noting that Australian banks were wary about lending to Holden without backing from its parent.

''Holden is scraping by in the competitive Australian automotive market, even though financing from its parent company has all but dried up,'' the cable said.

''While Holden will remain a part of the new GM, the Australian subsidiary was 'fenced off' from the parent in an attempt to prevent US tax dollars from flowing out of the United States,'' it said.

This forced Holden to dramatically scale back production at its South Australian plant and to reportedly seek short-term loans from GM finance facilities in Mexico and the European Union, among others, the cable said.

It said Mr Reuss ''appeared frustrated that GM had effectively left Holden in the financial wilderness'' once it accepted US Treasury money. Mr Reuss has since become president of General Motors' North American arm.

A spokeswoman for Holden said the cable was an interpretation of a conversation and was inaccurate in parts.

''The material appears to be notes taken by someone making observations of a conversation - it's not a factual document - and it includes a number of inaccuracies about potential export volumes and our financial arrangements,'' said Holden spokeswoman Emily Perry, who declined to comment further.

It is believed Holden did not seek financing from ANZ.

The cable also describes the car maker's plan to shift to production of mid-sized cars, with $149 million in financial support from the Australian government's Green Car Innovation Fund.

The cable noted that Mr Reuss believed a good relationship with the federal government ''will be critical'' should Holden need to ask for further assistance.

The undermining of the economics of Holden's Australian business model was mainly due to the collapse of its exports. Holden eventually persuaded the parent company to give financial support to its restructure, despite the parent's problems. Fundamental to its argument was that Holden played a key part in GM's global design and production network.

After racking up more than five years of losses, Holden's latest financial accounts show it delivered an after-tax profit of $112 million in 2009-10, rebounding from a $211 million loss in 2008-09.

In recent years, it has closed its ageing four-cylinder engine plant, cut more than 2000 jobs and shifted its focus to domestic sales. A spokeswoman for Industry Minister Kim Carr declined to comment.


Read more: http://www.theage.com.au/business/ho...#ixzz1Wl9HEJD5

[Tonz]

Try and budget how much they have received from Federal & state govmints

[Paxton]

Originally Posted by Tonz

Try and budget how much they have received from Federal & state govmints

Well, they got $200,000,000 when the Commonwealth Bank walked away from them last year. Chairman Rudd organised that one personally.

[vztrt]

http://theage.drive.com.au/motor-new...901-1jo91.html

Holden turned to Canberra after GM bankruptcy
Eric Johnston, Clancy Yeates
September 2, 2011

HOLDEN required the assistance of the federal government to stay afloat after it was cut adrift by its US parent at the height of the financial crisis, according to a leaked diplomatic cable.

Holden's chairman and managing director in 2009, Mark Reuss, reportedly described the period as ''very dark'' and said the car maker would ''scrape by'' until local production began of its Cruze model, cables released by WikiLeaks show.

The comments were reportedly made during a meeting between Mr Reuss and officials at the US consulate in Melbourne in June 2009, two weeks after Holden's parent, General Motors, had filed for bankruptcy.
Advertisement: Story continues below

With the company's local manufacturing business close to collapse, the Australian government stepped in to assist Holden to raise money through local banks, including ANZ, which was reportedly cautious about lending to it.

''Holden is scraping by in the competitive Australian automotive market even though financing from its parent company has all but dried up,'' the cable said. ''While Holden will remain a part of the new GM, the Australian subsidiary was 'fenced off' from the parent in an attempt to prevent US tax dollars from flowing out of the United States.''

Holden was forced to dramatically scale back production at its South Australian plant and was reported to have sought short-term loans from GM finance facilities in Mexico and the European Union.

The cable also said that Mr Reuss ''appeared frustrated that GM had effectively left Holden in the financial wilderness once it accepted US Treasury money''.

Mr Reuss has since taken on the role of president of General Motors North American arm.

A spokeswoman for Holden, Emily Perry, said the cable was an interpretation of a conversation and contained a number of inaccuracies.

''The material appears to be notes taken by someone making observations of a conversation - it's not a factual document - and it includes a number of inaccuracies about potential export volumes and our financial arrangements,'' she said.

After more than five years of losses, Holden's latest financial accounts show it delivered an after-tax profit of $112 million in 2009-10. The profit rebound followed a $211 million loss in 2008-09. It is understood Holden did not secure a loan from ANZ.

In recent years Holden has closed its ageing four-cylinder engine plant, cut more than 2000 jobs and shifted its focus to domestic sales.

[vztrt]

http://www.caradvice.com.au/135850/h...-gm-wikileaks/

Holden ‘left in financial wilderness’ by GM: Wikileaks
By Tim Beissmann | September 2nd, 2011

Holden’s manufacturing operations in Australia were placed under serious threat during the global financial crisis as parent company General Motors sought to protect its US business, according to documents released by Wikileaks.

Written by an unknown source, the leaked documents date back to June 2009, two weeks after GM filled for bankruptcy in the US. They are believed to have surfaced from a meeting involving then-Holden Chairman and Managing Director, Mark Reuss, at the US Consul in Melbourne.

The documents claim that Mr Reuss was “frustrated that GM had effectively left Holden in the financial wilderness”, and that he believed the local operations would struggle before production of the small Holden Cruze commenced.

“Holden is scraping by in the competitive Australian automotive market, even though financing from its parent company has all but dried up,” the Wikileaks documents reveal.

“While Holden will remain a part of the new GM, the Australian subsidiary was ‘fenced off’ from the parent in an attempt to prevent US tax dollars from flowing out of the United States.”

The documents also claim Holden received help from the Federal Government as it attempted to lend money from Australian banks.

In a short statement, Holden’s Emily Perry told CarAdvice the documents contained a lot of inaccurate information.

“The material appears to notes taken by someone making observations of a conversation – it’s certainly not a statement of fact and includes a number of inaccuracies about potential export volume and our financial arrangements, Ms Perry said.

“Correct information about these programs and other points is publicly available in our financial results and media statements over the last two years.”

According to the documents, Holden’s claim that it played a significant role in GM’s international design team got it over the line to secure continued funding from the parent company.

[svo supporter]

Nothing new. It was well publicised when the global financial crisis was round, that not only this car manufacturer was struggling, but others as well.

It was also documented that Holden was scaling back production, due to the sales slump, and they were also waiting for the Holden cruze to come into production.

They even offered reduncy packages to employees to help keep their head above water. The employees that stayed, were put on reduced pays, for one week (which they had off) and then when they had their weeks on, they got their full entitlements.


Once the Cruze came on line and sales picked up, Holden then went into full scale production, and also employed more people.

So in reality this news is old news

[stevz]

Originally Posted by Paxton

Well, they got $200,000,000 when the Commonwealth Bank walked away from them last year. Chairman Rudd organised that one personally.

Here we go again......

It was NOT a $200m handout as you are implying.

It was a line of credit which was NOT drawn upon.

http://www.themotorreport.com.au/392...xport-programs

“The Government has approved the request from GMH under the EFIC Act. The secured line of credit of up to $200 million has been agreed but not drawn and is subject to commercial terms and conditions,” it said.

The EFIC facility is best described as an overdraft targeted to export activity that Holden can tap into, in whole or in part (it is not a ‘grant’).

And, although it has not been drawn, the line of credit will no doubt assist Holden as it looks to secure new export opportunities for the Commodore, Statesman and its V6 engine export programs.

[Dr Smith]

Originally Posted by stevz

Here we go again......

It was NOT a $200m handout as you are implying.

It was a line of credit which was NOT drawn upon.

http://www.themotorreport.com.au/392...xport-programs

That article you linked to is 2 years old and correct in that no draw down had occured by August 2009...do you know if nothing was used since?

[stevz]

Originally Posted by Dr Smith

That article you linked to is 2 years old and correct in that no draw down had occured by August 2009...do you know if nothing was used since?

Well I don't work in Holden's finance department so I don't have the answer to that, but even if it has been drawn on since then, it is a line of credit which needs to be repaid.... not a free handout of taxpayers money as some people make it out to be.

[Joe5619]

how many times does this story have to link??? IT IS OLD NEWS!! why any website is putting it out there a new news is beyond me..

[Paxton]

Originally Posted by stevz

Here we go again......

It was NOT a $200m handout as you are implying.

It was a line of credit which was NOT drawn upon.

http://www.themotorreport.com.au/392...xport-programs

And if the Government didn't 'loan' them the money, where else from? The Commonwealth Bank didn't offer them the same 'line of credit'.

Holden needed the 'Line of Credlt', and couldn't get it from anywhere but the taxpayer. Smells like a hand out, looks like a hand out, must be a hand out.

[SpoolMan]

Originally Posted by Joe5619

IT IS OLD NEWS!! why any website is putting it out there a new news is beyond me..

Published today in a Melbourne news paper, the editor must have thought it to be news worthy..

[jpd80]

Originally Posted by Paxton

Well, they got $200,000,000 when the Commonwealth Bank walked away from them last year. Chairman Rudd organised that one personally.

As part of GM sustainability plan, GM NA told US Treasury representatives
that unless Holden was given Cruze production, Elizabeth was not viable.

[svo supporter]

Originally Posted by Paxton

And if the Government didn't 'loan' them the money, where else from? The Commonwealth Bank didn't offer them the same 'line of credit'.

Holden needed the 'Line of Credlt', and couldn't get it from anywhere but the taxpayer. Smells like a hand out, looks like a hand out, must be a hand out.

So can you say with confidence that it was a hand out and not a loan? Loans get paid back. Hand outs don't. So unless you're working for the Gov't treasury dept or Holdens financial dept, I seriously doubt you can answer the question properly. You can only speculate, like the rest of us

The gov't supplying Holden with this money was a savour in the long run. The workers and suppliers are still in a job (well paying too), which means the gov't is getting good money (from there taxable income), rather than getting less money because the workers wouldn't be earning as much, or be reliant on the dole for a period of time. (Reading between the lines, us non Holden workers would be supporting them even more).

So instead of having a sook about us tax payers loaning or giving this company a few mill, think about the long term benefit, which also includes local businesses that operate round that area and benefit from the employees. (Again, the gov't getting more tax dollars from workers and businesses in the area)

[Paxton]

Originally Posted by jpd80

As part of GM sustainability plan, GM NA told US Treasury representatives
that unless Holden was given Cruze production, Elizabeth was not viable.

That was before the Dollar shot straight through Parity, and rested at about 1.03/US. I'd be a little worried about the Viability of Cruze assembly if I were running Holden.

As for the Loan/Line of Credit/Handout - if they didn't need it, why wouldn't a Bank offer it. If the Commonwealth couldn't come up with the funds, surely another Financial institution could come up with the money. I'm thinking that straits were more dire than we would realise, and that the Banks would have had a hard time guaranteeing the money, hence the phone call to Chairman Rudd/Assassin Swan.

[jpd80]

Originally Posted by Paxton

That was before the Dollar shot straight through Parity, and rested at about 1.03/US. I'd be a little worried about the Viability of Cruze assembly if I were running Holden.
.

The big difference is that the majority of Cruzes are going to retail sales and are mid/high series,
Ford's business model for Focus was based on 65-70% being base model which has been
proven false by the very market Ford assessed. LV Focus sales have been mostly Zetec and Ghia sales.

Also, importing Cruze parts becomes around 30% cheaper with Aussie dollar going from 70 cents to $1.03,
that makes bluddy good business sense....Holden fluked that one

[Lukeyson]

Originally Posted by Dr Smith

do you know if nothing was used since?

LOL JK i am stirring people.

[Gobes32]

/\ Ha ha, made me laugh........

[Joe5619]

Originally Posted by jpd80

The big difference is that the majority of Cruzes are going to retail sales and are mid/high series,

Majority retial sales.. well yes, but not by much.. There was that article a few weeks back about Cruze & i30 chasing fleet sales... From member is was getting close to 50/50 spilt for Fleet/retail.. So those good margins are getting lost to fleet sales..

[Falc'man]

What were they hiding to keep this loan such a secret?

Originally Posted by SpoolMan

Published today in a Melbourne news paper, the editor must have thought it to be news worthy..

I think it was worthy only because it was just wiki leaked - all the info is old.

[stevz]

Originally Posted by svo supporter

So can you say with confidence that it was a hand out and not a loan? Loans get paid back. Hand outs don't. So unless you're working for the Gov't treasury dept or Holdens financial dept, I seriously doubt you can answer the question properly. You can only speculate, like the rest of us

The gov't supplying Holden with this money was a savour in the long run. The workers and suppliers are still in a job (well paying too), which means the gov't is getting good money (from there taxable income), rather than getting less money because the workers wouldn't be earning as much, or be reliant on the dole for a period of time. (Reading between the lines, us non Holden workers would be supporting them even more).

So instead of having a sook about us tax payers loaning or giving this company a few mill, think about the long term benefit, which also includes local businesses that operate round that area and benefit from the employees. (Again, the gov't getting more tax dollars from workers and businesses in the area)

Perfectly said.

[Dr Smith]

Originally Posted by Falc'man

What were they hiding to keep this loan such a secret?

I think it was worthy only because it was just wiki leaked - all the info is old.

Bad press, negative public perception...just look at the speculation Ford Oz receives on it's long term viability as a manufacturer here and then imagine Holden's horror if it got out they in fact were in far worse a situation and would only remain here after goverment support. Then again which goverment, whatever colour, was going to go down in history as allowing Holden to disappear.

[bobthebilda]

The whole thing may be old news, but it does remind us of the fact that what ever Holden releases to the public, two years down the track the truth comes out and versions are slightly different. At the Height of the GFC, we had Reuss and Kim Carr saying Holden was viable and people should be buying cars as per normal. The reality was that those who bought a car, were paying a premium for a warranty that may not have existed two months down the track.

Holden is no more viable now, than they were during the GFC. Pre GFC, the line had a speed of 320 cars per shift (640 on two shifts). On an average 21 work month, they arent even coming close to averaging 320 commodores (or derivatives) each day. They have filled the void with a car that sells for 1/2 the wholesale price that a new commodore does. They dont achieve some sort of cost savings by importing the majority of the cruze, with a high australian dollar. They compete against other car makers, that have also lowered car prices over the years, due to the advantages acheived by a high australian dollar. The minute cruze went local, the retail price jumped, whilst its competititors prices were falling.

Since the CFC, Holden have apparantly spent approx. $350 million of their own money on the cruze line (which is absolite crap), for absolutely no benefit to them. As a stand alone company, they are in even worse financial position in regards to their reliance on the sales of locally made products (cruze and commodore make up around 70% of their sales), than they were at any time during the GFC. It just takes two years for this information to come out.

GM US are trying to renege on warranties for cars made under the "old" GM, why would anyone think that when the australian operations have to be cut loose due to "real" continuing losses, that they will be left with a 2 month old car with no warranty.

Toyota workers in oz walked off the job yesterday (more planned in coming weeks) due to the fact that they have only been offered a 1% pay rise (last raise was early 2010). If toyotas local operations are feeeling the pinch, I cant see any rosiness in Holdens operations.

[burnz]

bob; maybe wait until holden post profit/losses for the financial year would be better.

as for not honuring warranty! where your link..
according to GMI members they have had no problems with old GM warranty.

[svo supporter]

Originally Posted by bobthebilda

Holden is no more viable now, than they were during the GFC. Pre GFC, the line had a speed of 320 cars per shift (640 on two shifts). On an average 21 work month, they arent even coming close to averaging 320 commodores (or derivatives) each day. If thery weren't viable, why the hell did they employ more people? Just for the fun of it? Doubt it. It is also well known, production was down scaled during the GFC. Since the GFC, they have remped up production. They aren't going full production speed, mainly due to making sure they haven't got stock sitting in their yard rusting away.

. They dont achieve some sort of cost savings by importing the majority of the cruze, with a high australian dollar. They compete against other car makers, that have also lowered car prices over the years, due to the advantages acheived by a high australian dollar. The minute cruze went local, the retail price jumped, whilst its competititors prices were falling.
But they're still marketting it as an Aussie car and promoting the "buy Aussie made" theme. Makes plenty of sense to keep local people in a job, than kick them off onto the dole, doesn't it?

Since the CFC, Holden have apparantly spent approx. $350 million of their own money on the cruze line (which is absolite crap), for absolutely no benefit to them. As a stand alone company, they are in even worse financial position in regards to their reliance on the sales of locally made products (cruze and commodore make up around 70% of their sales), than they were at any time during the GFC. It just takes two years for this information to come out.
So how much money did they actually spend on the Cruze line? As for being in a worst financial position. Crap. Holden have employed another 160 or so people, since the cruze was put in production. Now for a company you're claiming is going down the girgular, why the hell employ more people? Just for giggles? Don't think so


Toyota workers in oz walked off the job yesterday (more planned in coming weeks) due to the fact that they have only been offered a 1% pay rise (last raise was early 2010). If toyotas local operations are feeeling the pinch, I cant see any rosiness in Holdens operations.

It's common knowledge (well in your case not so common) that the car manufacturing sector is always chasing more money. It's got me buggered why. Their base pay rate is about $700 per week and the work isn't that bloody hard. The rate increases after 3 months. Not sure how much by, but it does. If you want exact figures, just ask and I'll find out.

[bobthebilda]

Originally Posted by burnz

bob; maybe wait until holden post profit/losses for the financial year would be better.

as for not honuring warranty! where your link..
according to GMI members they have had no problems with old GM warranty.

Come on Burnz, it aint that hard. Just google GM warranty. However if it is that hard, heres one of more than hundreds of stories on the current issues

http://www.chicagotribune.com/busine...0,870265.story

[burnz]

Originally Posted by bobthebilda

Come on Burnz, it aint that hard. Just google GM warranty. However if it is that hard, heres one of more than hundreds of stories on the current issues

http://www.chicagotribune.com/busine...0,870265.story

so someone has a problem with tie rod ends and it's game on??
the rest are ambulance chasers...

[Gobes32]

Originally Posted by svo supporter

It's common knowledge (well in your case not so common) that the car manufacturing sector is always chasing more money. It's got me buggered why. Their base pay rate is about $700 per week and the work isn't that bloody hard. The rate increases after 3 months. Not sure how much by, but it does. If you want exact figures, just ask and I'll find out.

How much should they be payed? Bearing in mind some people merely polish doors and yet some are qualified riggers. That's the beauty of a highly unionized workplace, every worker is worth the same.

[svo supporter]

Originally Posted by Gobes32

How much should they be payed? Bearing in mind some people merely polish doors and yet some are qualified riggers. That's the beauty of a highly unionized workplace, every worker is worth the same.

Good question. I have no idea what they should be paid, but they're always after more. I was mearly puting up what the base rate was and a reasoning behind why Toyota is striking.

IMA, I hate unions as well. My experience with them is, if you don't get your own way, strike, which means you lose money constantly. But everyone has their own opinions of them, which we'll leave out of this thread.

[SpoolMan]

We started talking about Holdens plight back in 2009, now we are about Unions and pay rates...

Closed

ps: the people who work on the shop floor are the union.