“SIT’S A BEAUTY! “smiled the Prime Minister at the time, Ben Chifley, as the first entirely built car in Australia came off the assembly line in 1948. The Holden FX, as it was called, was welcomed as the totem of a young nation joining the ranks of industrialized economies. Even better, he had an Australian pedigree, even though General Motors owned the factory. Holden was a saddle manufacturing company in Adelaide that started making bodywork to go with imported engines and chassis in 1919. GM bought it in 1931, but kept the brand. For a long time, its advertising slogan was “People Trust Holden”. So when GM announced this week that it was eliminating the brand, outrage and nostalgia abounded.
Scott Morrison, Prime Minister, berated GM for allowing Holden to “waste away” even if “Australian taxpayers have invested millions in this multinational”. Unions blamed his government for cutting subsidies that could have kept Holden from spoiling. The government is so devoutly free-market that it “will not lift a finger” to protect Australian jobs, grumbled Sally McManus of the Australian Council of Trade Unions.
GM says it cannot justify new investments in a long unprofitable business. Although Holden manufactured almost half of all new cars sold in Australia in the late 1950s, locals nowadays prefer sharper or more elegant contours. SUVFor the big sedans for which it is known, even if, as an advertising jingle says, the essence of Australia is “football, meat pies, kangaroos and Holden cars”. (The jingle was an adaptation of an advertisement for Chevrolet being an all-American brand.) Last year, Holden whipped only 43,000 vehicles, a third of its sales ten years ago.
Holden had already closed its last plant in Australia in 2017; its vehicles are now imported, from Thailand among others. Ford and Toyota closed Australian assembly lines at the same time, leaving Australia without automakers. To be competitive, analysts said, Australian factories had to produce 200,000 to 300,000 cars a year. On the eve of the factory shutdown, Holden only produced 80,000. It didn’t help that “the closest major market is 10,000 km away,” notes John Daley of the Grattan Institute, a group of reflection. Moreover, KPMG, an accounting and consulting firm, calculated that in 2012, Australia was the second most expensive place to manufacture automotive components, after Japan. High wage costs have inevitably played a role.
The industry has only survived for so long because successive governments have supplied it with subsidies. GM roughed up about A $ 2 billion ($ 1.3 billion) before donations were cut by Mr. Morrison’s party in 2013. Rightly so, according to a report released the following year by the Productivity Commission . He found no evidence that they had helped the economy as a whole, concluding that “the costs of such assistance outweigh the benefits”.
The share of manufacturing in the Australian economy peaked in the 1960s, at the height of Holden. It now represents just under 6% of GDP, well below the level of most other rich countries. But that hasn’t stopped the Australian economy – and local wages – from growing faster than their peers. ■
This article appeared in the Asia section of the print edition under the title “Holden folds”