Holden halves production at Elizabeth

[omicron]

April 2009
Words - Ken Gratton
Manufacturing at Holden's South Australian plant is moving from two shifts to one, but jobs are safe

Holden announced this morning that the company will reduce its manufacturing capacity from 620 cars a day to just 310. This slowdown results from the company cutting out a manufacturing shift, leaving just one shift building the VE Commodore and derivatives.

The latest initiative to ensure inventory levels remain consistent with demand follows a cut-back in production earlier this year (more here).

In 2007, Holden posted a loss of $144.6 million and at least $20 million of that loss comprised redundancies from the third shift Holden was running at Elizabeth before the upgrade of the plant to a more efficient line for the introduction of the VE Commodore.

This time around, the company is not seeking redundancies for efficiencies and profit. Holden is retaining staff, but reducing plant capacity to keep wholesale stock (which constitutes a growing liability) at a manageable level.

Management at Holden are negotiating with unions to secure jobs without take-home pay suffering too greatly. One idea floated by the company in its press release today offers workers one week on, the alternate week off, with 50 per cent pay for the week off. Whatever is decided, it will mean no job losses for the workers at the plant.

"We have no job losses here," Holden's Chairman and MD, Mark Reuss, announced at a press conference today, "and we're trying to really stabilise production here for the supply base, but also -- more importantly -- the people in the supply base and our employees here in Elizabeth."

"I'm sorry that we've had some uncertainty with our employees and our suppliers around what we're doing on our production basis," says Reuss.

Reuss stressed that Elizabeth is still building Australia's most popular car ("We still have the best-selling car here -- by a margin") and he mentioned too that the Pontiac G8, the American market sedan based on the Commodore and built at Elizabeth, enjoyed its best month of sales in March -- "in a very, very tough market", as Reuss explained. In fact, sales of the G8 last month were on target with the forecast for the car prior to the global financial crisis.

The Holden boss placed the blame for the production cut-back squarely on the global financial crisis, rather than the long-term decline in large car sales per se. He also balanced that against the plant workers' relief that their jobs were safe -- despite parent company GM facing the prospect of bankruptcy.

"This is all about saving jobs," he said, "and this economy is probably, in general, better than other ones around the globe, however we've seen some of the global impact begin to take hold here in Australia as well...

"The last thing we want, as we begin the transition to the new car [the small car to be built here on the Delta II platform]... we're trying to bridge the transition of the global financial crisis demand, with the beginning of a new car here. So this workforce is a really good workforce, highly talented and highly skilled -- the last thing we want to do is lose that skillset because of some short-term decision we decided to make. We're looking at how we get the workforce ready to produce this car in the next 12 to 18 months."

But if the news isn't all bad for the production line workforce, there are still some positions at Holden that may be at risk.

"We're looking at creating a new Holden here," says Reuss, "and I said that publicly. We're looking at our business with the new small car and beyond for the next five to 10 years, so there are people that have been engineers and designers at Holden for a long time. We're going to continue with a high level of expertise in our product-development capability here at Holden, so I can't predict the future on any of that, but right now we're addressing our capacity and versus supply and demand.

"We're reinventing the company, so we're not through with what that means for the entire workforce..."

At the retail end of the supply side, Reuss predicts that the new production program will even out some delays in delivery.

"I'm not sure that there's any product-marketing impact [from] this at all," he told the Carsales Network.

"I will say this, we have had -- and it's not intuitive -- but we have had problems supplying dealerships with the most popular variants of the VE Commodore, like Sportwagon, under the schedule that we ran because we were 'on and off'.

"We've had complaints from the dealer body as well with that approach, which was a temporary approach. We want to be able to supply in a much more 'continual' way cars that our customers are really demanding, so this will help that a great deal."

Chances are the cars that can be supplied faster to private buyers will yield relatively better per-unit profit, not least of all for being delivered immediately and typically in a higher level of specification. Reuss doesn't expect the production change will affect fleet buyers "in any way".

Holden's reduction in production capacity has been mirrored by Ford Australia at that company's Broadmeadows plant (more here), but Ford has had to resort to voluntary redundancies to achieve the same ends. The single-shift migration at Elizabeth will take effect from May 4.

http://www.carpoint.com.au/news/2009/large-passenger/holden/commodore/holden-halves-production-at-elizabeth-14708

One shift and 310 cars a day....back in the VT-VY Commodore days (1997-2004), the plant was operating three shifts over 24 hours producing more than 900 cars a day.

[S204STi]

Glad to hear they aren't working Elizabeth so hard.  Poor old girl was getting a bit stretched out.

[omicron]

[the Teuton]

It sounds like Australia is playing a much smarter plan than the American parts of GM.