Treasurer Joe Hockey says the factors that will end Holden car production in 2017 are faced by many businesses in Australia.
Federal Treasurer Joe Hockey has warned that the challenges that caused GM Holden to end Australian motor vehicle production by 2017 are the same faced by many manufacturers and businesses.
The iconic car maker announced its decision on Wednesday that will see some 2900 positions cut in South Australia and Victoria over the next four years.
GM boss Dan Akerson, Holden’s parent company, confirmed its production withdrawal after weeks of speculation and the transition of Holden to a sales company.
“The decision to end manufacturing in Australia reflects the perfect storm of negative influences the industry faces in the country,” Mr Akerson said in a statement.
These include the sustained strength of the Australian dollar, high cost of production, small domestic market and “arguably the most competitive and fragmented auto market in the world”.
Mr Hockey agreed it is a challenging environment.
“(These) are the same challenges that many other manufacturers and businesses in Australia are now facing,” he told parliament.
Australian Industry Group chief executive Innes Willox said Holden’s decision will directly affect about 3000 businesses that are linked into the automotive supply chain.
They contributed about $5.5 billion to the economy in 2011/12, including $1.9 billion worth of exported cars and $1.6 billion in exported auto components.
“These automotive businesses employ 45,000 people nationwide, equivalent to around five per cent of the total manufacturing workforce,” he said in a statement.
Holden’s decision came as new data showed a drop in consumer confidence to its lowest level since July, falling 4.8 per cent in December.
Shadow treasurer Chris Bowen said the result underlines the emptiness of Mr Hockey’s pre- and post-election rhetoric about confidence being “magically boosted” by the election of a coalition government.
“Will the treasurer be taking credit for this fall in confidence, like he did when there was a bounce a month ago?” Mr Bowen said in a statement.
Westpac chief economist Bill Evans said confidence around the economic outlook has faltered, and respondents thought news surrounding employment had worsened over the past three months.
“It is likely that news on job losses in high profile companies such as Qantas and Holden may have unnerved respondents,” Mr Evans said.
Qantas announced last week that the troubled airline will shed 1000 jobs over the next 12 months.
November labour force data are released on Thursday.
Economists expect a 10,000 increase in the number of people employed than a month earlier, but not by enough to prevent the jobless rate rising to 5.8 per cent from 5.7 per cent.
Meanwhile, retailers remain confident of a stronger Christmas shopping period than the past two years, despite this drop in confidence.
Australian National Retailers’ Association chief executive Margy Osmond said October retail figures released earlier this month provided the first glimpse of Christmas trading.
“It looks likely the sector will finish in better shape than last year,” she said in a statement.