Opinion & Commentary
Stop this highway robbery
The future of Australia’s iconic carmaker Holden is linked to its American parent General Motors. When Kevin Rudd goes to Washington later this month, he should make a detour to Detroit with a simple message: ‘We won’t be blackmailed.’
For six decades cars made by Holden have dominated Australia’s roads. To generations of Australians, the Barinas, Monaros and Commodores of the past have not only been 4-wheeled vehicles but almost members of the family.
But despite Holden’s status as a national icon, we should not by blinded by sentimentality when it comes to making decisions about the company’s future. Especially not if it involves the taxpayer handing out huge sums of money to keep Holden alive.
Holden’s American parent General Motors has been troubled for many years, long before the current financial crisis began. In the United States, they produced cars that people no longer wanted to buy. They also missed out on the trend for smarter and smaller cars. To make matters worse, General Motors’ costs were much higher than those of their competitors.
In many ways, Holden was a true daughter of her American parent. While we may feel nostalgic about Holden’s cars, the truth is that fewer of us actually bought them. Holden’s market share has collapsed from more than 50 percent in the 1950s to just 12.9 percent last year.
But things are likely to get worse because of the global economic crisis. When even oil-rich Middle Eastern countries stop importing fuel-thirsty Holdens you know that the company has a problem.
General Motors has handed in a restructuring plan to the US Treasury but the 117-page document contained just one single paragraph on the future of Holden. It mentioned ‘changes in market preferences,’ which in plain English means that Australians don’t buy Holden’s cars anymore. It promised ‘to bring to market a new, more fuel-efficient vehicle,’ only admitting that such cars have never been built by Holden. And it made it very clear that without permanent grants from the Australian government the company could not restructure. You could be forgiven to call this blackmail.
But where was the public outcry in Australia? Did anyone stand up and say ‘Hang on: Why should we pay for your bad business decisions?’
In fact, that’s precisely what happened, in Sweden. The Swedish Holden is called Saab, and to the Swedes it is just as iconic as Holden is in Australia – and equally in trouble. But Swedish industry minister Maud Olofsson remained bold: ‘Voters elected me because they wanted nursery schools, police and nurses, and not to buy loss-making car factories.’ Quite.
It is time our own politicians stand up to the highway robbers of General Motors and protect Australian taxpayers. And it would be far better to help Holden’s workers directly rather than handing out money to an American company on the brink of bankruptcy.
Send them a message to Detroit that we won’t be blackmailed. And if you don’t know how to phrase it ask the Swedes.
Dr Oliver Marc Hartwich is a Research Fellow at The Centre for Independent Studies.
