Anyone who lived in Victoria in the late 1980’s would remember the ad in the video below, from the State Bank of Victoria. The line “It’s your money, Ralph” became as common in regular conversation back then as “Not Happy, Jan!” became in offices around the country five years ago.
The news broke last Friday (at 5pm, of course) that Opel would be pulling its cars out of Australia after a spectacularly short 12 months where they sold just 1500-or-so cars to actual customers.
It’s hard to comprehend just how massive a stuff-up this is or how the supposedly smart people running a global corporation could make it, but it’s HUGE and they’ve done it. And believe it or not, this is just the second part in an ongoing saga called Will-GM-Exist-In-Australia-Or-Not?
Right now, there’s plenty of money on both sides of the wager over whether or not GM Holden will continue in any meaningful way in Australia. There’s a very real fear that Holden will cease manufacturing in the near term and become an imports-only business selling cars designed somewhere and manufactured in cheap labour markets in Asia.
Successive Australian governments have already poured millions into Holden and the other two local manufacturers, Ford and Toyota. With Ford pulling the pin on local manufacturing in 2016 and Holden making noises about doing the same, the appetite for propping up the local industry with taxpayer funds has withered considerably. There’s a feeling amongst the people that these global companies are just sucking money out of the locals and it seems to be happening with monotonous regularity.
This latest episode with Opel only poses more questions as to which inmates are running the asylum at General Motors. Why would the Australian taxpayer want to put another cent into a company when the global parent could get a market investment like Opel so completely and utterly wrong?
It’s your money, Aussies.
Australia has put billions of dollars into the car industry, more than $2billion going to Holden alone in the last 12 years. There’s another $2.3billion sitting in the Automotive Transformation scheme to be allocated over the next few years and with Ford pulling out of manufacturing in Australia, Holden is eyeing off a larger chunk of that pot, too.
Here’s a neat little table, courtesy of news.com.au
Government funding over the past 12 years (2001 to 2012):
Holden: $2.17 billion
Toyota: $1.2 billion
Ford: $1.1 billion
Annual average over the past 12 years (2001 to 2012):
Holden: $180 million
Toyota: $95.8 million
Ford: $87.8 million
Cars made locally in 2012:
Average taxpayer dollars per car built in 2012:
It’s your money, Dealers
There were 20 Opel dealers in Australia last Friday and they learned about the brand’s fate the same day we all did. GoAuto reports that they’d each spent between $500,000 and $3million getting Opel into their showrooms with some of them building brand new facilities for the brand.
Dealers will get some of their investment back directly from Opel, which will reimburse for some vehicles, marketing materials, etc. But what about that extra space that some dealers have just built or are still in the process of building?
What about the opportunity cost of two years wasted on just a year’s sales when that money could have been spent by dealers on a brand that was here for the long haul? Dealers who took Opel on had to sign up to a 5-year commitment. That’s why they put so much money into establishing their Opel presence on site. It’s more than reasonable for them to expect that Opel would honour their end of the deal.
Those showrooms, by the way, were built at Opel’s insistence. Either dealers allocated a significant/new building for Opel sales, or they missed the franchise. Nice.
It’s your money, Employees
First of all, let’s spare a brief thought for the Opel employees directly employed by Opel and working in Saab’s old offices here in Australia. There’s not many of them, but spare them a thought anyway because most will be out of a job now.
Same for the dealership staff employed to sell Opels that are no longer going to be sold. Some of them probably left decent paying jobs elsewhere to take up the challenge of building a new brand, one with a solid history within a global corporate giant. Oops.
Taking a wider view, however, and considering the rather large amounts of government assistance that Holden are both in receipt of and anticipating in the future, spare a thought for Holden’s vehicle assembly staff in South Australia.
The company wants a whole lot of government money in one hand. It’s putting its employees in the other hand – and squeezing.
A new employment deal being offered to workers includes a 3-year wage freeze, reduced leave (at a time Holden tells you is OK), reduced breaks through the day, regular drug testing, short notice for what is effectively compulsory overtime if needed and the threat of termination for a vaguely worded ‘inefficiency’.
Some of these are fair enough. I wouldn’t like my car to be built by a guy with a massive case of the munchies. But if I were a Holden employee, sick already from an axe hanging over my head, this new deal wouldn’t have me doing cartwheels or star-jumps.
Given that Holden’s likely to cut and run from assembly in Australia in the next few years anyway, I’d advise Holden workers to hit the halls at their local TAFE (training institution, for you non-Aussies) sooner rather than later.
It’s your money, Americans
The numbers we’re talking about in the Australian context are peanuts compared to the taxpayer funded bailout that GM received from the US government back in 2009. But still, this is GM we’re talking about and what we see here is careless planning and reckless behaviour from a bailed out company in a market that’s probably not going to be on the American radar.
My American friends – this is what your too-big-to-fail company is doing outside your borders. This is how they’re managing their business, reorganised and propped up for more than a few years by your money. Opel is a German unit of General Motors and they money they’ve spent on production for Australia, dealerships in Australia, marketing in Australia and even sporting sponsorships in Australia, will be booked back to Germany. But it’s still all part of the big GM family.
You can make of that what you will.
I like the fact that we’ve got a car manufacturing industry here in Australia. I like the fact that for the last however-many years, we’ve had a selection of Australian cars that were designed for Australian conditions. I like the fact that the industry drives innovation and creates jobs. I don’t want the industry to go.
At some point, however, you’ve got to wonder when the companies involved will develop and manufacture viable vehicles. GM got itself into a deathwatch position at the turn of the century because it was addicted to manufacturing vehicles that people were buying in reduced numbers. They completely missed the move to smaller, more fuel-efficient cars and they nearly died as a company because of it. It’s killing the Australian industry, too, because buyers moved to small SUV’s or compact cars a long time ago and GM/Ford have insisted on building large sedans right through that move.
I know it’s not easy or cheap to change, but it sure beats the unending losses that lead to closures. Holden seem to be very adept at hoovering the wallets of the Australian government but the whole mess with Opel makes me wonder about the wisdom of propping up a company that’s run at a global level by a bunch of inebriated man-clowns.