A confidential leaked report by chair of South Australia’s Advanced Manufacturing Council has detailed plans on how the state might cope with the closure of Holden’s Elizabeth factory, which could happen as soon as 2016.
Professor Goran Roos, SA’s former Thinker In Residence and a world-renowned business expert, has “drawn up secret plans” regarding the car maker’s exit, reports News Corp, who obtained a copy of the Cabinet in confidence report.
"Our key working assumption is that manufacturing/assembly of mass-market vehicle platforms at GMH is not sustainable," Roos wrote in the analysis, for which he was granted access to company intelligence for a month.
"The analysis shown ... validates this assumption.”
Roos spent August looking at General Motors Holden’s operations. He predicts that the company would have to make a pre-tax profit of about five per cent to justify further investment from its parent company, General Motors. Holden is currently on-track to make a pre-tax loss of three per cent without further government assistance.
The report unfavourably compares the high costs – in areas such as labour prices, components and logistics – with the cost of making cars in Thailand or Poland, with only job cuts available as a significant savings measure for Holden.
Roos also highlighted the difficulties in creating replacement industries in the state, and for suppliers to the car maker to diversify.
"We believe that the question of 'how long (it will take) to diversify' should be answered with urgency,” wrote Roos.
“Further, we believe that the focus of all efforts should be to have Holden and Toyota continue assembly long enough to allow the successful diversification."