Earlier this month I noted that there was an outside chance that Belgian automotive entrepreneur, Guido Dumarey, would save Holden’s Elizabeth plant, which is due to close early next year.
Sadly, General Motors and Dumarey have jointly decided against continuing manufacturing operations, meaning that the plant will shutter as scheduled next year. From The Australian:
In a joint statement last night, General Motors and Guido Dumarey’s Punch Corporation said a detailed analysis of the business model had determined that a proposal to continue manufacturing vehicles at Holden’s Elizabeth plant was not viable…
Earlier yesterday, Holden confirmed what had first been foreshadowed by The Australian in 2014, announcing production of the Cruze would end in October with the loss of about 400 jobs.
As noted previously, estimates of the employment impacts from the car industry’s closure vary, but are nonetheless alarming.
On the rosy side sits the Productivity Commission (PC) and the Allen Consulting Group (ACG). The PC estimated that the car industry’s closure would cost up to 40,000 jobs, mostly in Victoria and South Australia, whereas ACG’s modelling, which used economic analysis from Monash University, estimated that the closure would cost around 33,000 jobs in Melbourne and around 6,600 jobs in Adelaide by 2018.
However, both studies were arguably overly optimistic, given they assume that a high proportion of component manufacturers would move into exports and/or the after-sales parts market, which are already crowded and highly competitive.
On the pessimistic side sits the University of Adelaide researchers, Lance Worrall and John Spoehr, who estimate that the car industry’s closure could cost up to 200,000 jobs once employment multipliers are added into the mix.
Irrespective, the impact of the car industry’s closure will be large and represent a king hit to the economy, particularly in South Australia and Victoria. It will also coincide with the ongoing unwind in mining investment and very likely a decline in dwelling construction from the second half.
