Press Conference, Parliament House, Canberra
12.30 pm, Tuesday 2 June 2009
Subject: Future for Holden in Australia
KIM CARR: We welcome Mark Reuss to Canberra today.
The reorganisation of General Motors announced overnight will have no direct impact on Holden, its workers or its suppliers. Holden is not part of the company's chapter 11 filing, but it will be part of the New GM.
This is - there is every possibility that Holden will come out of this process in an even stronger position. This is a tribute to the hard work, creativity and perseverance of Holden's workers. They have made considerable sacrifices in recent times, and their commitment has paid off.
This has been a genuine team effort. Workers, unions, management and the Government have all played a part in achieving an outstanding result for the Australian automotive industry.
Everyone at Holden can take credit for conserving the company's skills and production capacity, and maintaining its focus on innovation and quality, the very things that the world will be looking for when the global economy rebounds.
The reorganisation of General Motors represents Australia with an historic opportunity. The company has reaffirmed overnight that it aims to increase fuel efficiency and reduce greenhouse gas emissions across its line-up, as well as pushing ahead with advanced propulsion technologies.
Now, these are the very objectives enshrined in our New Car Plan for a Greener Future, a partnership between the Commonwealth and the automotive industry, with the potential to generate more than $22 billion in new investment.
The environment is changing rapidly. Australia is ahead of the game. That gives us the chance to cement our place in international production system. More than that, it gives us the real chance to influence how the automobile actually evolves in the decades ahead.
Of course, the next few months will be very difficult, and that's why the Government has acted so aggressively to minimise the impact of the global downturn on the industry and on all Australians, including by introducing the business tax break that offers small firms buying vehicles a bonus reduction of 50 per cent. At the same time, we must never lose sight of the future and the opportunities that it will bring. For Holden and the Australian car industry, the future is very bright indeed.
MARK REUSS: Senator, just a few words here.
It's hard to follow what the Senator just has said. But I will say this, overnight here, obviously, our parent company has filed for chapter 11 in the United States.
We have worked over the last 18 months, since we got into Australia here, with this new Government on a continued basis, almost daily in some cases, to structure Holden for success, not only during this time of filing for chapter 11 by the parent company, but for the future for the next five to 10 years.
Mr Carr briefly outlined some of the fuel saving technologies that we have coming on line for the best selling Commodore, but also the new Holden Cruze which arrives in dealerships right now, will be made in Adelaide in third quarter of next year.
The reason why this is important is because, as an American in Australia, and watching us from afar, I've worked in quite a few different places around the world, and I have to say that we are absolutely fortunate. We're fortunate to have a man(*), staff and Government, and a Prime Minister that actually cares about manufacturing. Manufacturing things in an economy that is very, very robust compared to the rest of the world right now.
If you look at the other countries where auto makers are having problems, there is cash bail outs, there is transfers of ownerships.
There's all sorts of things happening at the very last minute.
I feel like our partnership with the Government here in Australia, as an industry, and as Holden, has been like studying for an exam, and we have now passed the exam to be part of the new GM for the future.
It's very exciting for me, as a career GM person, but it's also very exciting for me as part of Holden here in Australia. It means so much to our workers, it means so much to this economy. We sign off a half a billion dollars in wages every year. We put almost a half a billion dollars of [indistinct] research and development back into this economy, and that's a very bright future that we've now created with the Green Car Innovation Fund.
So with that, I'd like to turn over for some questions. Thank you.
QUESTION: Mark, on radio this morning, I thought you said you were quite clear that Holden had not received any financial assistance from the Federal Government. Can you just clarify exactly what you meant?
MARK REUSS: Sure. We have not had any monetary assistance from the Australian Government until we begin producing our new car in Adelaide in the third quarter of next year. So, as you know, that's a three to one investment ratio here for the plant.
So up to this point, we have become and restructured to be a cash positive and liquid and almost profitable entity here in Australia over the last 18 months. And there's nothing like new product that solidifies that. We're still the best selling car in Australia with the Commodore, and we're going to keep enhancing that Commodore over a very long period of time, to become really deep profound experts in rear-wheel drive, and have the best, continue to have the best selling car here in Australia.
QUESTION: Will the Cruze make up for the loss of the Buick at all?
MARK REUSS: Ah, the Buick…
QUESTION: Well the fact that G… the Buick's not going to be made in Adelaide any more - the Commodore version…
MARK REUSS: I think you're…
QUESTION: The Pontiac, sorry.
MARK REUSS: …sorry, to the GM Pontiac.
QUESTION: Yeah. Sorry.
MARK REUSS: Yeah, that's okay. Yeah, you know, 50 per cent of our business out of Adelaide was export. And one of the big exports was the G8 for Pontiac to the United States.
And, we do have replacement export business that will come online, that we'll be able to reveal at a later date.
But, I can't expose our future product lines. But yes, we've been aggressively pursuing that.
An example I can point to in our engine facility in Victoria, is the recent awarding of another 2500 units of that engine to go into a Cadillac that's made in Mexico for the United States and North American markets, which, you know, we have really created our own luck with that engine. We've really gone after some pretty high quality standards, and we have achieved those. And so we're going to make our own luck and get some of that business back, awarded to us, and we are.
QUESTION: …any profit for five years. On that basis, how can you sustain, how can you say that jobs won't [indistinct] be affected if, if you're continuing not to make a profit?
MARK REUSS: Well I don't know anybody that's making a profit as an automobile maker in Australia right now.
We've worked our markets off, you know, 20 per cent. You'll see the market come in less than that because of some of the incentive packages that were put in, into place, about 17 per cent on a year to year basis, which is a good begin of our recovery here.
So, you know, not making money, liquidity and cash flow are completely, are very different things to talk about.
So, you know, we are cash flow positive because of our sales that we generate here and abroad. And we're just beginning to sell the Cruze here and deal with this right now.
QUESTION: And is the business sustainable in Australia?
MARK REUSS: Yes it is.
QUESTION: And there will be no job losses in the immediate future?
MARK REUSS: That's correct.
And I would say that there's been two outside firms that have gone through - and this is a good [indistinct] point for us here - to become viable to be part of the new GM we've had two outside firms here looking at each subsidiary of GM around the world. We've been doing this for the last six or eight months as we approach the 1 June date. And so we've had to prove to some pretty, pretty scrutinous people that we can earn a lot of money here and we can do it on a revenue basis where we reinvest in a new product and new technology.
We've done that. And, by the way, we're also liquid and cash flow positive from the restructuring that we've done as the industry declined.
We're now matching almost car for car orders with production out of our plant, which is a very very important point right now.
So we're very, very tight in terms of the way we're running the business.
QUESTION: Would that have been possible without Government assistance?
MARK REUSS: Ah, we did this with no Government assistance.
QUESTION: No, but you've got Government assistance coming down the track and…
MARK REUSS: Well, the only thing that Government assistance has done today, to make sure the company is viable.
There's two things. We have a great car that's coming out - number one. Something that's going to be a winner in fuel economy and crash worthiness and safety. And it's a great looking car.
The other piece of this is the confidence of the Government in manufacturing in our auto industry in Australia. That's imperceptive. That - how do you measure that?
But that's very important when you get into times like this around the world. The confidence of people wanting you to manufacture and be successful in Australia is demonstrated by the Green Car Innovation Fund, and all of the innovation and creativity that goes into those cars.
So that's, that's - I don't know how you measure that. It's a subjective measure. But it's extremely important. And, you know, this is all about confidence.
QUESTION: Minister…
KIM CARR: Can I just finish on that. We've probably had the toughest audit we're ever likely to face. In terms of what's occurred for General Motors Corporation in the United States, every branch, every unit, every facility of the General Motors Corporation is being put under the microscope, and we see around the world, a very different approach is being taken to the facilities of the companies that we see in General Motors Holden by comparison to other companies.
On the other side of the coin, the Government policies, the Government policy parameters were also under very very tough audit internationally, and they've come up trumps as well.
And what you've got is a recognition internationally that what's occurred at General Motors Holden and the Australian automotive industry is a model - a model for others to follow. And while we have not provided General Motors Holden with cash in regard to any of the particular projects, what we have said is the policy parameters have provided a certainty, a confidence.
We've provided the scope for improvement in terms of the innovation that's introduced into the company, the new investment decisions. Remember, all our plans are predicated on one basic assumption - that you don't get any assistance from the Government, unless the company is prepared to put money on the table themselves. In the time of the worst economic crisis that we've faced in three generations, we are discussing with General Motors, and actually seeing happen, investments in new product.
A new car line, at Elizabeth, to start production in the third quarter of next year.
And that's an extraordinary event in these economic times.
QUESTION: Minister, can I ask you, as I understand it with the chapter 11 bankruptcy, GM's assets are ring-fenced from its subsidiaries. Now if Holden locally holds more capital because they can't access the parents, will the Government step in, and what kind of form might they take.
KIM CARR: Well we've got the New Car Plan outline in detail. And we have no intention of changing that, the legislation will go to the Parliamentary session. That outlines the extent of the financial support that we'll be providing to the industry through the new car plan.
And Mark, of course, has been working on the strategy to ensure that General Motors Holden is effectively self-contained. The operations in this country are separate from what occurs in other parts, and are very different from other parts of the world, and as I read the situation, Australia is now to be one of the key centres in the Asia Pacific region, along with China and Korea.
And this is again quite extraordinary, given what people have been saying about how high-wage advanced economies like ours compete with low-wage countries.
We're proving that we can compete. We are internationally competitive - not on wages, but on innovation, on design, on creativity.
The environment in which we operate provides a sound basis for international firms to do business, and we are leading the world in many respects in regard to the automotive industry.
QUESTION: But Mark, you've spoken about the importance of the [indistinct], but, you know, it's a big gamble, though. You're launching a car that's going to be competing with the Corolla, the number two selling car, the Mazda3. Other models like that, cars can be brought from Thailand much cheaper than they can be made for here.
Isn't this just we're putting off, you know, the inevitable, that Holden will have to make cut backs in the future?
MARK REUSS: I don't think so. I think you know, there's a couple of things they tell our team, our engineering and product development team. There's got to be at least five combined reasons why someone's going to walk into one of our dealerships and show rooms and buy one of our cars, and if we don't have those, we shouldn't be making the product.
And I think if you take this car and put it up against any one of those competitors that you mentioned, we've got, number one, a price advantage; and number two, we've got performance advantage, a styling advantage, a safety advantage, and a fuel economy advantage.
This is what we told the Government we would do, and we will do.
And it only gets better as we localise the car. The car will be in two forms when it comes through - you haven't seen the hatch yet - and the hatch is something that I think we'll be very proud of here.
So I think, you know, we've got a product that's going to go right at the heart of this. It is a global product, and a lot of that - you know, up to 30 per cent with our current supply base capability will be here and in Australia, and we're going to be very competitive doing that.
And we've driven the business case around the world to lots of different parties that are looking at this. So we've got a good business case. We've got a great car. And we've got a very successful place to play in here with that car in Adelaide.
I think if you read the press reports of the launch of that car, this is everything I just said it was, and potentially more. This is a little bit bigger car than the Corolla.
QUESTION: Will this Cruz be different from the one made in America?
MARK REUSS: Yes it will.
QUESTION: [Indistinct]
MARK REUSS: Well I kind of do this without revealing what the product would actually be in the United States [indistinct], and I don't want to compromise that with this. It's a very important car for the United States. But we have very much that influence on the way the car was designed. In fact, one of the variants of this car is going to be done entirely in Australia, and we'll have that story for you a little later, but you know, this is a heavily-influenced car in Australia by Holden - both design, engineering, and integration of the car.
And the safety piece of this as well. So yes, it will be different.
QUESTION: Mark, given that you said that the Holden business is sustainable and you haven't received any Federal Government assistance to date, can the Government claim any credit for Holden's current position.
MARK REUSS: Oh, the Government can claim a whole bunch of credit for the position of Holden absolutely. I think, you know, this is - we like to talk about money. And we like to talk about funding. We like to talk about projects. But one of the things that as an American here, this government did not have to trust me at all coming in here and running Holden last year in February.
But they did. And for everything that I said I was going to do, I have tried to deliver. I told Mr Carr the second week I was here that I never give up. And I don't give in. And so that remains true. And I think that's a big part of what this brand is in this country as well, and so I'm lucky enough to be here and represent that. I'm extremely lucky to have people in Government here who understand what the business is, what it means to the country, what it means to the families that work for it, the wage basis that goes back into the economy, and all of the flow down effects for all the supply base, and everything else.
So it doesn't - it's not work for me to come talk to people like Minister Carr in this Government, and talk about what's really happening and, to him, to have him understand that is painless - which is a very special relationship. And I think it always gets down to relationships - relationships of trust and cooperation between our unions, the Government, and our work force is absolutely what this is all about.
QUESTION: Five years ago, Holden's niche in the world, and GM, was to make big cars, largely for export, largely for here. What is going to be the new niche? How do you define Holden.
MARK REUSS: Well I'm not sure it's a niche, number one. This is one of the very few countries and development centres in the world that can actually do a world car for any market in the world. And you know, I - the notion that engineering skills are transportable, or commodities, is something that you'll find if you ask someone who works at Holden.
I just can't stand that opinion.
Not everybody can make a good car, not everybody can make cars that succeed in the market place just because you've put it in an auto show and claimed victory. That's not what this is about. This is about true capability, true intellect, true skill sets that are very rare in the auto industry. And the auto industry is - you know, this is not an easy game anywhere in the world. And to have that kind of skill set in Australia that's been cultivated over the last 60 years, quite frankly, that's not something that should be treated as any type of commodity at all.
QUESTION: Sol Trujillo recently described the Australian business environment as backwards and talked about racism.
MARK REUSS: I'm sorry, who did?
QUESTION: Sol Trujillo.
MARK REUSS: Oh.
QUESTION: And he…
MARK REUSS: [Indistinct] come and done that at all, I wouldn't agree with any one of those things. I very much enjoy being here. I think there is a lot of things - you know, if you look at the United States, for instance, and General Motors, one of the problems was the health care piece of this, okay, and the company payed for it, and the company was one of the biggest health care providers in the world. There aren't those sorts of things here.
It's a very good system here from what I've seen. I've actually participated in it a couple of times. And I - you know, there's a lot to be learned. I really - I [indistinct] the generalisations of any economy, but especially here, this is an incredible standard of living, it's an incredible economy, and it's an incredible country with people in it, and Government that is very responsible from what I have seen.
QUESTION: Mark, do you believe you'll be here the long-term, or do you think with GM being reorganised, you might be asked to go back in Detroit?
MARK REUSS: Oh, no, I wish I could answer that, because it would provide certainty for me, but I can't. And I love being here. I love my job here. And I love the company. I love the people in it. That's all I know.
And that's my focus.
FEMALE SPEAKER: We're out of time. Thank you very much.