Australia Vows Support as Auto Industry Struggles

Australia Vows Support as Auto Industry Struggles

The auto manufacturing sector employs more than 50,000 people in Australia with another 250,000 jobs in associated industries.

SYDNEY -- The Australian government vowed Thursday to continue backing its struggling car manufacturing industry amid reports General Motors subsidiary Holden is seeking another big bailout package.

The high cost of manufacturing in Australia and a strong local currency have made it increasingly hard for car companies to compete with cheap imports, leading Ford to announce in May it will stop making vehicles in the country by 2016.

Holden, which in April announced a plan to slash 500 jobs and which is one of two remaining major players along with Toyota, said Thursday it was doing "everything in its power" to secure the future of its local operations.

But it refused to comment on a report in The Australian newspaper that it wants an extra Aus$265 million (US$245 million) from the government to survive, on top of the Aus$275 million it was promised last year.

"We are in close and constant discussions with both sides of politics -- at a state and federal level -- but are not in a position to publicly comment on the details of those discussions," a spokesman said.

Industry Minister Kim Carr also refused to confirm or deny any future subsidy, but stated: "What I can say... is that the Labor government remains absolutely committed to ensuring we have a prosperous automotive industry in Australia."

He told the public broadcaster ABC that discussions with Holden were ongoing and confidential.

The auto manufacturing sector employs more than 50,000 people in Australia with another 250,000 jobs in associated industries.

But it has struggled, until very recently, with the Australian dollar trading near or above parity with the greenback for almost two years, squeezing exports and compounding rising production costs.

Canberra extended a Aus$3.2 billion bailout to the ailing sector at the height of the global economic downturn and provided additional lifelines to Ford and Holden last year.

Copyright Agence France-Presse, 2013

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