Flat White

No point holding on to Holden

19 February 2020

3:27 PM

19 February 2020

3:27 PM

Another one bites the dust in Australian manufacturing. This time it’s Holden. Across Australia, people are lamenting the end of the iconic automotive brand. While the nostalgia of ‘football, meat-pies, kangaroos and Holden cars’ is strong, the market is stronger.

On Monday, General Motors confirmed that they would terminate the 164-year-old brand. The Holden Commodore was Australia’s most popular car from 1996-2010, selling over a million cars. For many Australians, it evokes sentimental memories of a by-gone era. While Australians are grieving the loss of this icon, not enough people were willing to put their money where their mouth is. In 2019, Holden sold a measly 40,000 new cars.  

The brand’s managing director, Kristian Aquilina noted they couldn’t remain competitive in “a highly fragmented market with seventy-odd competitors competing for one per cent of the global automotive volume”. 

The demise of Holden was imminent. From 2000-2012, holding onto Holden cost the Federal government over $2 billion in subsidies. The taxpayer not only shouldered the burden of an unviable economic enterprise, but helped drive it into the ground. Protectionist policies surrounding the Australian automotive industry disincentivised companies like Holden to adapt to the new market conditions and remain competitive. Instead, subsidies helped Holden spend years making outdated vehicles that the general consumer didn’t want. 

While Prime Minister Scott Morrison expressed disappointment in General Motors for letting Holden “wither away” despite receiving tax dollars, New South Wales Treasurer Dominic Perrottet called these government subsidies “putting off the inevitable”.  

The death of Holden has reignited the conversation about the overall retreat of manufacturing in Australia. As Australia has become specialised in the service economy, the changing face of the Australian manufacturing industry is simply part of adapting to a globalised economy.   

Taxpayers foot the bill. Holden employees lose their jobs. Australians lose an icon. But who is to blame? 

At least part must be shouldered by trade unions which priced manufacturers out of a job and sent them overseas. High labour costs rendered Australia uncompetitive in the global automotive market.  

If anyone should be reflecting on the loss of the great Australian cars, it should be conservatives. Many conservatives have relinquished the fight for more flexible industrial relations and bowed to the wage demands of trade unions. Jobs have moved offshore and now an Australian icon is gone.  

When government subsidies ended, Holden’s life-support was switched off. In 2020 it finally flatlined. Hundreds of employees will now be out of a job. Never was there a more ripe time to renew the fight for IR reform. The greatest protection of jobs does not come through subsidies or tariffs but through flexible wage determination. Protectionism kills jobs, companies and innovation. 

Holden has reached the end of the road. But, hopefully, it is only the beginning for tangible industrial relations reform. 

Julia Kokic is a research associate for the Australian Taxpayers’ Alliance. 

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