General Motors Ushers Australia Into The Post-Industrial Age

You just keep me Holden on...

You just keep me Holden on…

Amidst the copious news General Motors has made over the last week, one fully-formed and profoundly important story is doggedly evading the notice of the press. Overshadowed by the end of US Treasury ownership and the promotion of GM’s first female CEO, the demise of The General’s Australian unit Holden should not be overlooked. Not because the phenomenon it demonstrates is new… in fact it’s nothing more than the latest example of the GM standard operating procedure that has helped devastate local governments across America. Rather, the tragic turn of events in Australia sends a sharp warning, every bit as poignant as the recent bankruptcy of Detroit, to the American taxpayers about the company they rescued.

The Government Motors endgame is only just beginning…

Though largely uncovered in the US,  sequence of events in Australia is easy enough to follow: GM CEO Dan Akerson made the call to kill Holden after Australia’s new conservative government made it clear it wouldn’t promise further tax dollars:

The final word on Holden came coincidentally during Parliamentary Question Time, as the acting Prime Minister Warren Truss and Federal Treasurer Joe Hockey goaded the car maker to make its intentions clear.

Holden President Mike Deveraux delivered the news from Detroit, telling the Australian government

“General Motors has nothing but gratitude and praise for the very strong partnership we’ve had with successive governments over the decades,” said Mr Devereux, adding that the company was proud to “have been a part of the industrialisation of this country”.

Note the grim use of past tense. But the real dagger was still yet to come for Australia:

To gain approval to develop a new Commodore, General Motors did a top-secret deal with Holden to pair the next generation sedan with a Buick that was originally exclusive to the Chinese market.

Holden won the contract to design the car, which was then due to be built in Australia and China.\

>But now that Holden has decided to shut its Elizabeth car assembly line in 2017, China is poised to become the sole producer of the vehicle.

Surprised? You shouldn’t be. The threat of moving operations to China is the most reliable tool in GM’s campaign to extract the public wealth of developed markets. Besides, GM’s CEO Dan Akerson just told reporters at the National Press Club that

“There’s no question in my mind though, over the next twenty or thirty years, there will be one or two global Chinese “champions” that come out of the domestic market.”

Akerson went on to laud GM’s Chinese partner Shanghai Auto (SAIC) and described the relationship as “robust.” No wonder, considering GM is giving China more than just Australia’s automotive industry: the recent “GM China Tech Day” revealed how much of GM’s crucial next-generation automotive technology is being co-developed with SAIC in China.

With its “public execution” of Australia’s auto industry, GM has put the developed world on notice: industrial jobs, the one-time foundation of the middle class, are the most important product GM offers for sale. If governments in developed markets around the world don’t keep buying the product, China is waiting with open arms. Suddenly Australian taxpayers are being forced ton consider that the billions they considered long-term investments in their industrial base were merely rents. GM fan forums are being deluged with new registrants from Australia, as they vent their anger and sense of betrayal. Perhaps anticipating the move, Australia’s Prime Minister has replaced his personal Holden with a BMW.

But the transfer of technology to a Chinese firm that Akerson all but hailed as a future global competitor represents something decidedly more troubling than the age-old debate over the offshoring of manufacturing jobs. Still on a decades-long market share losing streak in the US, the source of its global brand power and short-term profits, GM seems to be positioning itself to merge with or be bought by SAIC. If nothing else, it is very carelessly giving SAIC a leg-up into global competition that other auto majors are not extending to their Chinese partners.

This strategy would be objectionable enough if GM didn’t owe the opportunity to execute it to the American, Canadian and Australian governments… or more precisely to the taxpayers who fund them. But then, at least taxpayers in the US have some recourse: with the vast majority of GM’s earnings and profit still coming from North America, the public that funded GM’s shift to China still holds the keys to GM’s present. All Australia has left is the bitter advantage of learning a hard lesson before everyone else, and memories of its industrial age.