The Lucky Country runs out of luck

Australia's iconic brand Holden is due to cease production and Qantas expects to record a $250-300 million pre-tax loss and sack 1,000 workers.

Holden tipped to pull out of Aust from 2016

General Motors is set to shut its government-supported Australian car making operation in 2016, potentially putting an end to the 50,000-job vehicle assembly industry, local media reports said.

NZ Herald,

6 December, 2013

The ABC said GM's Holden was in discussions with the government over its future but that unnamed senior government ministers had told the broadcaster that it would cease production as early as 2016.

Industry Minister Ian Macfarlane and Opposition Industry spokesman Kim Carr issued statements denying a decision has been made. Macfarlane met with Holden on Thursday and said talks were continuing, the ABC said.

The speculation came as Australia's productivity commission continued an inquiry into the future of the car industry that is expected to determine Holden's future after key competitor, Ford, announced in May its plan to stop its Australian manufacturing by 2016 with the loss of 1200 jobs.

If the commission recommends against ongoing funding, Holden is likely to follow Ford and close its assembly facilities, the ABC said. A final report is due on March 31.

Holden said its discussions with the Government were continuing, and it did not respond to speculation. Industry Minister Ian Macfarlane said he has spoken to Holden and they have denied the reports.

Research released last month suggested that Holden's closure would cost the South Australian economy $1.24 billion and 13,200 jobs alone.

Australian unemployment is currently running at 5.7 per cent.

The Federal Chamber of Automotive Industries says the industry directly employs more than 45,000 people across the country.

The Australian Manufacturing Workers Union says Toyota would be likely to follow suit, meaning the end of the Australian automotive industry.

In that proves to be the case, up to 50,000 jobs could be lost across the country, with second and-third tier suppliers also forced to close their operations, the ABC said.

Ford's exit had long been expected after 20 years of declining fortunes for the industry. Early this year, Ford Australia president Bob Graziano blamed the high Australian dollar, rising costs and "one of the most competitive and crowded automotive markets in the world" for the decision to end local production. He said costs in Australia were twice those of Europe and four times those of Asia. Toyota - the only other Australian vehicle manufacturer - is widely expected to close its lines within the next few years.

What is behind the Qantas-Virgin row?

Qantas and Virgin Australia are currently engaged in a public battle over who is better off under the existing regulations that govern airlines in Australia, but what is the context to the dispute?

ABC,
9 December, 2013



A recent capital raising from Virgin, and the announcement by Qantas that it expects to record a $250-300 million pre-tax loss and sack 1,000 workers has brought discussions over the future of the national carrier to the fore.


Central to the issue are two pieces of legislation - the Qantas Sale Act and the Air Navigation Act.


The Qantas Sale Act was enacted in 1992 to ensure the national carrier retained majority Australian ownership after privatisation.


Under the act, foreign ownership in the flying kangaroo is capped at 49 per cent, and single foreign investors cannot own more than 25 per cent of the company.



There are further restrictions on ownership by overseas airlines - limiting total ownership by foreign airlines to 35 per cent, and in 2011 the act was amended to require Qantas base its principal operation centre in Australia.


The Air Navigation Act requires carriers to keep an Australian majority in order to gain access to routes in and out of Australia.


Qantas has called for changes to the Qantas Sale Act, saying it leaves them at a commercial disadvantage compared to Virgin Australia.


Commercial disadvantage?


Qantas is claiming that Virgin, which is partially owned by three foreign airlines, is being run at a loss to drive Qantas out of business - citing Virgin's recent $350 million capital raising that is underwritten by the foreign owners.


Qantas CEO Alan Joyce has also questioned whether the investment, which will take the trio's stake to almost 70 per cent, complies with the Air Navigation Act.


Virgin last year split its domestic and international operations, allowing it to maintain Australian ownership of its international business, while its domestic offering is now predominantly foreign owned.


This split allows Virgin to adhere to the Air Navigation Act, but Qantas is claiming the separation is a sham.


The Qantas Sale Act prevents the national carrier from achieving a similar separation.


In response Virgin has hit back, claiming Qantas receives preferential treatment from the Federal Government, such of comfort letters to its ratings agencies.


Qantas has flagged several other ways the Federal Government could assist it, including a Commonwealth guarantee on its debt, and Virgin CEO John Borghetti says any assistance should be extended to Virgin.


Mr Borghetti has called for the end of the Qantas Sale Act, saying the airline is happy to compete on a level playing field.