Holden will cut production of its Cruze small car from 400 to 335 a day at its Adelaide plant.
The manufacturer blames the strength of the local dollar for impacting on sales.
Holden will also shed 400 jobs in Adelaide – and another l00 redundancies will be made up of product development staff in Melbourne.
The company employs some 4000 people in Australia, and last year slashed its workforce by about 170, again citing a strong Australian dollar and slow car sales.
“This is a very difficult decision because people and their families are involved,” says chairman Mike Devereux said. “But to protect the long-term future of Holden, we have been forced to take these actions and this restructure will better align Holden with projected future volume and workload.”
The company says the cuts were: “primarily due to a reduction in demand for the locally made Cruze small car led by a high Australian dollar, combined with one of the most open and competitive car markets in the world.
“The appreciation of the currency means that making things in this country is 60% more expensive than it was 10 years ago. The currency is the strongest it’s been in more than 30 years,” says Devereux.
“We have made significant productivity gains, but are witnessing a structural shift in the Australian market which favors importers due to a sustained high Australian dollar and extremely low tariffs. This perfect storm of economic conditions has put intense pressure on the local industry,” he says.
The government, which handed Holden a A$275 million (US$285 million) lifeline last year to keep its plants open amid fears it would pull out of Australia, says it is disappointed with the news.
“The Gillard government remains committed to the Australian automotive sector and the manufacturing sector more broadly,” says Gary Gray, acting Australian minister for climate change, industry and innovation.
“Car manufacturing is an integral part of the Australian economy, with about 250,000 people employed in the sector and associated industries,” he adds.
Australia’s auto manufacturing industry is struggling with the effects of the high local dollar, which has traded near or above parity with the greenback for more than two years, squeezing exports and compounding rising production costs.
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