Holden’s closure impact ‘exaggerated’, says report

A REPORT looking at the future health of South Australia’s $90 billion economy beyond 2017 suggests the knock-on effects of Holden’s decision to quit car-making have been exaggerated.

The latest Deloitte Access Economics quarterly business report for the June quarter says that while the state’s contribution to the nation’s gross domestic product will hit a bit of a road bump due to Holden’s decision to quit car-making in late 2017, the robustness of the rest of Australia’s economy will help smooth out the impact of the car-maker’s closure.

"The number of jobs directly lost in South Australia as a result of Holden ending its local manufacturing operations is likely to be less than 2000 people," the report reads.

"Although that is undoubtedly a disaster for the individuals involved it isn't a disaster when measured against the state's employment base of 800,000 people," it says.

Instead, it says a lower Australian dollar and record-low interest rates will outweigh the effect of most of the job losses in the state.

The South Australian government has committed to spending $60 million towards helping struggling car-parts makers to re-tool and find new markets once Holden shuts down its Elizabeth-based production line.

Adelaide University economic modelling released in March predicted up to 200,000 jobs nationally would be lost four years after the announcement of the closure of the Australian car-making industry, costing the economy $29 billion – the equivalent of about 2 percent of GDP – a year.

SA’s share of the pain was expected to amount to more than 23,000 jobs and $3.7 billion in financial pain a year, with Victoria expected to take the lion’s share with $13 billion in earnings lost each year and 98,000 jobs lost, the university modelling predicted.

Victoria’s first-tier automotive manufacturing includes Ford’s Geelong-based engine casting plant and Broadmeadows assembly line, Toyota’s Altona-based engine casting and assembly line, and Holden’s Port Melbourne-based engine casting foundry.

Ford will close its Australian car-making business in late 2016, with Holden and Toyota hanging on until late 2017 before also shuttering their operations.