Lower local content if GM Holden stays

THE percentage of local content in Holden cars would take a hit if General Motors does go ahead with its $1 billion, two-model program from 2016 after all.

Replacing the Australian-designed Commodore platform with a second global architecture from later this decade would cut local content by half from the VF Commodore’s level, said GMH chairman and managing director Mike Devereux.

This would mean less business for local suppliers, but Mr Devereux said the possibility of working on a global platform would open up the possibility of offshore contracts.

Speaking at this week’s Productivity Commission hearing into the local industry, commissioner Mike Woods asked Mr Devereux whether the company had reduced local content on the Cruze in a bid to cut the $1500 “supplier premium” that GMH pays for buying parts in Australia.

The $1500 supplier premium is almost half the $3750 extra cost it takes to build the Cruze in Australia versus overseas plants.

“Commodore is around, in total value, around 50 per cent and Cruze is around 25 to 30 per cent,” he said. “Cruze is a global platform and we get a number of parts from all over the GM world for that.”

Mr Devereux did not answer directly, but explained that GMH had to sometimes make strategic decisions based on aspects other than cost.

He said the company had to be mindful that the local supplier ecosystem needed certain volume levels to remain viable. Sometimes that involved a price increase for the local supplier, sometimes it involved GMH getting “deeply involved” in the supplier’s management and financial affairs, he said.

However, he admitted that the second global platform that is proposed to be introduced to Elizabeth in 2016 would have lower content levels than the Commodore.

“The general notion is that you’d see localisation levels more in line with what you have today on the Cruze.”

But he said there was an upside to global platforms, if the local suppliers were good enough.

“You also have the ability, if you are world class, to bid on the volume made in the six, eight or 10 plants where that global architecture is made.”

He said there were examples of local suppliers winning overseas contracts, such as MET Pty, which supplies engine cover heatshields for the Commodore and for the Camaro, which is made in Oshawa, Canada.