Business

GM to shut operations in Australia, New Zealand, Thailand

General Motors has decided to pull out of Australia, New Zealand and Thailand as part of a strategy to exit markets that don't produce adequate returns on investments, raising dismay Monday from officials concerned over job losses.

Sales, engineering and design operations for the historic Holden brand to be discontinued

A Chevrolet Spin multi purpose vehicle meant for the Asian market is built at the GM manufacturing facility in Bekasi, West Java, Indonesia. GM is shutting operations in Thailand, New Zealand and Australia after losing money in its international division. (Tatan Syuflana/The Associated Press)

General Motors has decided to pull out of Australia, New Zealand and Thailand as part of a strategy to exit markets that don't produce adequate returns on investments, raising dismay Monday from officials concerned over job losses.

The company said in a statement Sunday that it plans to wind down sales, engineering and design operations for its historic Holden brand in Australia and New Zealand in 2021. It also plans to sell its Rayong factory in Thailand to China's Great Wall Motors and withdraw the Chevrolet brand from Thailand by the end of this year.

At the end of 2019, GM shut its plant in Oshawa, Ont., as part of a global rationalization. It still has an assembly plant in Ingersoll, Ont., and builds engines and transmissions in St. Catharines.

"This is a very disappointing outcome," said Karen Andrews, Australia's minister for Industry, Science and Technology. She said it was unfortunate both because about 500 workers would lose their jobs, but also because "they only advised the government of this decision just before the announcement."

The move means the end of Australia's Holden brand, which began as a saddle maker in South Australia in 1856 before it started building vehicles in 1908.

Dave Smith of the Australian Manufacturing Workers' Union also expressed chagrin.

Cars drive past a car dealership of Holden, General Motors Co.'s Australian subsidiary, in Sydney, Australia, on Dec. 11, 2013. GM is retiring the Holden brand. (Rob Griffith/The Associated Press)

Workers at Holden had thought they'd "been through the worst of it, and that's not the case," Smith said. "For many of them their long-term workers have been very loyal to the company ... they've loved being part of the car industry, and now, it was such an iconic brand coming to an end; it'll mean an end to their jobs."

GM has 828 employees in Australia and New Zealand and another 1,500 in Thailand, the company said.

In Thailand, the decision to sell GM's plant in Rayong, south of Bangkok, may well end up being good news for workers there.

Great Wall Motors plans Thai expansion

Great Wall Motors, a major maker of sport utility vehicles and pickups, said it intends to expand in Southeast Asia using the plant in Thailand as its base.

"We will also promote the development of the local supply chain, research and development and related industries, plus contribute more to the exchequer of both the local Rayong and Thailand governments," Great Wall's vice-president for global strategy, Liu Xiangshang.

Thailand is still determined to be the "Detroit of Asia," Krichanont Iyapunya, a spokesman for the Ministry of Industry said. He said plant closures and openings happen constantly.

"The automobile industry must be adaptive," Krichanont said.

General Motors CEO Mary Barra says the company wants to focus on markets where it can drive strong returns. (Paul Sancya/The Associated Press)

Liu, of Great Wall Motors, said the Thai expansion was part of the company's global push, following the launch of a plant in Tula in Russia in 2019 and plans to acquire GM's Talegaon plant in India.

Losing money in Asia

GM has struggled in Asia in the past year. Its international operations, which include China, lost $200 million US last year, including $100 million in the fourth quarter. It analyzed the business case for future production at the Rayong plant, but low utilization of its capacity and low sales volumes "made continued GM production at the site unsustainable," the company said.

GM's CEO, Mary Barra, said the company wants to focus on markets where it can drive strong returns, scaling back operations in Australia, New Zealand and Thailand to selling niche specialty vehicles. GM will support its employees and customers in the transition, she said.

GM is making the same moves in Japan, Russia and Europe, where "we don't have significant scale," she said.

"We are pursuing a niche presence by selling profitable high-end imported vehicles supported by a lean GM structure," International Operations Senior Vice-President Julian Blissett said in the statement.

GM said it will honour all warranties in the markets, and it will continue to provide service and parts. Local operations also will handle recalls and any safety-related issues, the company said.

$1.1B charge to shut operations

The Detroit automaker expects to take $1.1 billion worth of cash and noncash charges this year as it cuts operations in the three countries.

GM has a long history in Australia with the Holden brand, where cars were designed and sold in the U.S. and other markets. The 2008 and 2009 Pontiac G8 muscle car, for instance, was designed as a Holden Commodore and built in Australia. But Holden's market share, which was nearly 22 per cent in 2002, fell to just over four per cent last year.

GM President Mark Reuss, who once ran the Australian operations, said the company explored options to continue Holden, "but none could overcome the challenges of the investments needed for the highly fragmented right-hand-drive market, the economics to support growing the brand, and delivering an appropriate return on investment," he said in the statement.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.