The Australian Automotive Manufacturing Industry-Reform is the Norm

2

• The Australian automotive manufacturing industry• Reform over the past 20 years• GM Holden today • New reform agenda• Summary

Outline

3

The Australian Automotive Manufacturing Industry

• important role in the development of the Australian economy

• one of the largest sources of employment

• one of Australia’s most significant export industries

• intensive developer and user of advanced technologies

• the largest sector in manufacturing

4

Global Vehicle Sales- Current

0

10

20

30

40

50

60

70

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

2005: 64.7 mil.

Global Car Parc: 750 mil.

5

The Australian Automotive MarketA

nnua

l Mar

ket S

ize

(Uni

ts)

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

1100000

1970 1975 1980 1985 1990 1995 2000 2005

July 2000 - GST

6

The Australian Automotive Manufacturing Industry

• The Australian automotive industry developed with considerable govt support

• Features of this highly protected industry • Tariffs• Quotas on imports• Low productivity • Poor quality• Too many manufacturers focussed on the small Australian market• Low levels of technology

• As a result, the industry’s lack of global competitiveness required structural change

7

Reform over the past 20 years

• The Passenger Motor Vehicle Plan

• A set of policies designed to reduce the industry’s dependence on state support and improve productivity

• Quotas on imports abolished • Tariff reduction plan

• 1985- 57.5%• 1992- 35%• Now at 10%

• Export facilitation scheme

8

Reform over the past 20 years

Award Restructuring

• changes to job structures in order to achieve a more flexible and better skilled workforce

• shift to wages based on nationally consistent skill levels

• reduction from 240 pay classifications to 3 for non trade and 6 for trade employees

9

Reform over the past 20 years

• Central to the implementation of this award structure was the introduction of new arrangements for the training of the workforce

• training and skill formation became bargaining currency

• formal training for the so- called ‘unskilled sector’

• broadly based trade training which would allow for multi skilling and reduce demarcations

10

Reform over the past 20 yearsEnterprise Bargaining

• EBA embraced in the early 1990s and 5 agreements negotiated to date

• opportunity to negotiate further enhancements to improve flexibility and productivity

•used as the vehicle to implement lean manufacturing principles

11

GM Holden today

What does our business look like today?• Holden still an iconic brand

• Today we employ approximately 8,200 people

• GM’s investment in Australia to support growth is significant

• A$6.1 billion over 10 years

• A$2.0 billion between 2002 and 2006

• Now fully integrated into the global organisation

12

GM Holden today

Vehicle Manufacturing• 4,500 employees

• 140,000+ cars per year over two shifts

• 620 cars a day – a new car every 76 seconds

• 152,000 cars built in 2005

•$532 million investment in plant upgrade for VE/WM just completed

• Vehicle exports to every continent except for Antarctica- 60,000 in 2005

13

0

10000

20000

30000

40000

50000

60000

Vehi

cles

Exp

orte

d

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Holden Vehicle Exports 1992-2005

14

GM Holden today

Engine Manufacturing • 1,200 employees• 315,670 engines produced in 2005 • Engine Manufacture:

• Family II 4 cylinder • Global V6

• $435 million investment in Global V6 plant • Component Manufacture:

• Iron castings• Brake and suspension components

• Australia’s largest exporter of automotive components• South Africa, Korea, China, Thailand, Europe

15

GM Holden today• Now fully integrated into the global organisation

GMNA GME

GMAP GMLAAM

Think globally, act locally

16

GMNA GME GMAP GM LAAMProduct Development

Manufacturing/LR

Sales/Service/Marketing

Quality

Powertrain

Legal/Public Policy

R&D/Strategic Planning

Finance

Communications

IS&S

GMAC

Purchasing/Supply Chain

Glo

bal P

roce

sses

Human Resources

Each business unit managed by the global function as opposed to the countryA global businessGM Holden today

17

GM Holden todayGlobal Engineering & Design Centres

• significant role in GM’s global products•engineering and design centre strategy

• now providing intellectual property as part of GMs global•1200 Engineering and Design staff• largest private sector R&D spend in Australia

18

GM Holden todayGlobal Architectural Development Teams

A global business

19

New Reform AgendaWorkchoices

Business seems to be taking 1 of 3 approaches

• Business as Usual

• Wait and See

• Rush to Reform

20

New Reform Agenda

ConsiderationsRegardless of the level and extent of legislative reform in this area, there are 3 key considerations• Unions like any organisation are organic in nature ie. will grow

and adapt to their environment accordingly• Likewise, other stakeholders (eg. AIRC) will re-invent

themselves as necessary to continue to have a meaningful role• Employees are the key – how do we engage with them?

• Attract• Retain• Maintain • Motivate

21

Summary

• Survival of the automotive industry in Australia and companies like GM Holden now not only depends on our ability to remain internationally competitive and respond to the global market pressures

• Also depends on our capacity to contribute fully as part of a global organisation

22

US: 25.5 million(+47%) China: 15.8 million

(+587%)

Brazil: 6.4 million(+121%)

Europe: 25.3 million(+22%)

Japan: 5.3 million(-10%)India: 4 million

(+150%)

Australia: 1.2 million(+50%)

Summary Growth in Emerging Markets

23

f/c

Imports Domestic Exports Tariff Rate

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

800

700

600

500

400

300

200

100

0

Ann

ual V

olum

es (0

00)

Tarif

f Rat

e

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Summary

Note: 2010 = 5%

Reducing Tariffs

24

Summary Australia- an open market

25

Source: VFacts

0

50000

100000

150000

200000

250000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Small Large Compact & Medium SUV

Summary Large Passenger Vehicle Market

26

Muncie, INMuncie, IN

Janesville 1 & 3, WIJanesville 1 & 3, WI

Bay City, MIBay City, MI

Defiance, OHDefiance, OH

Messena, NYMessena, NY

Elizabeth, AustraliaElizabeth, Australia

Elizabeth, South AustraliaElizabeth, South Australia

Bekasi IndonesiaBekasi Indonesia

Rayong, ThailandRayong, Thailand

Rayong, ThailandRayong, Thailand

Eisenach, GermanyEisenach, Germany

Wilmington, DEWilmington, DE

Mansfield, OHMansfield, OH

Orion, MIOrion, MI

Fort Wayne, INFort Wayne, IN

Lordstown, OHLordstown, OH

Lordstown, OHLordstown, OH

Szentgotthard, HungarySzentgotthard, Hungary

Azambuja, PortugalAzambuja, Portugal

Marion, INMarion, IN

Baltimore, MDBaltimore, MD

Baltimore, MDBaltimore, MD

Indianapolis, INIndianapolis, IN

Indianapolis, INIndianapolis, IN

Strasbourg, FranceStrasbourg, France

Zaragoza, SpainZaragoza, Spain

Zaragoza, SpainZaragoza, Spain

Windsor, ONTWindsor, ONT

Ellesmere Port, UKEllesmere Port, UK

Ellesmere Port, UKEllesmere Port, UK

Trollhättan, SwedenTrollhättan, Sweden

Trollhättan, SwedenTrollhättan, Sweden

Soedertaelje, SwedenSoedertaelje, Sweden

Gothenburg, SwedenGothenburg, SwedenSTSW, MISTSW, MI

Gravatai, BrazilGravatai, Brazil

Gravatai, BrazilGravatai, BrazilMogi das Cruzes, BrazilMogi das Cruzes, Brazil

Oklahoma City, OKOklahoma City, OK

Port Quasim, PakistanPort Quasim, Pakistan

NUMMI-Fremont, CANUMMI-Fremont, CA JV

Mishawaka, INMishawaka, IN 3P

Barcelona, SpainBarcelona, Spain 3P

Steyr, Graz, AustriaSteyr, Graz, Austria 3P

Bertone, Grugliasco, ItalyBertone, Grugliasco, Italy 3P

ZAO Avtotor Kaliningrad, RussiaZAO Avtotor Kaliningrad, Russia 3P

AvtoVAZ, Togliatti, RussiaAvtoVAZ, Togliatti, Russia JV

CJSC, Zaporozhzhye, UkraineCJSC, Zaporozhzhye, Ukraine 3P

Halol, IndiaHalol, India CKD

Hanoi, VietnamHanoi, Vietnam CKDJV

6 October City, Egypt6 October City, Egypt CKD

Arica, ChileArica, Chile CKD

Bogota, ColombiaBogota, Colombia CKD

Kairouan, TunisiaKairouan, Tunisia CKDJV

Lagos, NigeriaLagos, Nigeria CKDJV

Nairobi, Kenya Nairobi, Kenya CKDJVQuito, EcuadorQuito, Ecuador CKD

Port Elizabeth 1, South AfricaPort Elizabeth 1, South Africa CKD

Port Elizabeth 2, South AfricaPort Elizabeth 2, South Africa CKD

Valencia, VenezuelaValencia, Venezuela CKD

NUMMI-Fremont, CANUMMI-Fremont, CA JV

Moraine, OHMoraine, OH

Moraine, OHMoraine, OH JV

Gliwice, PolandGliwice, Poland

Gliwice, PolandGliwice, Poland

Biala (Bielsko), PolandBiala (Bielsko), Poland JV

Tychy, PolandTychy, Poland JV

Gunsan, S. KoreaGunsan, S. Korea JV

Gunsan, S. KoreaGunsan, S. Korea JV

Gunsan, KoreaGunsan, Korea Changwon, KoreaChangwon, Korea JV

Changwon, S. KoreaChangwon, S. Korea JV

Changwon, S. KoreaChangwon, S. Korea JV

Shanghai, ChinaShanghai, China JV

Shanghai, ChinaShanghai, China JV

Shanghai N&S, ChinaShanghai N&S, China JV

Port Melbourne, AustraliaPort Melbourne, Australia JV

Wuling East & WestLiuhou, ChinaWuling East & WestLiuhou, China JV

Liuzhou, ChinaLiuzhou, China JV

Liuzhou, ChinaLiuzhou, China

AssemblyDie & StampingPowertrainComplete Knock Down (CKD)Joint Venture (JV)3rd Party (3P)Not Currently BuildingApproved Future Plant

66

474750508080

55

11

37

12

Antwerp, BelgiumAntwerp, Belgium

Antwerp, BelgiumAntwerp, Belgium

Aspern, AustriaAspern, Austria

Flint, MI N&SFlint, MI N&S

Flint 1 & 3, MIFlint 1 & 3, MI

Flint, MIFlint, MI

Sao Caetano do Sul, BrazilSao Caetano do Sul, Brazil

Sao Caetano do Sul, BrazilSao Caetano do Sul, Brazil

Arlington, TXArlington, TX

Boryong, KoreaBoryong, Korea JV

Yantai/DongYue, ChinaYantai/DongYue, China JV

Yanati, ChinaYanati, China JV

Yantai, ChinaYantai, China JV

Bupyeong, S. KoreaBupyeong, S. Korea JV

Bupyeong, KoreaBupyeong, Korea JV

Bupyeong, S. KoreaBupyeong, S. Korea 3P

Bupyeong 1 & 2, S.KoreaBupyeong 1 & 2, S.Korea 3P

Qingdao, ChinaQingdao, China JV

Qingdao, ChinaQingdao, China JV

Shreveport, LAShreveport, LA

Shreveport, LAShreveport, LA

Bowling Green, KYBowling Green, KY

Parma, OHParma, OH

Parma, OHParma, OH Toledo, OHToledo, OH

Doraville, GADoraville, GA

Doraville, GADoraville, GA

Linden, NJLinden, NJ

Tonawanda, NYTonawanda, NY

Saginaw MCO, MISaginaw MCO, MI

Saginaw , MISaginaw , MI

Grand Rapids, MIGrand Rapids, MI

Bedford, MIBedford, MI

Grand Blanc, MIGrand Blanc, MI

Pontiac, MIPontiac, MI

Pontiac East, MIPontiac East, MI

Lansing Delta Twp, MILansing Delta Twp, MI

Lansing, MILansing, MI

Lansing Craft Center, MILansing Craft Center, MI

Lansing Grand River, MILansing Grand River, MI

Lansing Tooling, MILansing Tooling, MI

Lansing Regional. MILansing Regional. MI

Lansing C, MILansing C, MI

Lansing M, MILansing M, MI

Romulus, MI EngRomulus, MI Eng

Romulus, MI TransRomulus, MI Trans

AMT South Lyon, MIAMT South Lyon, MI

Warren, MIWarren, MI

Wixom, MIWixom, MI

Detroit-Hamtramck, MIDetroit-Hamtramck, MI

Oshawa Truck, ONTOshawa Truck, ONT

Oshawa 1 & 2, ONTOshawa 1 & 2, ONT

Oshawa, ONTOshawa, ONT

CAMI-Ingersoll, ONTCAMI-Ingersoll, ONT JV

Willow Run, MIWillow Run, MI

Livonia, MILivonia, MI

Pittsburgh, PAPittsburgh, PA

CAMI, ONTCAMI, ONT JV

St. Catharines, ONTSt. Catharines, ONT

Renault, Batilly, FranceRenault, Batilly, France 3P

Shenyang 2, ChinaShenyang 2, China

Shenyang 1, ChinaShenyang 1, China JV

Bochum, GermanyBochum, Germany

Bochum, GermanyBochum, Germany

Bochum, GermanyBochum, Germany

Fredericksburg, VAFredericksburg, VA

Fairfax, KSFairfax, KS

Fairfax, KSFairfax, KS

Wentzville, MOWentzville, MO

Wentzville, MOWentzville, MO

Ramos Arizpe 1 & 2, MexRamos Arizpe 1 & 2, Mex

Ramos Arizpe, MexicoRamos Arizpe, Mexico

Ramos Arizpe, MexicoRamos Arizpe, Mexico

Toluca, MexicoToluca, Mexico

Toluca, MexicoToluca, Mexico

Silao, MexicoSilao, Mexico

Silao, MexicoSilao, Mexico

Silao, MexicoSilao, Mexico

Spring Hill, TNSpring Hill, TN

Spring Hill, TNSpring Hill, TN

Spring Hill 1 & 2, TNSpring Hill 1 & 2, TN

Sao Jose dos Campos, BrazilSao Jose dos Campos, Brazil

Sao José dos Campos Trans, BrazilSao José dos Campos Trans, Brazil

Sao Jose dos Campos, BrazilSao Jose dos Campos, Brazil

Sao José dos Campos Fam I&II, BrazilSao José dos Campos Fam I&II, BrazilRosario, ArgentinaRosario, Argentina

Rosario, ArgentinaRosario, Argentina

Rosario, ArgentinaRosario, Argentina

Kaiserslautern, GermanyKaiserslautern, Germany

Kaiserslautern, GermanyKaiserslautern, Germany

IBC, Luton, UKIBC, Luton, UK

Luton IBC, UKLuton IBC, UK

Rüsselsheim, GermanyRüsselsheim, Germany

Rüsselsheim, GermanyRüsselsheim, Germany

Rüsselsheim, GermanyRüsselsheim, Germany

Heuliez, Cerizay, FranceHeuliez, Cerizay, France 3P

Summary

JV

JV

JV

JV

Global Capacity

27

Summary

• Metamorphosis of the work force

• The global worker• The war for talent • Skill shortages• Changing workforce demographics