Life & Style | Motoring
Exports from GM's Australian car plant nosedive due to strengthening currency
Holden facility ships abroad only 36,000 units in 2007 compared with 60,000 in 2005 despite growing demand.
- By Saifur Rahman, Business News Editor
- Published: 00:47 March 3, 2008
Adelaide: "My days start with three concerns: how many cars are we going to make, how many are we going to sell and what's the value of the Australian dollar against major currencies," Rod Keane, executive director for manufacturing at General Motors' Holden plant in South Australia, said.
"The strength of the Australian dollar has negatively impacted our exports. Ever since the value of the Australian dollar began to appreciate around 2001-02, our exports began to decline. So there is a direct co-relation."
GM Holden Ltd exported 60,000 cars in 2005, which came down to 36,500 units in 2007, despite a growing demand for cars worldwide, including the Middle East. "Roughly half of our exports go to the Middle East, where we mainly supply the Chevrolet Caprice and Lumina," he added.
The company's production plant has a capacity for 145,000 units and it expects to produce 135,000 units this year, up from last year's 107,795.
"We expect to export about 60,000 units this year, about half of those to the Middle East," Keane said.
"The Middle East is a good market and a growing market for us. The demand for luxury cars is growing in that region which could boost our overall exports."
Holden was the first Australian automobile manufacturing plant, set up in the 1920s. In 1923, General Motors acquired it and in 1948 began to roll out the first indigenous Australian cars from the plant.
In 1958, it widened the facility at its current location of 123 hectares and gradually expanded and employed the most modern technology.
"Ours is one of the most advanced car manufacturing plant with a high level of technology employed in production," he said, while giving a tour of the plant.
"About 95 per cent of our production work is done by robots - giving the car the utmost precision it needs in product performance.
"This is how we have reached this high level of production capability - rolling out a car in every 76 minutes."
He said, the company has invested more than A$500 million in upgrading the production facilities.
Assembly
A car typically takes two working days to finish. It starts with raw steel panels that are pressed at the Press Shop through the moulds to create the right shapes and curves of the steel body, part by part. These include the exterior body panel, the base steel structure that holds the body together, the bonnet covers, the roof, etc.
These are then brought to the Body Shop or the final assembly line separately and placed at various locations at the assembly line, next to the robots, from where the robots adds these units with the body as the skeleton of the car moves from one station to the other in a long assembly line - electronically controlled.
More than 400 automated robots assemble the car as its skeleton moves from one station to the other. At each station the robots pick up the designated part - a steel frame that comes from the Press Shop - and then assembles it with the skeleton.
Progressively, the bonnets, door panels, the doors, rear and front of the car comes to shape as the skeleton keeps moving from one station to the other. At each station, the robots get 76 seconds to finish his part of the job.
As the skeleton takes shape, technicians put final touches on the dashboard, the steering panels and associated works to make it ready for robots to assemble with the car.
Once these are fixed, an assembled 'underbody' is being readied by humans and robots, that include the engine, axle, gearbox and the bottom frame on which the car sits.
The joined body and underbody then moves to another station where technicians add front and rear bumpers to the body, before the wheels and car upholstery are put in place for the car to be made ready for electronic and road tests.
Domestic market
"The engine and automatic transmission are the two components that we import. The rest are pretty much domestically sourced," Keane explains.
"We do outsource some parts through domestic suppliers. However, the minimal extent. Almost all major components are done at the plant."
Australia's domestic car demand is about 1 million per year, shared by 44 manufacturers, who roll out 186 different models.
Among the major players, Toyota and Ford runs assembly plants as well. Toyota's Camry are exported from Australia to the Middle East
"Despite the strong competition, we have managed to remain as one of the most important players in the domestic market," Keane said.
Challenges
"Keeping the cost of production low, while maintaining or optimising production efficiency is one of the challenges," he said.
"The strengthening Australian dollar poses additional challenges, as our cars become expensive compared to our competitors."
The company last year laid off about 600 people as export fell.
"Despite the reduction in workforce, we have increased the daily production from 520 to 620 - with reduced workforce - maximising efficiency in production to keep the cost of production competitive," he said.
Tata Nano
The launch of a low-cost vehicle, Tata Nano, by India's Tata Motors poses a great challenge to other manufacturers. For the first time, production cost of a motor car has been brought down to the psychological level of $2,500.
"The advent of a $2,500 Tata Nano poses further challenges and focuses on the cost of production. We might never reach there in terms of production costs, but the challenge is that we need to significantly lower the costs to make them competitive," Keane said.
"It provides a first level of entry and puts a lot of pressure on manufacturers," he added.
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