Holden tipped to pull out of Aust from 2016

Workers assembling cars at Holden's plant in Elizabeth, South Australia. General Motors is widely rumoured to be pulling out of Australia by 2016, regardless of any Govt assistance plan.

General Motors is set to shut its government-supported Australian car making operation in 2016, potentially putting an end to the 50,000-job vehicle assembly industry, local media reports said.

The ABC said GM's Holden was in discussions with the government over its future but that unnamed senior government ministers had told the broadcaster that it would cease production as early as 2016.

Industry Minister Ian Macfarlane and Opposition Industry spokesman Kim Carr issued statements denying a decision has been made. Macfarlane met with Holden on Thursday and said talks were continuing, the ABC said.

The speculation came as Australia's productivity commission continued an inquiry into the future of the car industry that is expected to determine Holden's future after key competitor, Ford, announced in May its plan to stop its Australian manufacturing by 2016 with the loss of 1200 jobs.

If the commission recommends against ongoing funding, Holden is likely to follow Ford and close its assembly facilities, the ABC said. A final report is due on March 31.

Holden said its discussions with the Government were continuing, and it did not respond to speculation. Industry Minister Ian Macfarlane said he has spoken to Holden and they have denied the reports.

Research released last month suggested that Holden's closure would cost the South Australian economy $1.24 billion and 13,200 jobs alone.

Australian unemployment is currently running at 5.7 per cent.

The Federal Chamber of Automotive Industries says the industry directly employs more than 45,000 people across the country.

The Australian Manufacturing Workers Union says Toyota would be likely to follow suit, meaning the end of the Australian automotive industry.

In that proves to be the case, up to 50,000 jobs could be lost across the country, with second and-third tier suppliers also forced to close their operations, the ABC said.

Ford's exit had long been expected after 20 years of declining fortunes for the industry. Early this year, Ford Australia president Bob Graziano blamed the high Australian dollar, rising costs and "one of the most competitive and crowded automotive markets in the world" for the decision to end local production. He said costs in Australia were twice those of Europe and four times those of Asia. Toyota - the only other Australian vehicle manufacturer - is widely expected to close its lines within the next few years.