Brendan24688
20-09-2005, 03:56 PM
from Link (http://carsguide.news.com.au/news/story_page/0,8269,16522650%255E21822,00.html)
Sorry if it's a repost. I aint seen it
Holden crisis talks - Exclusive interview
Paul Gover
09sep05
Times are tough at the red lion. Holden has seen Commodore sales slump this year, it has taken an all-round beating from Toyota in showrooms and has been forced to call an early finish to the Monaro.
It's also had to cut its engineering workforce at Fishermans Bend and has just announced 1400 redundancies after cancelling the third shift at its assembly plant in Adelaide.
It is almost certain to lose its overseas business for the Pontiac GTO, has been forced to cut-price compact cars from South Korea, and has yet to get anything but the VE Commodore sedan approved for sales beyond 2006.
Even the once-unbeatable Holden Racing Team has taken a kicking.
It looks bleak, and some people even joked a fortnight ago that the fire at its engine factory in Melbourne was a self-inflicted wound.
The man who has the blowtorch on his belly is Denny Mooney, the American executive who sits in the big office at GM Holden's shiny new headquarters.
He followed the charismatic Peter Hanenberger into the top job at Holden after the turbocharged German engineer drove the company through its biggest growth period in recent history.
Everything looked good when Hanenberger retired, but now Mooney is steering a troubled ship and plugging leaks.
But the 59-year-old engineer refuses to get bogged down or deflated, even when faced with tough questions this week.
How are things at Holden?
Things are pretty difficult right now.
Anytime you make an announcement like we made on the third shift is difficult for everybody. Not just the people at the plant and their families. Everyone wonders what's going on in the business and the future of the business.
It's not unlike what's going on in the auto business worldwide. I tell people that if they don't like cars and you don't like competition, they might not want to be in the auto business.
Is it a crisis?
No, no, it's not a crisis.
It's something we need to do. I call it "right sizing" the business.
The reality is that a two-shift operation in Adelaide is much more appropriate for our demand. I would much rather be capacity constrained than build too many cars.
Our product development operation is strong and has lots of work into the future. We are working on lots of new concepts in vehicles, so we still have a lot of work on our platter.
Even though times are tight, we're still making money.
GM globally is doing it tough, but Ford's health isn't exactly the greatest, either, globally.
But haven't you also cut your engineering workforce?
We did that over 12-15 months.
If you look at the new car for next year, it's all new. There was a huge amount of engineering work on that car. When you have those sort of huge peak workloads then you typically hire contract designers and engineers. Over time, as that workload goes down, the number of designers and engineers goes down.
But we still have more than 1000 in engineering right now. That's much much bigger than any other product and engineering operation in Australia now.
So things are tough?
No question. Every company globally has the challenge to be cost competitive, as the marketplace is so competitive. Look at the marketplace in Australia, where the strong Australian dollar has really increased the competition.
It's great for the consumer, but it's very challenging if you're a local manufacturer, because you have got to be price competitive.
Is the fuel price making it worse?
Fuel prices are a concern, no question, when your core product is a full-sized vehicle like our Commodore.
I wouldn't say we've buried our head in the sand but we have been very successful in the past with a full-sized car and I think we'll be successful in the future.
We've talked diesels before, and that will be considered. We've got six-speed automatic transmissions in the new car.
You've just got to keep moving the technology forward to make that kind of vehicle as fuel efficient as you can, because people like all the comfort and convenience of that car.
Are consumers reacting to the fuel price?
People will get nervous. The message is that the Commodore's fuel efficiency is still very good.
Look at the real economy for what you get and the efficiency is very good and it will keep getting better.
It's not as fuel efficient as a small car, but you give up things for a small car.
With sales sliding, is this the beginning of the end for traditional Australian cars?
No. In fact, the other factor everyone should consider is that every car in the upper-medium segment is in the last or last couple of years of its life cycle.
Every product has a decay rate. Our product, the Falcon, the Mitsubishi, even the Toyota Avalon, they are all in their last year. That doesn't happen very often in one segment. It's kind of unusual, I have to say.
But you cannot change anyway, can you?
No, we set our course two to three years out. We have long product development cycles. The course on this new product was set 2 1/2 to three years ago.
Did you get it wrong for VE?
I don't think so. I'm still very excited about the new car.
I just drove some prototypes this week at our proving ground at Lang Lang and I'm extremely excited.
Don't you have to say that?
Every manufacturer will put on a straight face and say their product is great, but I've been in the car and I am genuinely fired up about the product.
Turning back to the factory, you have cut more than the third-shift workforce, haven't you?
Yes, it's more than the third shift. The new product is much more efficient to build, so if you look at efficiency numbers in the plant and the people you need, there are ultimately more people who will migrate out of the plan than we put into the third shift.
What do you mean by migrate?
Right now we are trying to use voluntary separations. So if you are a person with 30 years under your belt, the package might be an incentive to take early retirement.
We have talked about 1400 people ultimately, but we will still have employment for 4300.
By the way, right now most factories around the world that produce about 200,000 cars a year would have half that many employees.
Is Adelaide inefficient?
Not really, because we make a lot of components inside the factory that other factories get from suppliers.
That's interior trim, interior panels, rear suspension. We make our own steering knuckles, our plastic dashboards, and in other factories we typically buy that in.
So we are much more vertically integrated than a typical GM Plant.
Doesn't that make you vulnerable?
For a lot of big commodities, it is more efficient. You don't have shipping costs.
What is GM's commitment to the factory?
If you walk around and look at the press line, the new paint system for bumpers and the body dip system, we have put in a lot of new stuff. In the past 3 1/2 years we've spent $1.8 billion. That's $1.8 billion.
It won't close?
No. We're in it for the long haul.
Don't you also have two separate production lines?
No, we're going to build them on the same line next year. In the body shop we will will build VZ utes and wagons, Crewman and those body styles on one line, as those continue for a while, and in the other half we'll build the new product. But from paint to general assembly they run on the same line.
People are worried that the only approved VE product is the sedan. Can you tell us more?
I'll tell you point blank that we have other derivatives that we're working on right now.
Are any approved?
Oh, yeah, but not all of them. I can tell you that one additional body style is approved and one is in the hopper right behind.
Before you ask, I'm not going to go into details . . .
Are we seeing only the tip of the iceberg on the VE range?
Yeah, there is a lot more to come.
We are committed and I'm committed to have enough demand that we are capacity constrained. I want more demand than we can satisfy with two shifts.
What about Monaro?
It's one of the future body styles we're working on. But no news, other than we have some great concepts.
When will we see them?
I won't answer that.
How do you think Holden compares with other local manufacturers?
I think every local manufacturer has challenges when macro economics are the way they are.
I've talked about the strong dollar, which also puts pressure on Toyota, Ford and Mitsubishi.
We happen to have the highest volume, and we are the largest local manufacturer, so there is more pressure on us. The Middle East is still huge for our exports, but . . .
Toyota relies on exporting Camry and imports, so there is a lot less pressure. Ford is more domestic, so it's a little different.
Do you think Ford made a great call on Territory?
I would say Ford beat us to the punch in that segment.
But if you look at the sales there is a lot of interaction between the Falcon and the Territory.
If you look at our Commodore sales, they are not down nearly as much as the upper-medium segment as a whole. So we have actually increased our market share.
Do you have a Territory counter-punch?
Well, we've got an all-new Commodore. I think the product will speak for itself.
And it's the first product that we've done 100 per cent here in Australia. We've typically come off Opel product in the past and this is 100 per cent home-grown.
Do you think that sounds silly, coming from an American?
What can I say, it does.
Did you think Australia and Holden would be this tough?
No, I didn't, quite honestly. I got here two years ago, exactly this time in September, and Holden had some phenomenal years in 2001 and 2002 in particular.
There were some signs that the business was going to get tough, as our market share was in decline and in 2003 Toyota took number one, so there were signs of challenges.
Not knowing much about this market, I didn't have much appreciation of how tough Australia is. I saw some data the other day which showed there are more manufacturers competing here than in China, and this is a one-million market and China is five million.
Is that why you have switched to South Korean small cars?
We've gone to Korea primarily because we believe we can get better value in this marketplace. We think they're great little products, but we think we can be more competitive on prices.
And I think we have more influence than historically we have had with German products we have taken for Holden.
Will the Korean experiment work?
I think the products we have sourced from Korea will work. I've very confident. We cannot get them fast enough.
But what really excites me is the next generation of products, and we're already working on those.
Some of that is the influence we have, with people like Max Woolf on the design side, which will really work for Australia. The value is very exciting. And I'm very confident in what the chassis guys are doing to the cars at Lang Lang.
What about bad feeling over closing Daewoo in Australia?
As I said at the time, the Daewoo brand had no equity. We couldn't make money and frankly the dealers couldn't make money.
As you probably know, the same thing was done outside Korea. We did it in Europe, Eastern Europe and the US.
The other thing about the Daewoo brand is that it has lots of other non-automotive products. We didn't own the brand and other products could influence your product.
Do you know that people are blaming you personally for Holden's problems?
Sure I do, and that's only natural. Hey, I'm not in here for a popularity contest.
I'm not here to make a name for myself. I really want this company to succeed. I'm the leader of the organisation and I'm going to take the shots and that's OK.
Is it worse because you followed Peter Hanenberger?
He was here during some great times. And he's one of the most passionate automotive people I know and did some great things with the Holden organisation.
But conditions are much much tougher than they were three or four years ago.
Did he push Holden too far?
That's a difficult question to answer. If you sit here and look back, the 20:20 hindsight is easy. We took on a lot.
If you look at history in vivid detail to see what's changed, and look at some of the things going on – oil prices, competition and the strength of the dollar – then no one forecast them.
You didn't answer the question.
On whether he pushed too far? I think that as leader, you always struggle with how hard to push an organisation against what the organisation can achieve.
Remember we're still number two and the Commodore is the best-selling car in Australia. It's not like we're not enjoying some success.
Everything is relative. Things are tougher than they were, but it's still not a disaster.
What does the future look like?
I know what's happening, I know the future, I know what's in our plans, so I can have more confidence than people that don't know what is in those plans.
It's a challenge. To be quite honest I cannot just blurt this stuff out and communicate it to the masses. Frankly, the product plans have to be kept confidential.
Because of your opposition?
Sure. You don't want your competition to know what you're doing. Just read some military history.
How much longer will Denny Mooney be chairman of Holden?
I really don't know. When I took this assignment we never talked about a length of time.
But I don't see a move any time soon, not with all we have going on. We've got the new Commodore, the new stuff from Daewoo, everything else. It's a challenging time but it's never dull.
Herald Sun
Sorry if it's a repost. I aint seen it
Holden crisis talks - Exclusive interview
Paul Gover
09sep05
Times are tough at the red lion. Holden has seen Commodore sales slump this year, it has taken an all-round beating from Toyota in showrooms and has been forced to call an early finish to the Monaro.
It's also had to cut its engineering workforce at Fishermans Bend and has just announced 1400 redundancies after cancelling the third shift at its assembly plant in Adelaide.
It is almost certain to lose its overseas business for the Pontiac GTO, has been forced to cut-price compact cars from South Korea, and has yet to get anything but the VE Commodore sedan approved for sales beyond 2006.
Even the once-unbeatable Holden Racing Team has taken a kicking.
It looks bleak, and some people even joked a fortnight ago that the fire at its engine factory in Melbourne was a self-inflicted wound.
The man who has the blowtorch on his belly is Denny Mooney, the American executive who sits in the big office at GM Holden's shiny new headquarters.
He followed the charismatic Peter Hanenberger into the top job at Holden after the turbocharged German engineer drove the company through its biggest growth period in recent history.
Everything looked good when Hanenberger retired, but now Mooney is steering a troubled ship and plugging leaks.
But the 59-year-old engineer refuses to get bogged down or deflated, even when faced with tough questions this week.
How are things at Holden?
Things are pretty difficult right now.
Anytime you make an announcement like we made on the third shift is difficult for everybody. Not just the people at the plant and their families. Everyone wonders what's going on in the business and the future of the business.
It's not unlike what's going on in the auto business worldwide. I tell people that if they don't like cars and you don't like competition, they might not want to be in the auto business.
Is it a crisis?
No, no, it's not a crisis.
It's something we need to do. I call it "right sizing" the business.
The reality is that a two-shift operation in Adelaide is much more appropriate for our demand. I would much rather be capacity constrained than build too many cars.
Our product development operation is strong and has lots of work into the future. We are working on lots of new concepts in vehicles, so we still have a lot of work on our platter.
Even though times are tight, we're still making money.
GM globally is doing it tough, but Ford's health isn't exactly the greatest, either, globally.
But haven't you also cut your engineering workforce?
We did that over 12-15 months.
If you look at the new car for next year, it's all new. There was a huge amount of engineering work on that car. When you have those sort of huge peak workloads then you typically hire contract designers and engineers. Over time, as that workload goes down, the number of designers and engineers goes down.
But we still have more than 1000 in engineering right now. That's much much bigger than any other product and engineering operation in Australia now.
So things are tough?
No question. Every company globally has the challenge to be cost competitive, as the marketplace is so competitive. Look at the marketplace in Australia, where the strong Australian dollar has really increased the competition.
It's great for the consumer, but it's very challenging if you're a local manufacturer, because you have got to be price competitive.
Is the fuel price making it worse?
Fuel prices are a concern, no question, when your core product is a full-sized vehicle like our Commodore.
I wouldn't say we've buried our head in the sand but we have been very successful in the past with a full-sized car and I think we'll be successful in the future.
We've talked diesels before, and that will be considered. We've got six-speed automatic transmissions in the new car.
You've just got to keep moving the technology forward to make that kind of vehicle as fuel efficient as you can, because people like all the comfort and convenience of that car.
Are consumers reacting to the fuel price?
People will get nervous. The message is that the Commodore's fuel efficiency is still very good.
Look at the real economy for what you get and the efficiency is very good and it will keep getting better.
It's not as fuel efficient as a small car, but you give up things for a small car.
With sales sliding, is this the beginning of the end for traditional Australian cars?
No. In fact, the other factor everyone should consider is that every car in the upper-medium segment is in the last or last couple of years of its life cycle.
Every product has a decay rate. Our product, the Falcon, the Mitsubishi, even the Toyota Avalon, they are all in their last year. That doesn't happen very often in one segment. It's kind of unusual, I have to say.
But you cannot change anyway, can you?
No, we set our course two to three years out. We have long product development cycles. The course on this new product was set 2 1/2 to three years ago.
Did you get it wrong for VE?
I don't think so. I'm still very excited about the new car.
I just drove some prototypes this week at our proving ground at Lang Lang and I'm extremely excited.
Don't you have to say that?
Every manufacturer will put on a straight face and say their product is great, but I've been in the car and I am genuinely fired up about the product.
Turning back to the factory, you have cut more than the third-shift workforce, haven't you?
Yes, it's more than the third shift. The new product is much more efficient to build, so if you look at efficiency numbers in the plant and the people you need, there are ultimately more people who will migrate out of the plan than we put into the third shift.
What do you mean by migrate?
Right now we are trying to use voluntary separations. So if you are a person with 30 years under your belt, the package might be an incentive to take early retirement.
We have talked about 1400 people ultimately, but we will still have employment for 4300.
By the way, right now most factories around the world that produce about 200,000 cars a year would have half that many employees.
Is Adelaide inefficient?
Not really, because we make a lot of components inside the factory that other factories get from suppliers.
That's interior trim, interior panels, rear suspension. We make our own steering knuckles, our plastic dashboards, and in other factories we typically buy that in.
So we are much more vertically integrated than a typical GM Plant.
Doesn't that make you vulnerable?
For a lot of big commodities, it is more efficient. You don't have shipping costs.
What is GM's commitment to the factory?
If you walk around and look at the press line, the new paint system for bumpers and the body dip system, we have put in a lot of new stuff. In the past 3 1/2 years we've spent $1.8 billion. That's $1.8 billion.
It won't close?
No. We're in it for the long haul.
Don't you also have two separate production lines?
No, we're going to build them on the same line next year. In the body shop we will will build VZ utes and wagons, Crewman and those body styles on one line, as those continue for a while, and in the other half we'll build the new product. But from paint to general assembly they run on the same line.
People are worried that the only approved VE product is the sedan. Can you tell us more?
I'll tell you point blank that we have other derivatives that we're working on right now.
Are any approved?
Oh, yeah, but not all of them. I can tell you that one additional body style is approved and one is in the hopper right behind.
Before you ask, I'm not going to go into details . . .
Are we seeing only the tip of the iceberg on the VE range?
Yeah, there is a lot more to come.
We are committed and I'm committed to have enough demand that we are capacity constrained. I want more demand than we can satisfy with two shifts.
What about Monaro?
It's one of the future body styles we're working on. But no news, other than we have some great concepts.
When will we see them?
I won't answer that.
How do you think Holden compares with other local manufacturers?
I think every local manufacturer has challenges when macro economics are the way they are.
I've talked about the strong dollar, which also puts pressure on Toyota, Ford and Mitsubishi.
We happen to have the highest volume, and we are the largest local manufacturer, so there is more pressure on us. The Middle East is still huge for our exports, but . . .
Toyota relies on exporting Camry and imports, so there is a lot less pressure. Ford is more domestic, so it's a little different.
Do you think Ford made a great call on Territory?
I would say Ford beat us to the punch in that segment.
But if you look at the sales there is a lot of interaction between the Falcon and the Territory.
If you look at our Commodore sales, they are not down nearly as much as the upper-medium segment as a whole. So we have actually increased our market share.
Do you have a Territory counter-punch?
Well, we've got an all-new Commodore. I think the product will speak for itself.
And it's the first product that we've done 100 per cent here in Australia. We've typically come off Opel product in the past and this is 100 per cent home-grown.
Do you think that sounds silly, coming from an American?
What can I say, it does.
Did you think Australia and Holden would be this tough?
No, I didn't, quite honestly. I got here two years ago, exactly this time in September, and Holden had some phenomenal years in 2001 and 2002 in particular.
There were some signs that the business was going to get tough, as our market share was in decline and in 2003 Toyota took number one, so there were signs of challenges.
Not knowing much about this market, I didn't have much appreciation of how tough Australia is. I saw some data the other day which showed there are more manufacturers competing here than in China, and this is a one-million market and China is five million.
Is that why you have switched to South Korean small cars?
We've gone to Korea primarily because we believe we can get better value in this marketplace. We think they're great little products, but we think we can be more competitive on prices.
And I think we have more influence than historically we have had with German products we have taken for Holden.
Will the Korean experiment work?
I think the products we have sourced from Korea will work. I've very confident. We cannot get them fast enough.
But what really excites me is the next generation of products, and we're already working on those.
Some of that is the influence we have, with people like Max Woolf on the design side, which will really work for Australia. The value is very exciting. And I'm very confident in what the chassis guys are doing to the cars at Lang Lang.
What about bad feeling over closing Daewoo in Australia?
As I said at the time, the Daewoo brand had no equity. We couldn't make money and frankly the dealers couldn't make money.
As you probably know, the same thing was done outside Korea. We did it in Europe, Eastern Europe and the US.
The other thing about the Daewoo brand is that it has lots of other non-automotive products. We didn't own the brand and other products could influence your product.
Do you know that people are blaming you personally for Holden's problems?
Sure I do, and that's only natural. Hey, I'm not in here for a popularity contest.
I'm not here to make a name for myself. I really want this company to succeed. I'm the leader of the organisation and I'm going to take the shots and that's OK.
Is it worse because you followed Peter Hanenberger?
He was here during some great times. And he's one of the most passionate automotive people I know and did some great things with the Holden organisation.
But conditions are much much tougher than they were three or four years ago.
Did he push Holden too far?
That's a difficult question to answer. If you sit here and look back, the 20:20 hindsight is easy. We took on a lot.
If you look at history in vivid detail to see what's changed, and look at some of the things going on – oil prices, competition and the strength of the dollar – then no one forecast them.
You didn't answer the question.
On whether he pushed too far? I think that as leader, you always struggle with how hard to push an organisation against what the organisation can achieve.
Remember we're still number two and the Commodore is the best-selling car in Australia. It's not like we're not enjoying some success.
Everything is relative. Things are tougher than they were, but it's still not a disaster.
What does the future look like?
I know what's happening, I know the future, I know what's in our plans, so I can have more confidence than people that don't know what is in those plans.
It's a challenge. To be quite honest I cannot just blurt this stuff out and communicate it to the masses. Frankly, the product plans have to be kept confidential.
Because of your opposition?
Sure. You don't want your competition to know what you're doing. Just read some military history.
How much longer will Denny Mooney be chairman of Holden?
I really don't know. When I took this assignment we never talked about a length of time.
But I don't see a move any time soon, not with all we have going on. We've got the new Commodore, the new stuff from Daewoo, everything else. It's a challenging time but it's never dull.
Herald Sun