Comment, Free Access Articles , , ,

THE frustration at the recalcitrance shown by General Motors to listen to the Australian government’s demands for the company to negotiate in good faith with its dealers is boiling over in Canberra and trying the patience of the nations leaders at the highest levels on both sides of the isle.

In spite of representation from the highest level of government to take the Holden dealer dispute to arbitration, GM Holden has once more ignored the government and dismissed out of hand a letter from a senior minister to GM Holden interim chief Kristian Aquilina asking for his cooperation in settling the matter.

The letter, now rejected, had suggested that committing to arbitration was a way that GM “could demonstrate that it was genuinely committed to solving the dispute”.

The anger in Canberra is plain and tempers are flaring. There will be fallout.

One thing is clear and that is that GM Holden’s most recent behaviour towards the government is so palpably arrogant that it is going to set back, by years, any relationship the Coalition, and the Labor party, have with the OEMs and the Federal Chamber of Automotive Industries (FCAI).

The FCAI is now in danger of losing all credibility in Canberra.

It has watched helplessly as the political power within the motor industry moves from the OEMs over to the retailers and repairers whose presence and commercial contributions to their communities are politically strong within every electorate in Australia.

GM’s attitude can only make matters worse for the OEMs.

It is now dawning on the politicians and bureaucrats in Canberra that some foreign car makers see themselves as a law unto themselves when it comes to their operations in Australia and that any reasoned entreaties to respond to the will of the Australian government are likely to be ignored.

This will become the backdrop for the upcoming Senate hearing into the Holden departure and weaken the position of the OEMs in the ongoing development of the Automotive Franchising Code.

By thumbing its nose at the Morrison government in this way, GM Holden’s credibility in Canberra is seriously being called into question.

The federal opposition has made the first strike against GM’s future operations in Australia by calling on ASIC to investigate the company GM set up to conduct its specialist vehicle plans – GM Special Vehicles (GMSV).

The opposition has suggested that GM may have created a phoenix company that it will use to raise from the ashes the company it is winding down as it closes Holden’s operations. Labor wants the Australian Securities and Investments Commission to investigate. (See Labor letter below)

The problem is that GM Holden is ignoring the clear intent of the Morrison government which only wants a fair compensation deal for the investment 185 Australian companies and their employees made in the brand that has been so abruptly curtailed.

The latest developments …

In an extraordinary series of events late last week and over the weekend, the Morrison Government made it quite clear that it disapproved of GM Holden’s tactics of stonewalling dealers and using its uneven power over a body of Australian businesses which are seeking more realistic levels of compensation for the loss of their Holden franchise.

With the June 30 deadline looming for dealers to agree to GM’s terms – or get nothing – Ministers Karen Andrews and Michaelia Cash as well as Senator James McGrath issued a statement urging GM to the negotiation table.

The joint statement said the ministers had met with GM in Canberra and that they had an “unequivocal expectation” that GM Holden would negotiate in good faith with the dealers.

GM responded by restating its position that it was not changing its offer.

The ministers said: “General Motors must honour its promise to negotiate on compensation with Holden dealers in good faith, amid significant effort from dealers to resolve their ongoing dispute.

“Dealers have repeatedly shown they are committed to working with GM Holden to reach an outcome and finalise protracted negotiations stemming from GM’s decision to retire the Holden brand in Australia.

“GM Holden should demonstrate that same commitment,” the joint statement said.

Then it emerged that over the weekend Minister Cash wrote to Holden’s interim managing director Kristian Aquilina saying that Holden should enter into arbitration “as a matter of urgency”  asking that the June 30 deadline be extended so that arbitration can take place. (See copy of letter below).

The letter was leaked to the media.

Holden responded in a note to dealers on Monday morning saying: 

“Dear Holden Dealers,

“As you may be aware there was some publicity over the weekend regarding a suggestion that GM Holden and the Australian Holden Dealer Council would seek to settle their current dispute via arbitration, and that the deadline for the acceptance of transition support packages (TSP) would be extended beyond 30 June.

“This is not the case. Arbitration was suggested by the Federal Government but GM Holden does not agree that an arbitration process would be appropriate or helpful. We have responded to the Government accordingly.

“GM Holden’s dedicated dealer transition managers remain available to continue to speak with you to resolve any remaining issues with your TSP.

“Dealers must now make a decision on whether you accept your TSP. The deadline for the acceptance remains the close of business tomorrow, Tuesday 30 June.

“As we have always stated, we are keen to maintain an ongoing relationship with you and your business as we focus on supporting the 1.6 million Holden drivers out there. We remain hopeful you agree to do the same.”

Letter from Minister Cash to Mr Aquilina:

“The Australian Government is disappointed and concerned to hear that negotiations between you and the Australian Holden Dealer Council have again stalled.

“It has been the Government’s clear expectation from the outset that the parties should negotiate in good faith.

“In light of the failure of negotiations to resolve the dispute, it is the Government’s firm view that GM Holden and the Australian Holden Dealer Council should agree to enter into arbitration as a means to conclusively settle the outstanding matters in dispute.

“The Government is prepared to assist, where it can, to help facilitate this process. I have written to the Australian Holden Dealer Council in similar terms, encouraging its members to agree to arbitration.

“Agreeing to arbitration would signal that GM Holden is genuinely committed to resolving this dispute in a way that provides fairness to all parties.

“Given the importance, I would request you to provide a response indicating whether GM Holden would agree to take part in arbitration as a matter of urgency.

“In all the circumstances, the Government also calls upon GM Holden as a sign of good faith to extend the deadline for acceptance of its offer to the Australian Holden Dealer Council and its members for a reasonable period beyond 30 June to enable consideration to be given by both parties to the Government’s proposal.”

Earlier letter from Ministers Andrews and Cash as well as Senator McGrath to Holden:

“From day one the Morrison Government has made it clear to GM Holden that we expect them to negotiate in good faith and ensure a fair outcome for the Australian dealers who’ve carried their brand for decades, as well as their workers.

“Just last week Minister Andrews and Minister Cash met with GM Holden to reiterate that unequivocal expectation.

“Australian consumers, dealers and the Government have shown great commitment to GM Holden over many years, including more than $2 billion in taxpayer support.

It’s now time for this multinational to repay some of that faith.

“General Motors must demonstrate they’re a good corporate citizen. They must also consider their international reputation.

“The Australian Competition and Consumer Commission (ACCC) continues to monitor the negotiations between the parties and is communicating with them.

“The ACCC’s investigation is ongoing and is examining allegations relating to the good faith obligations of the Franchising Code of Conduct and the unconscionable conduct provisions of the Australian Consumer Law.

“The Morrison Government has also followed through on a promise to rebalance the new car retailing market, with Minister Andrews earlier this month introducing significant reforms to auto franchising regulations.” the joint statement said.

Letter from Senator Deborah O”Neill to James Shipton, chairman of ASIC:

“I write to you regarding a potential phoenixing situation.

“Specifically, the introduction to the Australian market of GM Special Vehicles while GM Holden has current large liabilities, particularly to its existing dealership network.

“I also note that this could involve the current directors of GM Holden moving to register GM Special Vehicles, a new company that will import and sell GM vehicles in a manner almost identical to GM Holden.

“I ask that you inquire into this and ascertain whether this is or isn’t a case of phoenixing,” Senator O’Neill’s letter said..

By John Mellor

Dealer Auction
AdTorque Edge