GM: Labor Cost Cuts Crucial to Survival of Australia Plants

General Motors Co.'s Holden unit has opened talks with its Australian union with a warning that deep reductions in labor costs are needed to keep the company's factories in the country from closing.

Holden Managing Director Mike Devereux tells reporters that it costs the company about $3,600 more to produce a vehicle in Australia than it does at most other GM facilities. Devereux noted previously that exchange rates have driven up expenses at Holden's plants 60% over the past 10 years.

The unit said in April that it would eliminate 500 jobs nearly 12% of its workforce by this summer. Holden operates an assembly plant in the Adelaide suburb of Elizabeth and an engine factory adjacent to company headquarters in Port Melbourne.

The Australian dollar's 83% surge against the yen in less than five years opened the way for a flood of lower-priced Japanese imports and has made locally built vehicles more expensive abroad.

Ford Motor Co. said last month it will shutter its two assembly plants in Australia by October 2016, thus eliminating 1,200 jobs. Nissan and Mitsubishi have ended local production. Industry experts warn that Ford's exit could have a domino effect because it leaves only Holden and Toyota to support the country's large supplier base.