Wage Freezes Persuade GM to Keep Australia Plant Open

General Motors Co.'s Holden unit will continue vehicle production at its factory near Adelaide, Australia, after workers there agreed to a three-year wage freeze, according to The Wall Street Journal.

Mark Reuss, head of GM's North America unit, tells the newspaper the labor cooperation will make Holden more competitive. When talks with its Australian union began in June, the company said it costs about US$3,600 more to build a vehicle there than it does at most other GM facilities.

High local labor costs and a flood of inexpensive imported cars from Japan have crippled the country's auto industry. Sales of Australia-made vehicles plunged 21% to 62,800 units in the January-July period of 2013.

In April Holden announced the elimination of 500 jobs, or 12% of its workforce there. A month later Ford said it would shutter both its assembly plants in the country by 2016.

Australia, which is eager to keep its two remaining carmakers, is offering a combined A$200 million ($184 million) in aid to GM and Toyota Motor Corp.