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FOR RELEASE: July 15, 2002

Holden to Boost Vehicle Production by 21 Percent in 2003

Holden plans to boost vehicle production at its manufacturing operation in Elizabeth, South Australia, from the current record rate of 620 vehicles a day to more than 750 a day by the end of next year.

A rapidly expanding domestic product portfolio, U.S. Monaro export delivery schedule that commences in September 2003 and longer term export strategies are among factors driving the dramatic planned increases in manufacturing capacity and flexibility.

Holden plans to invest $2 billion in capital and product programs over the next five years. It will spend $480 million within the next 18 months to upgrade plant and improve processes at the Elizabeth facility, already one of the world’s most flexible and productive automotive manufacturing operations.

Holden expects to build a record total of 143,000 vehicles in 2002 and is targeting annual volume of 180,000 by 2008 to achieve economies of scale necessary to achieve a sustainable position in the global marketplace.

Holden Chairman and Managing Director, Peter Hanenberger, said the company was gearing up for one of its biggest challenges.

“This capital expenditure and capacity expansion program is necessary if Holden is to move from a relatively low volume producer to a company that manufactures vehicles and components at sustainable international-scale volumes.

“Holden’s strategy for future success involves becoming a competitive producer of rear wheel drive passenger vehicles for domestic and global niche markets. These will be based on the versatile Commodore platform that will continue to be the backbone of Holden’s vehicle manufacturing operations,” Mr Hanenberger said.

Holden is already making inroads with the Commodore and Statesman models that sell in a growing range of export markets, notably the Middle East, branded as Chevrolets. The Monaro coupe will be exported to the Middle East later this year with 1200 units and the United States at the rate of 18,000 a year from late 2003 as a 2004 model.

The substantial tooling up at Elizabeth will mean an increase in staffing levels, and possible changes to the current shift pattern to facilitate productivity increases are being reviewed by a project team comprising management, unions and employees.

Elizabeth’s 4300-strong workforce produces 28 models from nine variants off the Commodore platform in left and right hand drive configurations for seven domestic and export markets.

All major areas of Holden’s Elizabeth operation – the Press, Fabrication, Body, Paint, Plastics and General Assembly facilities – will be upgraded.

In the Press Shop, where major body panels and components are stamped from sheet metal, two existing large press lines and a blanking line will be replaced at a cost of $68 million to yield the most modern and flexible large press capability in the country.

Tandem press lines are being upgraded to include quick die change facilities and inter-press robot automation, allowing for extensive productivity gains. A $45 million third transfer press to be commissioned in 2005 will further increase capacity.

In Fabrication, plans include modifications to the front suspension crossmember cell, expansion of laser cutting capability and duplication of the left-hand drive dash cell to complement the rise in export vehicle build requirements.

Fifty five million dollars will be invested in significant upgrades to Body Shop niche model welding lines, and the Paint operation will benefit from the addition of a $9 million automatic storage facility for painted bodies.

Holden’s world-competitive Plastics facility will benefit from the installation of a third 40,000 Kilo Newton injection moulding machine to increase output of the bumper facias that are integral to its platform flexibility. The facia paint facility will be further automated prior to the introduction of a totally new, $27 million facia paint operation in 2004.

In General Assembly, where the largest production team in the plant manages the transformation of bare body shells into ready-to-roll Holdens, new systems will deliver considerable gains in flexibility, mostly related to improvements in material flow and process control.

“Speed to market becomes a real issue as we develop more customer-focused cars or we stand to miss opportunities entirely,” Mr Hanenberger continued. “All the while we must ensure our quality is improving constantly and is on par with the world’s best.

“We will also be placing greater focus on automotive research and development to complement our Australian engineering ingenuity. It is crucial if we are to foster greater innovation in products and processes to achieve necessary economies of scale through additional exports and import replacement.

“If Australia is to be viewed by international investors as a competitive location for this global industry, it must be seen as a country that supports its automotive industry,” Mr Hanenberger concluded.

Holden exports of vehicles, engines, components and engineering services contributed $1.16 billion to Australia’s balance of trade in 2001.

Holden spends more than $2.6 billion a year on components and services, and purchases of vehicle components exceed $1.6 billion dollars. Close to 200 of Holden’s 332 direct suppliers are Australian-based.

In the past five years, Australian vehicle exports have almost doubled, and revenue now approaches $5 billion a year – more than such staple earners as beef, wheat or wool.