Holden's future in Australia under threat

General Motors is considering pulling the pin on its Holden manufacturing operation. Photo / Supplied

The South Australian and federal governments are negotiating to provide a funding package to car maker Holden to ensure the future of the company's Australian assembly operations.

South Australian Premier Jay Weatherill says Holden's parent company, General Motors (GM), is considering closing its Australian operations.

"We are, of course, urging GM not to pursue that option," Mr Weatherill said on Tuesday.

"However, we recognise that car making is a global industry."

The SA premier is in the US where he joined federal Manufacturing Minister Kim Carr in talks with GM chief executive Dan Akerson on the future of Holden's operations.

That includes discussions on an investment package from the state and federal governments that will help secure Holden's future and also the future of local component suppliers.

"In the light of ongoing speculation about Holden's future in Australia, I have come to Detroit to put South Australia's case for being a strong part of GM's future global plans," Mr Weatherill said.

"Today we received a clear message from Mr Akerson and (Holden boss Mike) Devereux that they are committed to working with government to secure Holden's future in Australia and, in particular, the Elizabeth plant."

The SA premier said it was likely the future of car making in Australia would involve a smaller but more secure industry.

"This will require us to build on those elements of our local industry which are world class and to lift standards in the balance of our industry," he said.

"This will be achieved through the agreement we are currently negotiating with General Motors.

"This agreement will involve co-investment by state and federal governments and a much closer working relationship with General Motors and Holden and component suppliers in Australia."

As part of the discussions, GM has agreed to establish a working group to look at increasing opportunities for local component suppliers in global markets.

Mr Weatherill has not disclosed the level of funds the two governments will commit, but said the package would be significant.

Mr Devereux said Holden and the state and federal governments had a "strong mutual desire" to retain Holden's capabilities in design, engineering and manufacturing.

But he said there was unprecedented competition for capital investment in manufacturing and product development for the next generation of global vehicles.

"Car makers are investing billions of dollars to develop future vehicles, so it's critical for Australia to have consistent and competitive long-term polices that make this country an attractive place for General Motors and other companies to continue to invest," he said.

"The discussions with the minister and the premier have been very positive and productive.

"We're making good progress in developing a new co-investment plan to help secure a long-term future for Holden and the automotive and manufacturing industry more broadly."

- AAP