Ford, Holden production at risk as parts supplier closes

Australia's automotive manufacturers have been placed in limbo today after a major parts supplier closed its factories indefinitely.
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Approximately 400 employees from aiAutomotive in Woodville, South Australia and Dair Industries in Dandenong and Gisborne in Victoria were turned away from work this morning as parent company Autodom Limited closed its doors, citing difficult economic conditions and a lack of support from the local manufacturing industry.

Autodom supplies hundreds of unique components to Australia’s three local automotive manufacturers – Ford, Holden and Toyota – and the sudden announcement has put the immediate production plans of two of those under a cloud.

Ford Australia, which sources more than 400 different components from Autodom for its Falcon and Territory vehicles, appears to be the hardest hit by the plant closures.

Ford Australia public affairs director Sinead Phipps said the Broadmeadows-based manufacturer could be forced to stop production as early as the middle of next week if Autodom did not resume supplying parts soon.

“We are currently assessing what effect it will have on our production,” Phipps said. “We are okay until the middle of next week but if it’s not resolved it could potentially affect our production then.”

She said it would require “significant work” to find new suppliers for all 400-plus components if Autodom did not reopen its doors.

Holden external communications director Craig Cheetham said the Elizabeth-based manufacturer, which sources roughly 100 parts from Autodom for its Commodore and Cruze vehicles, may also be forced to stop production next week if no resolution was reached.

“They build some fairly critical components for us and without those components we could see an idling of production from some point next week,” Cheetham said.

“We’re in a bit of a limbo period at the moment. We’re waiting to see how it all pans out but it’s a bit difficult to give any clear answers right now.

“We’re going to do what we can to minimise the disruption to both our employees and to our manufacturing capabilities.”

Toyota is more sheltered from the closures than Ford and Holden as it sources only two components from Autodom for its locally produced vehicles.

Toyota Australia external affairs manager Beck Angel said it was business as usual at the company’s Altona production plant for now.

“At this stage we’re not impacted by the closure of Autodom,” Angel said. “We’ve got sufficient supply from them so we’re not stopping production.”

She said Toyota had enough parts to support production for “more than a few weeks”, and would get a better idea of its stock levels after completing a stocktake over the coming days.

Autodom released a statement earlier today, with CEO Calvin Stead revealing the company was struggling to stay afloat in the declining local automotive industry and was working towards restructuring its operations.

“Our company is constrained by high fixed costs that cannot easily be aligned to the pace of the current volume reduction in the local car manufacturing sector," Stead said.

"We need time and assistance to reorganise ourselves and structurally change the direction in which we are headed. We have made excellent progress in this regard.

"Unfortunately we have no choice but to make this very difficult decision whilst we work together with all stakeholders in the hope that a solution can be found.

"We trust that the car companies and stakeholders will see the benefits of the restructure plan put forward and how their support will allow the company to develop a more robust and sustainable business.”

Ford Australia’s Phipps said all three local car makers had offered support to Autodom to avoid a situation like the current one.

“We have provided them with significant assistance in recent times including things like increasing the prices we pay for what they provide to us, improving payment terms, as well as supporting them in their efforts to diversify their business,” she said.

“The action they’ve taken this morning is extremely unfortunate but it is their decision.”

Cheetham said Autodom’s claim that the local car industry had failed to give it adequate support was “extremely disappointing”.

“Throughout the whole process over the past few years that we’ve done business with [Autodom] we have been very open,” he said.

“We’ve kept a continual dialogue, and while I can’t put a number on [the level] to which we may have supported them, I can certainly say that in line with our industry colleagues we have worked with them to try to find a solution to their problem, because it was our mutual interest.

“For them to come out and plainly state the industry hasn’t given them enough support is somewhat unfair.”

Autodom will make a further announcement on Friday afternoon to clarify its future production plans.