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Ford Australia forced to pause production

Supply ball and chain: A supplier of suspension parts that hit financial trouble has exposed frailty in the ‘just in time’ supply model, forcing Ford Australia to suspend production of its Falcon and Territory.

Supplier CMI folds, leaving Ford without vital components until at least Wednesday

Ford logo26 Apr 2012

FORD Australia has tonight resorted to halting production of its Falcon and Territory until at least Wednesday following the collapse of suspension parts supplier CMI, which went into administration today.

The Ford plants lines at Broadmeadows and Geelong in Victoria were already scheduled for a rostered day off on Monday but now their 1800 workers will be stood down on Friday and Tuesday.

Ford Australia public affairs director Sinead Phipps told GoAuto the company has brought forward two scheduled down days, enabling affected workers to receive half pay and have the option of topping that up with annual leave.

Around 80 workers at the Cambellfield site of supplier CMI have been locked out of the factory since Friday, when the building’s owner changed the locks over unpaid rent.

Ford, which had enough stock to keep building cars until tonight, appointed McGrathNicol as receivers and managers at lunchtime today and the directors of CMI appointed Grant Thornton as voluntary administrators.

Law firm HWL Ebsworth issued a statement saying the receivers and administrators are working to ensure the CMI factory reopens as soon as possible to minimise disruption to the automotive supply chain.

 center imageHWL Ebsworth also confirmed a buyer is being sought for CMI.

According to the AAP, Workplace Relations Minister Bill Shorten said he believes CMI could remain a viable business if restructured.

Ms Phipps said that once CMI resumes work, it would require a full 24 hours’ production for enough parts to be made for Ford to re-start production.

She said taking on another supplier in the interim would be time-consuming as CMI produces 23 different components for Ford.

Other companies that supply Ford on a ‘just in time’ basis may also have to stand down their workers as a knock-on effect of Ford’s production pause.

Ms Phipps admitted that some suppliers that solely produce components for Ford will be most affected but those which also provide components to Holden and Toyota will be able to keep running, albeit at reduced capacity.

“Essentially we tell them we are down and then they need to take whatever action is appropriate for their business,” she said.

Ms Phipps said the ‘just in time’ supply method is the most efficient and works 99 per cent of the time.

“If we had to keep stock of every single part for our vehicles we would need more warehouse space than there is available in Melbourne.” Having recently recovered from delivery delays caused by 2000 cars being damaged in Melbourne’s Christmas Day hail storm, Ford could do without this stoppage and Ms Phipps said shipments of cars to dealers would be affected.

“The days we pulled forward are days we were previously not going to be producing anyway but this was not the time that we were not going to be producing so we obviously have less control over that.

“It’s the right thing to do for our employees but it will have an effect on us getting stock out to dealers, but it is a little to early to quantify what that will be.” The situation at Ford signals the third bit of bad news in Victoria’s automotive industry this month, with Toyota sacking 350 workers at its Altona production facility and parts supplier APV sliding into receivership.

APV managed to resume trading after 34 of its 124 employees took voluntary redundancy and its customers agreed to guarantee orders plus temporary price increases.

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