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Ford to close its doors

Out of stock: Ford's Broadmeadows assembly line.

Dispute halts V8 Falcon production and could force a full shutdown at Ford tomorrow

Ford logo18 Apr 2007

FORD Australia stopped building V8 Falcons on Monday of this week and is expected to cease Falcon and Territory production completely and indefinitely from tomorrow following the failure of a meeting to shore up a cash-strapped Victoria auto parts company yesterday.

Meetings between the administrator of vehicle components supplier Coghlan and Russell Engineering and its creditors (including 49 staff stood down last week, their union representatives and major customers Ford and Delphi) will continue.

However, a resolution is not expected in time to prevent Ford’s Broadmeadows assembly plant closing until further notice from Thursday.

"At this stage we've run out of one particular part for our V8 engines, so our V8s have gone into restriction in terms of production," Ford spokeswoman Sinead McAlary told GoAuto yesterday.

"We are still working through it, but it looks like we’ll be running out of six or seven other parts that we need across the range by close of business Wednesday (today).

"So our production could well be affected as from Thursday – which means we’ll be looking at plant stand-downs," said Ms McAlary, who added that Coghlan & Russell is yet to advise how many components remained in stock.

Neither Mitsubishi’s Tonsley Park production facility in Adelaide nor Toyota Australia’s Altona assembly plant in Melbourne will be affected. It’s understood production at GM Holden’s Elizabeth (SA) factory may also be affected, but the company did not return GoAuto’s calls on Tuesday.

A proposal by both Ford and major General Motors supplier Delphi - the debt-ridden factory’s two biggest clients - to jointly inject enough capital to continue production for 60 days was rejected on Tuesday morning by workers, who later yesterday agreed not to return to work while they still face the loss of $521,000 in entitlements, including eight months of unpaid superannuation.

According to the Australian Manufacturing Workers Union, the workers are owed a total of about $1.5 million, including redundancy payments, but that they would not be entitled to help from the Federal Government's entitlement scheme GEERS because they had not been made redundant.

It’s believed the situation has been further complicated by an overpayment claim made against Coghlan & Russell Engineering by Ford, which entered into a payment plan with the company six months ago when it emerged Ford had overpaid the factory by about $2.5 million.

GoAuto understands that Ford and Delphi had together offered almost one million dollars to keep the company afloat, in addition to the $1.4 million Coghlan & Russell still owes Ford. But Ford says it will not fulfill the workers’ entitlement obligations of C&R or other suppliers because of the industry precedent this would set.

Ms McAlary said the Ford/Delphi plan would have guaranteed that the company’s doors stayed open for two months while it examined its restructuring options - and while Ford and Delphi explored its alternatives, including the possibility of retrofitting the unavailable components or sourcing them from other local suppliers. But she stressed neither scenario would be easy.

The Geelong company had supplied Ford with 37 different vehicle parts, including a V8 engine damper, but rising debts following slower sales of Ford’s large Australian-built models saw the firm cease production and axe its workforce last week.

Administrator PPB was appointed last Tuesday and workers have occupied the factory with its permission since then.

The Ford shutdown is the latest crisis to hit Victoria’s beleaguered car industry, which saw Holden and Ford axe 200 and 640 jobs at their Port Melbourne and Broadmeadows plants respectively late last year.

Production of both Falcon and Territory, and Holden’s new VE Commodore, was also threatened last August, when Braeside parts maker Ajax Engineered Fasteners went into liquidation owing 189 workers an estimated $12 million in entitlements.

Ajax’s future, as well as the continuation of production at both Ford and Holden, was rescued at the 11th hour by major Ajax customers including Big Four brake supplier PBR, which agreed to underwrite the Melbourne company for six months.

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