Make / Model Search

News - Ford

Glimmers of hope amid parts sector crisis

Beam me up: Diver Consolidated Industries CEO Jim Griffin secured government funding to develop an aluminium beam for the VF Commodore, and is now working on taking the technology overseas.

New opportunities emerge for car parts-makers facing widespread closure in 2016/17

18 Mar 2014

NEW opportunities – both local and overseas – for Australian car parts-makers have emerged in recent weeks, providing a glimmer of hope for a portion of the automotive supply chain which is still facing widespread closure with Toyota, Holden and Ford’s decision to cease manufacturing here by 2017.

A trade fair organised by Ford Australia and others in Geelong last week has produced some significant leads, including a strong level of interest being shown by overseas companies in aluminium technology developed for Holden’s VF Commodore.

In addition, parts-makers looking at diversification have been alerted to the possibilities in Australian rail transport – both light and heavy rail – where more than $30 billion is expected to be spent in the coming decade.

Originally conceived as a Ford supplier conference, the Victorian government and the Federation of Automotive Products Manufacturers (FAPM) helped expand the Geelong event into a trade fair for all-comers.

Holden and Toyota also participated, bringing buyers in from various offshore operations.

FAPM president Jim Griffin told GoAuto he was “very impressed” with the event, adding that while it was too early to say how many contracts might flow from the fair, one supplier – Diver Consolidated, of which he is chief executive – received a lot of attention for the aluminium technology it developed for the VF Commodore.

“Diver has follow-up meetings tomorrow with some people and lots of invitations to head back over to China and Thailand to talk to people,” he said.

As part of the weight-reduction program for the VF series, Diver switched from a steel ‘cross-car’ beam (running between the car’s front pillars to support the dashboard and instrument panel) to one made from aluminium.

The process required a complete overhaul of Diver’s equipment and the acquisition of new skills, with the upshot being that Diver is now one of only a few companies in the world that can produce such a component.

“I had people come up to me at the trade fair … and instantly comprehend how difficult it is to make that thing and looking at us and asking, ‘You guys can do that? We need to talk to you because you obviously know what you’re doing’,” Mr Griffin said.

“We have learned a lot around aluminium fabrication, robotic welding, MIG welding of aluminium structures. We moved our expertise to a completely new area and a new level as a result of that program.

“The expertise I have learned through that process has enabled me to now to bid on aluminium structure, to start redesigning steel structures into aluminium, because we have more confidence.

“If you are doing it clever in Australia for a Commodore, you can do it clever overseas for a global platform. It’s just a matter of getting the opportunity.”

However, Mr Griffin said parts-makers should not expect to be able to make products in Australia and simply ship them to car plants in the region.

“Unfortunately, I do come back to that stark reality that the likelihood is, while the Australian dollar is where it is, exporting large volumes of components from here will be difficult,” he said.

“The bottom line is no-one wants to pay logistics costs. They want to have the components made in-country, as close to the assembly plant as possible.”

This will mean Australian companies will have to form joint ventures overseas so they can capitalise on their technology, their expertise or their project management, Mr Griffin said.

Ahead of last week’s trade fair, Ford Australia revealed that it had assisted nine suppliers secure work with offshore companies, including plastic parts-maker MHG, although Ford has declined to provide specific details.

As part of ‘Automotive Week’ surrounding the Australian F1 Grand Prix, parts-makers were also given details about opportunities that will be available in the rail transport industry, which includes trams as well as heavy rail.

The federal government’s rail supplier advocate, Bruce Griffiths, said the rail market was worth at least $4 billion a year and that around $30 billion of work had already been outlined for coming years, mainly by state rail authorities.

Mr Griffiths has had a long career in automotive parts, first as chief executive of Air International and then as chief executive of Futuris Automotive.

Speaking at a function organised by the government-supported Industry Capability Network, Mr Griffiths said the only difference between automotive and rail was that rail wheels were all metal.

“The rail industry is not for the feint-hearted, but there are opportunities,” he said.

He said rail procurement was volatile because state governments did not co-ordinate their procurement, which meant that suppliers alternate between having large orders to fill and having little or no work at other times.

“If we could smooth that demand and collaborate between states on when they place their procurement orders, a saving of $6 billion could be made for taxpayers,” he said.

“It would also change the whole cycle for investment and slow, perhaps, what has been turning to an import model in recent times.”

Mr Griffiths said the shrinkage that has been seen in the automotive sector in recent months was reversible if the state governments could start to collaborate on their procurement to smooth out the peaks and troughs.

“It won’t be fully reversible, but it could be, to some extent,” he said.

“There is a sustainable rail manufacturing industry available to this country.

“It is taxpayers’ money that is making the procurement in each state government. We should be building these trains in Australia.”

Just like the AutoCRC before it, the rail industry has drawn up a ‘technology road map’ to identify which direction the industry will be heading.

“For those in the automotive sector, you should have a look at the rail technology road map because it does identify 22 recommendations on technology,” Mr Griffiths said.

The road map outlines three priority areas: materials and manufacturing, monitoring and management, and power and propulsion.

Mr Griffiths said car parts-makers considering diversifying into rail should consider attending the Inno Trans expo in Berlin later this year. He said a trade mission of 15 companies to Inno Trans in 2010 had been successful.

In 2012, 33 companies went and secured business worth more than $50 million, he said.

The Road to Recovery podcast series

Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

Ford articles

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here