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Car-maker exit forces Denso’s hand in Australia

Big player, long history: Denso which has been in Australia since 1972 supplies many components from air-conditioning to satellite navigation systems to car-makers.

Top parts supplier Denso says end of car-making in Australia will force it to close

16 Sep 2014

LEADING automotive parts-maker Denso has announced it will cease all manufacturing and assembly operations in Australia, blaming the demise of local vehicle production as the reason behind its own impending closure.

At least 290 workers out of the 420 currently employed at Denso Automotive Systems Australia, based in Croydon, east of Melbourne, are in line to lose their job as the company winds down in conjunction with the exit of Ford, Holden and Toyota.

Ford closes its factories in October 2016, with Holden and Toyota following a year later.

Denso started operations in Australia in the early 1970s and has gone on to become a major parts supplier to original equipment vehicle producers both locally and overseas.

In a statement, Denso Automotive said the loss of earnings the company faces with the withdrawal of the three local car-makers has forced its hand, with income from exports insufficient to sustain production.

“We could find no other way because almost all of our business is for vehicle manufacturing,” the company said.

“Much activity has taken place over the recent years in endeavouring to diversify the local manufacturing operation into non-automotive sectors. Whilst some of this activity has been successful it could not replace the scale of production lost through the departure of the local vehicle producers.”

Denso currently supplies air-conditioning units, diesel fuel injection systems, electronics and ignition systems, satellite navigation equipment, radiators and engine cooling components, air intakes, windscreen wipers, fuel pump modules and instrument clusters.

Denso’s global president and CEO Nobuaki Katoh said the end of production was regretful given the success the company has experienced as it has expanded during its 45 years in Australia.

This includes a research and development department established last year, prior to Holden and Toyota’s closure announcements.

“Denso Australia started operation in 1972 with big expectations as a pioneer company of Denso’s overseas operations,” Mr Katoh said.

“Since then, Denso Australia grew as an important overseas company of Denso Group, overcoming a lot of difficulties. It is very regretful to decide to stop manufacturing operations when considering Denso Australia’s distinguished history to be the representative manufacturing company in Australia.” Denso’s Australian president and CEO Russell Jopson said the costs associated with Australian manufacturing did not make the transition from an Australian operation into a global export base viable.

Mr Jopson said that while manufacturing will end, Denso’s aftermarket business will continue to have a sales presence in Australia.

While almost 300 people will certainly be directly impacted by the decision to end manufacturing in Australia, the company said the exact number was not known at this stage.

The future of Denso’s Croydon facility and those working in local research and development is also yet to be determined with the company saying it will examine which roles and functions will stay.

Denso is 22 per cent owned by Toyota and has its headquarters in the city of Kariya in Japan. The company’s first quarter operating profit was ¥85.1 billion ($A915.68 million).

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