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Car-parts maker stands down 400 workers

End of production: Components supplier to Ford, Holden and Toyota, Autodom Limited, has closed its factories for an indefinite period and stood down hundreds of workers.

Crisis talks underway as Autodom closes factories in two states ‘indefinitely’

General News logo1 Nov 2012

THE Australian automotive industry is facing unscheduled production cuts after parts-maker Autodom Limited closed its factories for an indefinite period in South Australia and Victoria this morning, standing down around 400 workers.

A components supplier for local car-makers Ford, Holden and Toyota, as well as truck-maker Kenworth and other significant parts-makers such as Futuris Automotive, Autodom said it was “forced” to close its aiAutomotive plant in Woodville, Adelaide, and its Dair Industries factory in Dandenong, east of Melbourne.

Billed as the largest press-metal manufacturer in the Australian car parts industry, Autodom also operates two other plants near Melbourne, one with Dair Industries in New Gisborne and a second aiAutomotive facility in Bayswater.

Autodom has suspended trading of the company’s securities on the Australian Stock Exchange and is now negotiating a restructuring plan with government, industry and union representatives.

In a statement, Autodom Limited chief executive Calvin Stead said he was “disappointed in the lack of support from key players in the industry, which could potentially result in significant direct cost burdens to both the industry and government should the business fail completely”.

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“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,” he 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.” Mr Stead said the company found itself in this predicament because the automotive industry in Australia had more than halved its build rates in less than four years, a situation he described as unsustainable “without mutual co-operation between the car companies and the component sector, with government having an important role to facilitate that co-operation”.

“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,” he said.

Autodom has submitted a restructuring proposal to its stakeholders, which is at the centre of negotiations.

The company has not been placed in administration and, like many other local parts-makers, is attempting to diversify its business beyond the automotive sector.

Workers will continue to be paid under their conditions of employment until a decision is reached on the future of the company.

This could come as early as later today or tomorrow, and follows industrial action earlier this year by Dair Industries workers, who picketed the Dandenong factory for several days during August before securing a redundancy payout cap of 104 weeks for long-serving employees.

This week’s events serve to justify Dair workers’ nervousness about their job security, and further reinforce the problems being experienced across the entire component manufacturing sector as car-makers cut production and struggle against competition generated by the high Australian dollar.

“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,” said Mr Stead.

“During this very difficult time for the company, we sympathise with our valuable employees who are not only being directly affected by these actions but also facing an uncertain future.” While all three Australian car-makers use Autodom parts, Ford Australia is likely to be the first affected by the stoppage.

Ford Australia communications and public affairs director Sinead Phipps told GoAuto that the company was “currently assessing the likely impact on our production if this situation continues”.

“We are disappointed by the actions Autodom have taken this morning,” she said.

“Ford has provided significant assistance to Autodom in recent times, including increased piece prices and improved payment terms, as well as providing support in their efforts to diversify their business.” GM Holden corporate affairs manager (SA/WA) Sean Poppitt told us “there is no immediate impact to production and we are carrying enough parts until around mid-next-week, by which time we hope to have resolved the issue”.

“We are extremely disappointed by today’s announcement,” he added.

“GM Holden has continually and openly negotiated with AIA (aiAutomotive) and its key stakeholders and we will continue to do this irrespective of any action taken today by AIA.

“We will do everything we can to minimise any disruption this may cause to our employees and our manufacturing operations and are currently considering our forward position.” Toyota Australia media and external affairs manager Beck Angel said: “At this stage, Toyota will not be impacted by Autodom ceasing production at its Adelaide and Dandenong sites.

“We will continue to build cars at our Altona manufacturing plant. We have sufficient stock for the immediate future and are reviewing our sourcing options from our existing local supplier base.

“Toyota has been working closely with Autodom as it attempts to restructure its business. We have offered Autodom support to assist with its restructure.” On its website, Autodom describes aiAutomotive as offering a wide range of metal pressing, assembly, specialised welding, ‘E-Coat’ and other paint capability.

Over the past six years, aiAutomotive has taken over a number of smaller parts-makers, including South Australian companies Hendersons Components (metal pressing and assembly) in 2006 and Dair SA (cross car beams and handbrake assemblies) in 2007.

In 2008, aiAutomotive purchased Victorian firm HPG Engineering, which manufactures a range of metal components used in seating and suspension systems.

Autodom has pursued a similar strategy for Dair Industries, which produces a range of complex metal parts such as rear bumper assemblies, foot brakes, clutch mechanisms, hood hinges, parking brakes and car jacks.

Dair Industries bought the Bayswater plant from Kozma Industries in November 2008, and in 2009 purchased the business of Flexdrive Cables in New Gisborne. These acquisitions brought with them products such as seating mechanisms, complex cable assemblies and blow-moulded products.

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