ACL collapse exposes Ford and Toyota

FORD and Toyota are facing the prospect of a parts shortage after engine bearing and gasket maker Automotive Components Limited (ACL) was placed into voluntary administration this morning.

Production has been secured for the short term while the administrator and receivers try to find a buyer for the Launceston-based company, which also has a plant in Eagle Farm near Brisbane, but will cease if one is not located.

That would mean a production interruption at Ford and possibly also Toyota, while up to 300 people at ACL would lose their jobs.

Asked what would happen if ACL production ceased, Ford Australia spokesperson Sinead McAlary said: “They are the only supplier of these bearings, so our production would be affected.”

Ms McAlary said the company hoped it would not have to switch bearing suppliers.

“Finding an alternative source for these components would be very difficult,” she said.

Ford Australia handed over a “substantial” sum to prop up the ailing component supplier which looked to have averted a shutdown in June when it secured $7 million assistance package from the federal government.

ACL, which recorded losses of $11.5 million and $8.7 million in the past two financial years, had come up with a new plan for survival after meeting a $3 million loan deadline days after securing the government bailout.

It has since reviewed its financial situation and decided that its business model is no longer financially viable.

In June, the federal government stated that its bailout had saved 5000 jobs that would have been lost as a result of the ACL closure.

Ford Australia’s financial contribution to ACL meant it became a secured lender and therefore had the right to appoint a receiver.

It chose Greg Keith and Matt Byrnes of Grant Thornton of Melbourne, who intend to keep the factories running to avoid a component shortage.

“The receivers intend to continue to trade ACL and ensure continuity of supply to the automotive industry while they consider all available options for the business,” said a company statement.

Federal industry minister Senator Kim Carr said the government would work with Ford, Toyota, unions, receivers and administrators to avoid disruption to the automotive industry.

“Our primary concern is for the welfare of the automotive industry workers in Launceston and across Australia,” Senator Carr said.

He said the receivers were committed to keeping the plant running for now.

“Grant Thornton will not be taking a short-term view of the matter and will conduct an ongoing review of ACL. Grant Thornton intends that ACL will continue trading and ensure continuity of supply to the automotive industry.”

However Mr Carr indicated that ACL jobs were not secure.

“In the unfortunate event that workers are made redundant, the government will provide immediate assistance to help them find new jobs – including opportunities to retrain if necessary,” Senator Carr said.

When the government agreed to help ACL in June, Senator Carr said: “This is a decision in the national interest. If ACL had collapsed, Ford and Toyota would have been in very difficult circumstances.

“Thousands of workers would have been stood down and production lines would have halted. There would also have been serious flow-on implications for other parts-makers who supply Ford and Toyota.”

Federal Chamber of Automotive Industries chief executive Andrew McKellar said he hoped the receivers and administrator would be able to come up with a positive result for ACL.

“Today’s action will provide a ‘fresh set of eyes’ to assist in securing the long-term future of the company,” he said.

Mr McKellar said the FCAI welcomed the quick action to keep component manufacturer ACL trading.

“A reliable supply chain is vital to the success of the Australian automotive industry,” he said.

“Components supplied by ACL are crucial to the industry and swift action has been taken to ensure the company continues to trade.”

ACL Launceston workers have already been working four-day weeks, which represented a 20 per cent pay cut, to give the company every chance to survive.

ACL emerged from a 1986 buy-out of various automotive component businesses owned by proud Australian motoring brand Repco.