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Taxpayer-funded car parts maker shifts jobs offshore

End of the line: South Australian parts manufacturer will cease production.

Car parts maker SMR Automotive shifts work to Thailand to cut costs, stay alive

8 May 2013

A SOUTH Australian car-parts maker that has received almost $3 million in taxpayer funds is to move part of its production to Thailand.

SMR Automotive, which makes rear-view mirrors, door handles and indicator lamps for all three Australian car-makers, announced today that it would shed 90 staff and shift some production to Asia, largely in response to the high cost of making components in Australia.

The announcement is the second blow to the Australian car industry to surface in recent days after Melbourne-based LPG fuel tank supplier to both Ford and Holden, CMI Fuel Systems, last week announced it had called in the receivers.

SMR said in a statement that up to 90 of the Adelaide-based company’s employees could go as part of the plan, using a mix of not replacing workers as they leave and voluntary redundancies.

However, it said parts made locally for the Australian-built Ford, Holden and Toyota cars would not be affected.

“SMR Automotive continues to remain committed to Australia despite the depleting domestic automotive market, challenges posed by a record-high Australian dollar and the high cost of manufacturing in this country,” the parts maker said.

“The company’s determination to succeed in the global automotive sector and maintain its commitment to Australia demands that it leverage Australia’s strengths in innovation and sophisticated high-end, high-value production.

“For this reason, SMR Automotive has taken a decision to move the production of some non-competitive and commodity product lines to a manufacturing plant in Thailand.”

A spokesman for SMR Automotive Australia told GoAuto that the products shifting to Thailand were all for the export market, and not for the Australian production lines of Ford, Holden and Toyota.

“The products that are being transferred are a mixture of actuators, mirror lighting components and electronic components,” the spokesman said.

“These are components deemed to be no longer competitive in the marketplace.”

John Scott, the general operations manager for SMR Automotive Australia, said while the changes to the company’s workforce were regrettable, “inaction risks our entire Australian-based business”.

“Our long term viability requires a high level of flexibility in a competitive and ever changing automotive sector,” Mr Scott said.

“Our aim is to ensure that the company is strong, sustainable and in a position to offer Australian operations greater opportunities in the long term.”

In February, the South Australian government singled out SMR as a business success story for the state. In 2011, the Weatherill government handed the company $500,000 to help it develop new products.

The company also received a $2.4 million grant from the federal government to help it develop a lightweight rear-view mirror for international markets and create more jobs.

“It will also develop new manufacturing processes, and demonstrate their viability at pilot scale,” the fund’s announcement of the grant said.

“The new mirrors will provide a reduction in mass compared to current mirrors used, leading to a reduction in carbon dioxide emissions by vehicles fitted with the new technology.”

SMR confirmed today that the intellectual property developed for the lightweight rear-view mirrors would stay in Australia.

“This technology is the key plank in SMR Automotive’s future business ventures and opportunities that carry this technology exist both overseas and locally,” the company said.

A spokesman for federal Industry and Innovation Minister Greg Combet said the government was aware that SMR Automotive Australia was shifting manufacturing operations to Thailand.

Mr Combet was told that there would be no loss to SMR’s research and development division, or design and engineering capabilities under the restructure, the spokesman said.

South Australian Premier Jay Weatherill some of the SMR workers affected by the loss of production would find other work.

“They’re high-skilled workers that will have a capacity to work elsewhere in our manufacturing sector,” he told GoAuto.

“But SMR has a large workforce it’s a small proportion of its workforce which are going to be restructured because of the high Australian dollar,” Mr Weatherill said“But the future for us is to continue to press into advanced manufacturing where the size of the dollar, the value of the dollar doesn’t have a bearing on the competitiveness of our products.”

Toyota earlier this year recognised SMR for its contribution to the Japanese car-maker’s Australian division.

Meanwhile in Victoria, CMI Fuel Systems, the Bayswater-based company that makes high-pressure fuel tanks for dedicated LPG Ford Falcons and Holden Commodores, announced it had called in administrators this week.

In an unusual move, components maker aiAutomotive – which itself was placed in the hands of receivers last year after traditionally fierce rivals Ford and Holden agreed to cover a $6.5 million debt hole out of their own pockets – said it would help CMI to continue making the tanks until the company’s future was decided.

“We will work constructively with (CMI’s) voluntary administrators and key stakeholders of CMI Fuel to stabilise operations,” McGrathNicol receiver and manager Keith Crawford said.

“We also intend to investigate the possibility of an acquisition of the business by aiAutomotive.”

aiAutomotive is a subsidiary of Autodom, a group of components makers that fell into the hands of receivers in November last year.

McGrathNicol said it was “exploring all options” for a restructure or sale of Autodom’s business units at Dandenong in Victoria and Woodville in South Australia.

The administrators said they expect Autodom’s New Gisborne facility in Victoria will close later this year, with the loss of about 40 jobs.

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