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Asian threat to Nissan casting plant

Australian content: Nissan's Leaf comprises three Dandenong-made aluminium castings.

Nissan banks on accessories to keep Aussie casting factory alive as Asia ramps up

Nissan logo5 Aug 2011

NISSAN Australia is looking to its fledgling accessory business for the long-term viability of its Australian aluminium casting plant which it says will face increasing competition from low-cost component plants across Asia.

The company’s managing director and CEO, Dan Thompson, told GoAuto that an export contract for aluminium castings for the new all-electric Nissan Leaf – announced in March – would provide a secure foundation for five years.

Mr Thompson said that despite the strength of the Australian dollar, a lack of overseas capacity to meet huge demand for parts as Nissan expanded around the globe was “helping to keep the ship afloat” at the Nissan casting plant at Dandenong, Victoria, from where 90 per cent of its castings were being exported.

He said Nissan Australia’s research and development capability and casting skills were also helping to maintain business, winning contracts for more complex castings from Nissan in Japan.

“When you talk about Indonesia and Thailand in that R&D capability, they don’t have it yet,” he said.

“It’s about all we have to hang our hat on against the ones that are gate-fencing us – at the moment.”

Mr Thompson said Nissan was building new factories in Thailand, Indonesia and China, all of which would probably end up with their own casting factories.

“I would suspect in 10 years’ time, casting in Thailand, Indonesia and China will just almost put a fence around us,” he said.

 center imageLeft: Nissan Australia CEO Dan Thompson with the Leaf's inverter. Below: Nissan's casting plant at Dandenong and D22 Nissan Navara with nudge bar fitted.

“And if the Aussie dollar stays where it’s at and all the costs – not just the carbon tax but everything that you need to run your business is going up – how are we going to compete with Indonesia, Thailand, China, as an exporter? That really concerns me.”

Mr Thompson cited the example of a new engine assembly plant planned by Nissan in Indonesia as an example of the expansion that could ultimately threaten the casting plant.

“And you know what’ll be next – it will be casting and all that,” he said.

“I think we’d probably look to expand the accessory business before we’d look to expand further the casting operation.”

Mr Thompson said the Dandenong plant was only about 60 days from producing its first accessories, which include nudge bars, ute sports bars and tow bars.

He said the advantage of this accessory business was its domestic sales focus, which was less vulnerable to exchange rates and overseas competition.

“When we talk about accessories, we have such a big business that I can control with our Nissan motor cars,” he said.

“I think there is a lot more growth that we can have – keeping the plant going – but focusing on domestic business.

“At the moment, the scope of our accessory business is only towbars and sports bars and nudge bars, but we do tens of millions of dollars of accessories on the motor company side, so there’s a lot of opportunity there – and that’s synergy between the companies and within the Nissan group.”

In March, Nissan Australia announced the deal to make three types of aluminium castings for the Leaf using a new Australian-developed high-tech process at Nissan Casting Plant.

The parts will be exported at the rate of 22,000 a month to three Nissan plants assembling the new Leaf – the world’s first mass-produced full-electric five-door hatchback – from early next year.

The $21 million project – partly funded by a $3.3 million grant from the federal government’s now-defunct Green Car Innovation Fund – will generate $160 million in export earnings over the next five years and help to secure the factory and its 145 jobs.

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