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Nissan blasts carbon tax

Grand opening: Federal opposition leader Tony Abbott (middle) with Nissan Australia CEO Dan Thompson (right) and national manager procurement and accessory engineering Bruce Graham at the Dandenong plant.

Carbon tax might stall casting plant, says Nissan Australia CEO

Nissan logo5 Oct 2011

NISSAN Australia enlisted federal opposition leader Tony Abbott as it went on the attack today against the federal government’s proposed carbon tax which the company says will have a “significant impact” on its aluminium car parts casting business in Victoria.

Government ministers were nowhere in sight as Mr Abbott officiated with company executives in a ceremony to start production of accessories at the Dandenong plant that currently makes 22 million car parts a year for Nissan vehicles assembled around the world.

Ironically, the plant received $3.3 million from the Labor federal government’s now-defunct green car innovation fund earlier this year to gear up to make cast aluminium parts for the world’s first all-electric five-door hatchback, the Nissan Leaf, from next year.

Nissan Australia managing director and CEO Dan Thompson said the factory was a major consumer of utilities and raw materials – a fact that would not change.

“What might change, and what we do not welcome, is the prospect of rapidly inflating resources costs which will drive up costs and have the effect of limiting or stalling growth at this facility,” he said.

Mr Thompson said the carbon tax was looming as a hurdle to Australian manufacturing and “won’t help” the company’s drive to secure the plant’s continued viability.

 center imageLeft: A range of Nissan accessories. Below: A Nissan Navara hangs from a crane by the new Australian-made tow bar to demonstrate its strength.

He said Nissan was investing aggressively to grow the business, but “within an environment where manufacturing in Australia has never been tougher”.

“We cross our fingers that any additional and unnecessary tax burden won’t lead us to change our plans,” he said.

“After all our employees’ hard work, we are not in a mood to see that happen.”

Mr Abbott said 40 per cent of the cost of manufacturing at the Nissan casting plant went in aluminium for castings and a further 20 per cent in electricity.

He described the tax as a “dark cloud on the horizon” for such manufacturers – one that he hoped to relieve when in government.

The 30-year-old Nissan Casting Plant in Dandenong – a remnant of Nissan’s car-making capability in Australia before it closed its assembly plant in Clayton in 1991 – came perilously close to shutting last year in the wake of the global financial crisis and in the face of competition from other Nissan casting plants around the world.

A change of plant management, improved productivity and the good prospect of winning the new Nissan Leaf casting contract all combined to convince Nissan’s head office in Yokahama to keep the plant open.

When the Leaf contract was subsequently announced, Mr Thompson said it would provide a secure foundation for the Australian operation five years.

However, new factories in places such as China, Indonesia and Thailand would “put a fence around us” in 10 years, he said.

Yesterday at the line-off ceremony for the new locally built tow bar, Mr Thompson said the factory had won critical business against “some staunch overseas competition from much bigger and strategically advantaged Nissan facilities in aggressively competitive regions such as China, Mexico and Thailand”.

“We’ve turned 180 degrees, and instead of battling a ferocious economic headwind, we now have a tailwind at our back,” he said.

Mr Thompson said Nissan had invested $20 million in the plant over the past year, and was well on its way to achieving its financial turnover target of $100 million a year.

The factory, with 146 full-time employees working three shifts a day, six days a week, has branched out in vehicle accessories to make the operation more viable and to shield Nissan Australia from what Mr Thompson described as “yo-yo” exchange rates.

The factory yesterday officially started production of its first accessory – a tow bar for Nissan vehicles that it says it will produce at the rate of 30,000 a year.

The company will expand into ute sports bars and nudge bars over the next two years in a disused area of the factory now populated at the cost of $4 million with an array of robots to weld, polish and finish the accessories.

Mr Thompson said the purpose-designed robotics helped Nissan Australia’s business case for the local operation, which would supersede accessories made in Asia by suppliers.

He said it would give Nissan more control over lead times, costs and shipping, as well as providing opportunities for future expansion into export markets and potential deals with other Australian car companies.

Nissan Australia executive general manager of aftersales and the casting plant Tony Carraturo said Nissan sold more genuine 4WD accessories to its customers than any other Australian car importer.

He said the “repatriation” of accessory manufacturing to Australia would play a major role in positioning Nissan Australia for future growth, including the company’s mid-term goals of importer market leadership and a greater footprint in the 4WD and leisure segments.

Mr Carraturo said steel for the tow bars was now being sourced from an Australian supplier, helping to give further protection from currency movements.

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