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Big 3 rack up $1.7 billion in closure costs

Red sunset: The cost of going out of business is mounting for Australia’s three car manufacturers.

Toyota the latest to announce big hit to bottom line due to Australian factory exit

Toyota logo26 Jun 2014

By RON HAMMERTON

THE decision by Australia’s three car manufacturers to exit local production has cost them a collective $1.7 billion in the past financial year as they write down factory assets and pay out worker redundancy packages.

The bill is likely to continue to mount over the next three years as the car-makers pay out remaining workers and wind up production before the end of 2017.

Toyota Australia is the most recent company to announce massive restructuring costs due to the company's decision to close its Altona plant in Victoria in 2017, taking a $505 million hit in asset write-downs and another $384 million for redundancies.

Toyota’s overall result was a record loss of $437 million, which would have been worse except for more than $70 million in government assistance.

Without the write-downs and redundancy bill, the result would have been a perfectly acceptable pre-tax profit of $266 million.

Earlier this year, Holden announced $500 million in asset write-downs and $122 million in redundancy provisions, while Ford posted $242 million in asset write-downs.

All three companies have announced massive losses as a result, with combined losses of $1.2 billion in their most recent reporting periods.

Holden’s loss of $553 million in the 2013 calendar year was a company record, while Ford lost $267 million in the same period – its third biggest.

Ford will be first the shut the doors on its local factories in Geelong and Campbellfield, in 2016, to be followed by both Holden – which has factories in both South Australia and Victoria – and Toyota in 2017.

The closures will have a dramatic impact on suppliers across South Australia and Victoria, adding millions of dollars more to the bill.

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