COMMENT: Autodom storm gathers pace down under
By Simon Warburton | 9 November 2012
Autodom's workers across Australia wait for the administrator's news
Component maker and stamper, Autodom, has plunged into administration for reasons that are not as yet clear, but which have been darkly hinted at by its CEO, Calvin Stead, who cited 'lack of support from key players in the industry,' without naming who these might be.
The CEO went on to add Autodom had been constrained by high fixed costs "that can't be easily aligned to the pace of the current volume reduction in the local car manufacturing sector" and that it needed "time and assistance" to reorganise itself.
But in a sign of just how vital Autodom is to the Australian automotive sector - one that employs around 200,000 people - no small beer in a vast country with a small population - into the fray step General Motors Holden and Ford with that US$6.8m temporary bailout that has at least made the production lines roll again.
When was the last time two global multi-nationals pooled financial resources to save an ailing supplier? To those two Detroit giants, US$6m is mere loose change down the back of the sofa, but it indicates the sheer, pivotal importance of Autodom to their operations that they have flourished the chequebook and saved the day.
But this is only a finger in the dam. Autodom is in administration and its future - just before the Christmas and New Year period - is highly uncertain as a new buyer is sought for its many divisions including Ai Automotive and Dair Industries.
There are suggestions Autodom could be split into several entities, but whatever the administrators, McGrathNicol, decide, GMH and Ford will want speedy resolutions.
In a time of global uncertainty in Europe, they will want to maximise those regions that are performing well and despite undoubted falls, the automotive industry in Australia still generates more than A$12bn per year.
Indeed, Autodom claims the sector is the country's largest complex goods manufacturing segment with sales of vehicles and components valued at more than A$6bn, while nearly 50% of vehicles made in Australia are exported.
The Autodom boss is also warning of considerable cost to the industry and government should the supplier go under, a position echoed by the country's powerful Australian Manufacturing Workers' Union (AMWU).
The labour body is urging the State of Victoria in particular to take a lead in ensuring Autodom survives in some form but it is unclear whether that involves a direct financial prop or help in securing new investors.
However, the union has raised what it claims is Victoria State Premier, Ted Baillieu's "rhetoric," concerning the government's pledge to support manufacturing jobs in the region that has the largest proportion of the country's 200,000 automotive jobs.
"The Premier likes to get out there when there's good news, saying he supports manufacturing, but this is an opportunity for him to get in and back it up by assisting these workers," AMWU Victoria assistant state secretary, Leigh Diehm, said.
Several mass meetings have already taken place at Autodom's Clayton South, New Gisborne and Woodville sites, with the AMWU stressing it will "keep on the backs" of the receivers, who will have to secure a new buyer fairly soon.
And if they don't? Will GMH and Ford ride to the rescue again and if so, how much this time? Will the fact Autodom appears to have played such a key role mean frantic negotiations are even now on-going to find new - and solvent - suppliers in the long-term? How much have both earmarked for any future bailout of Autodom if that is not immediately possible?
Such co-operation between arch rivals must be a fairly new situation for such fierce competitors, but it seems they just don't have any choice.
Stead himself made the case forcefully for more joint action by noting: "It [automotive industry] can't be sustainable without mutual co-operation between car companies and the component sector with the government having an important role to facilitate that co-operation."
Time is now of the essence and indeed, the AMWU has called on the receivers to come back on 14 November with assurances its members will receive holiday pay during the forthcoming festive season as well as an indication production itself will continue across Christmas and New Year.
GMH and Ford too, would like those assurances given especially as Autodom subsidiary, Dair, produces rear bumper assemblies, foot brakes, clutch mechanisms, hood hinges and parking brakes for Ford, Toyota, GMH and truck maker Kenworth.
I'm waiting for an update from Autodom, the union and Victoria State. There's a lot at stake for employees, automakers and suppliers.
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COMMENT: Autodom storm gathers pace down under