General Motors’ Australian Holden unit reportedly faces increased costs and a search for a new supplier after the bank-appointed managers of parts maker Ion Ltd. on Friday decided not to complete a partially built Melbourne factory, saying it was unviable.
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The factory was to have supplied Holden’s $A400 million ($US313 million) V6 engine plant with engine blocks from 2006 but work on the factory was halted on December 7, a day after the administrators were appointed to Ion, Bloomberg News reported.
“We obviously need to identify a supplier of engine blocks,” Holden spokesman Jason Laird told the news agency, adding: “We require a very precise aluminium cast block. It’s a specific manufacturing process and there is simply not that local capability to supply that.”
Bloomberg News said Holden’s six-cylinder engine plant in Melbourne began production [of GM’s new ‘global’ V6 line] in November 2003 using engine blocks manufactured in Mexico. Ion had a contract to make the blocks from 2006 and had allocated $A160 million for the factory.
The news agency said the Holden engine plant is one of two General Motors global six-cylinder plants. Securing a new supplier of engine blocks “has the potential” to increase the cost of manufacturing the six-cylinder engines, Laird reportedly said – Holden had attempted to find new investors and new customers for Ion’s engine block plant.
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By GlobalData“After extensive discussions with state and federal governments, Holden, the only current prospective customer, and parties possibly interested in taking over the project, it has now become apparent that it will not be commercially viable to complete the project,” Ion administrators Colin Nicol and Peter Anderson said in a statement to the Australian Stock Exchange cited by Bloomberg News.
The news agency said Ion, which makes wheels, gearboxes and engine parts for Ford, Ssangyong and Harley-Davidson, was placed in administration after lenders with an estimated $A550 million of claims cut their credit to the company.
The administrators plan to sell Ion’s businesses, the report added.
