By on November 2, 2012

The demise of a large Australian auto parts supplier threatens to bring Australian units of Ford and GM to their knees as early as next week.  Management is working feverishly on keeping the doors open, while complaining about “lack of support from key players in the industry,” Reuters says.

Autodom, a top Australian parts supplier, has been hit hard by high local production and labor costs. Manufacturing lines cannot be quickly scaled back, CEO Calvin Stead said. Autodom  is Australia’s largest press metal manufacturer, and a key component supplier to Ford and GM Holden.

Despite hefty government subsidies and tariff support, the Australian auto industry is reeling. The high Australian dollar makes imports attractive and exports uncompetitive.

  • Ford buys hundreds of components from Autodom for its Australia-built Falcon sedan and Territory SUV. Ford only has stock until the middle of the coming week.
  • GM Holden said a closure of Autodom could halt production of  the Commodore sedan and Cruze compact by next week.
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12 Comments on “Crippled Australian Supplier Could Take GM And Ford Down...”

  • avatar

    So, how could this have happened? If it was indeed that important, how could this happen? There should be warning lights before a company comes to a halt like this. If it was money/cashflow problem, which I would guess is the primary direct, immediate cause of a company folding like this, couldn’t they asked for more money, loans, whatever, from GM and Ford, threatening bankruptcy and shutdown if they’re not willing to help?

    • 0 avatar

      It doesn’t appear to be a cashflow issue
      “Autodom chief executive Calvin Stead has told ABC’s Inside Business says the company has seen business drop by half since 2008.”
      ““Our company is constrained by high fixed costs that cannot easily be aligned to the pace of the current volume reduction in the local car manufacturing sector,” Autodom CEO Calvin Stead said.

      “We need time and assistance to reorganise ourselves.””

      Hopefully they can achieve a position to stay in business, but I would not like to be in their shoes.

  • avatar
    Pastor Glenn

    Interesting enough, GM and Ford apparently have not learned one of the biggest lessons from Toyota, especially.

    Treat your suppliers the way you’d like to be treated by them. Ensure they can be profitable. Help them instead of pinching all pennies out of them to make them unprofitable. Treat them as if they are partners because they are.

    I’ll give a real example. A friend of mine worked at a car parts plant in the USA and the big 3 treated the company he worked for like a mere hireling – no, more like a slave.

    Toyota, on the other hand, helped the company out. Treated it like a valued partner.

    In the time when GM and Chrysler went bust, this particular supplier also went bankrupt. Toyota added work as quickly as possible to this plant – even though the supplier was “not allowed” by bankruptcy law to ASK for additional work, Toyota sent it along to help.

    Seems to me like the Australian portions of GM and Ford needed to learned from Toyota too.

    • 0 avatar
      sunridge place

      You did read the Reuters article and see that Toyota was a customer of Autodom right?

      • 0 avatar

        I saw that, too. But it does not state about production halting for Toyota. Ford and GM reps were quoted, but there were no references to a Toyota spokesperson.

      • 0 avatar

        Pretty sure Autodom/Dair supplies Brake pedals, and hand brake assemblies to Toyota.
        But given that Falcon & the Commodore are on unique platforms globally, its always going to hurt more when a local suppliers shuts up.
        Autodom wants to hold the car co. for ransom, have a read of the announcement, ironic after they granted payrises to their staff in August 2012…
        Mind you this is only part of a long list, of small Australian suppliers falling over:
        APV Automotive.
        CMI Industries.

      • 0 avatar

        tresmonos – from news reports I think that just means that Toyota has more parts on hand. Perhaps they took a precaution against this happening?

  • avatar

  • avatar

    IIRC current tariffs are 10%, except vehicles with high ground clearance that see 5%, hardly “geneeous” in my book even though id rathwr see them at 0. Plus the FTA agreement with Thailand sees alot of small/mud size made there attract 0. Far more about the nonstop subsidies here.

  • avatar

    Surely Cruze parts can be imported thanks to the strong Australian dollar and the proximity to the car’s Korean homeland.

    • 0 avatar

      That would be the last of their worries at Holden if a major supplier gets into trouble. Normally, suppliers affect more than one model and in this case it was three manufacturers as well.

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