By on November 5, 2012

Ford and GM co-signed a $6.5 million loan in an effort to pull a key Australian parts supplier from the brink, Reuters says.

Autodom closed plants in two Australian cities last week and was about to close its complete operations.  The company is strategically important to GM’s and Ford’s Australian operations:

  • 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.

Ford Australia and GM Holden agreed to share the debt liability equally. After receivers were appointed, the company can resume production this week.

GM Holden said last week it was cutting 170 jobs at its Adelaide assembly plant because of falling demand for locally-built vehicles.

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10 Comments on “Ford, GM Bail Out Australian Supplier...”

  • avatar

    I would be very curious to know the type of and which parts are apparently shared between them.

    EDIT: according to their site:

    “In late 2006 aiA acquired the business of Hendersons Components an Adelaide metal pressing and assembly business. In late 2007 it completed the purchase of Dair SA which manufactures cross car beams and hand brake assemblies. Both these businesses have been relocated into the aiA manufacturing plant at Woodville in Adelaide.”

    “DAIR is a wholly owned subsidiary of Autodom following completion of the acquisition of its assets at the end of August 2010.

    DAIR manufactured items found in most locally made vehicles include rear bumper assemblies, foot brakes, clutch mechanisms, hood hinges, parking brakes and car jacks. “

    • 0 avatar

      Most likely none.

      I work in the supply chain and we supply pretty much the same stuff to the NA plants of Ford, Chrysler, GM, Toyota, and Honda. Nothing is “shared” between the manufacturers, everyone has their own designs and requirements even for the “same” (in name only) items coming out of the same plant.

  • avatar

    I had suspected they’d eventually had to do that. Hope they learned their lesson, and making sure if your ONLY supplier seem to be in trouble, better find another one, at least as a backup!

    I notice in the previous article about this that the company were bought by another. Could it be a leveraged purchase, thus the company’s saddled with big debt burden that in the current situation becomes hard to service?

  • avatar

    This is interesting. I realize it is business and often the job goes to the lowest bidder in the tier 1 supplier world, but the OEMs really treat their suppliers poorly in many cases and force them out of business.

    I live in a town that (used to be) thick with tier 1 and 2 suppliers to the automotive industry. Often OEMs will withold payment for tooling or components for month after month forcing the supplier to give them free credit.

    The thinking used to be, “you don’t like it, fine, we’ll source elsewhere.”

    Looks like it’s finally coming to the point where enough suppliers have been culled where there is no more elsewhere.

    The OEMs literally bit the hands that fed (their plants).

    • 0 avatar

      I was thinking that this bailout would make GM and Ford start shopping for a new supplier, but maybe not. They may have to simply pay more for their parts from this one.

    • 0 avatar

      Once a suppliers parts and process meet the stated specifications, the OEM is obliged to approve the suppliers PSW and then pay for the supplier financed tools ( usually against a lump-sum Tool PO).

      Payment for production part deliveries proceed according to the Production Part PO, with payment occurring according to the term agreed between the parties, can range from 30 Days Net with one OEM to 60 days with another.

      OEMs are much more reliable in making timely payment than some of their big 1st Tier System Integrator suppliers (I’m thinking of you Visteon and International Automotive Components Co.)

      • 0 avatar

        As for the insolvency of an Australian auto supplier, the reason is most likely lack of scale owing to being a local producer only.

        Our Australian competitor, not this one, had no significant business outside of Au, and survived because Ford didn’t push its global supply base to localize there because the vehicles were market unique. As long as the Au ops of GM or Ford enjoyed market dominance, there was adequate volume for a purely domestic supplier to survive, but once other OEMs achieved significant market penetration, the reduced volumes imperiled both the formerly dominant OEMs and their supply base.

        I would expect that this insolvency may be the first of several.

      • 0 avatar

        These types of agreements may have been in place, but was unfortunately not how it transpired for many of the suppliers.

      • 0 avatar
        Athos Nobile

        “I would expect that this insolvency may be the first of several.”

        Except it ain’t the first one, we’ve been through this already this year with another one.

        Your comment is spot on.

  • avatar

    This was easily the most predictable thing to happen in the global auto business in the last week. Nothing to see here, folks, and there never really was, despite lurid headlines.

    (Okay, maybe it was the second most predictable, after Tesla posting a quarterly loss.)

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