South Australia Motor Parts Sector At Breaking Point

Only 20 per cent of South Australian car component suppliers will continue operations beyond 2017 when GM Holden closes its Australian operations at Elizabeth, a senate inquiry has heard in Adelaide recently. 20 per cent of the state’s 33 tier-one parts suppliers to car manufacturers had a diversification plan to take their businesses beyond 2017 said South Australian Automotive Transformation Taskforce chief executive Len Piro told the inquiry into the future of Australia’s motor industry. â€œWe’re already aware of those who may survive if they diversify,” Piro told The Australian. Forecasts are based on research from University of Adelaide, Allen Consulting and the taskforce’s interviews. Piro’s “robust projection” compared with Federation of Automotive Product Manufacturers forecasts made to the Melbourne hearing of the inquiry this week of, in a best-case scenario, one-third of 33,000 direct jobs will be lost says Independent senator Nick Xenophon.

South Australia is absolutely at a tipping point as it had 7500 direct and 7500 indirect jobs tied to the parts sector, Piro said. The Australian Government must make the full $900 million of its ATS available to suppliers until 2021 to give them time to diversify from car making. The Adelaide sitting came after confusion about how much the government would spend to help suppliers retool after it promised to pull back the scheme’s timeline to 2017 and signalled unspent funds would return to general revenue. As little as $105 million of the promised $900 million could be spent under the scheme that is tied to the slowing production rate of cars made in the country.

“It was Joe Hockey and Warren Truss who goaded and dared Holden to leave in federal parliament. The day after that, Holden said that they were going.” â€œI’m disappointed that we have to be here at all — if it wasn’t for the current government chasing Holden out of the state,’’ Maher told the inquiry. Asked by Liberal senator Sean Edwards if he believed Holden would have changed its business model under a Labor government, Maher noted: “I have no doubt about it.” â€œIt’s our view that the $900 million needs to be able to be used. In South Australia we have the capacity for diversifying many manufacturing companies and there’s much skill and capacity within the workforce,” he says.

Maher said the state needed the government on side to support the automotive, renewable energy and the defence sectors while in heated debate with Senator Edwards. He agreed with inquiry chairman Kim Carr that $60m in federal funding for next-generation manu­facturing investment programs was grossly inadequate and oversubscribed, as 265 companies sought $554m.