Futuris optimistic about future, despite Ford exit
BY IAN PORTER | 2nd Aug 2013
The company is bracing for a hit to its operations with Ford’s exit from Australian manufacturing in 2016, and, like the entire industry, is facing further uncertainty as Holden thrashes out a make-or-break enterprise agreement with its factory workers and looks to cut costs in other areas in order to remain viable.
However, in an interview with GoAuto Mr de Wit said he was confident that under new owner Clearlake Capital Group – which has purchased the company from listed rural services group Elders at a knocked-down value of $69 million – Futuris would be able to expand its overseas operations to more than compensate for the exit of Ford.
Ford Australia currently provides about 25 per cent of Futuris’ annual turnover of $350 million, and is the parts-maker’s single biggest customer.
But Mr de Wit is hopeful of keeping on the bulk of the 210 workers employed at the Futuris site located inside Ford’s Campbellfield compound north of Melbourne, switching to programs unrelated to Ford.
“In the end, whilst (the Ford decision) is large and important and unfortunate, the opportunities we have in front of the business are far more sizeable than that, so we feel pretty good that the business has a very, very bright future,” he said.
“At least we have got that certainty, and the buyer has that certainty, and we all know the cards we are playing with.”With Ford, at least.
In March, directors of Elders downgraded the value of Futuris Automotive by $166 million, but even that was not enough.
Announcing the sale of Futuris yesterday, Elders Limited managing director Malcolm Jackman said Elders would book a further loss of $28 million on completion of the sale to Clearlake.
But if it was a poor deal for Elders, it was a good one for Clearlake.
“They’re fortunate to be buying at a good time, from their perspective,” Mr de Wit said.
“There is obviously a lot of hangover effect from the Ford announcement, and we are coming off the back of a VE Commodore run-out, so you can imagine the business has a lot of upside from here.”Mr de Wit said having a new owner would present some big possibilities for Futuris, both in terms of internal growth and through acquisitions.
“This acquisition opens up a whole new field for us. We will be able to use our cash flows for our businesses, not for servicing Elders’ debt,” Mr de Wit said.
While Futuris has been able to establish joint-venture and wholly owned manufacturing operations in recent years in Thailand (two), China (four) and the US (one), Mr de Wit said it had all “been done on a shoestring”.
“Definitely, access to capital has been an issue in the past,” he said.
“We will (now) have access to a greater capital pool. We have not had access to such an opportunity for some time.”Mr de Wit said Futuris had been limited in the size of seating contracts for which it could tender.
“There will be more projects and bigger projects available to us now. We will be able to open our arms and start to bid for some big contracts.”And he said future growth might not only come from winning extra work.
“Clearlake will now be able to look for acquisition opportunities for Futuris.
That’s a possibility that opens up,” he said.
“Under the past ownership, that was not a possibility.”Mr de Wit said Futuris currently had around 730 employees in Australia, including the 210 at Campbellfield, and emphasised the broad nature of the work at the Ford site involves “a lot of non-automotive work, and a lot of Toyota work”.
“That plant does not just do Ford work – we make Toyota components in there, seats for Queensland Rail for trains, Bombardier, Woven Image, eWood we make out of there, Microheat water heaters,” he said.
“The vast majority of business in that plant is Ford, but there are other things going on in that facility as well.
“In fact, we are wanting to grow that and we will still have some employment requirements.
“How successful we are in growing some of these other areas will determine how many of the 200 or so we can retain and protect.
“Fortunately, we have three years to work on that.” Apart from the possibility of winning new seat contracts around the world and perhaps growing by acquisition, Mr de Wit said Clearlake directors were interested in the new seat technology Futuris has invented in conjunction with the AutoCRC.
“I think Clearlake are extremely excited about the prospects of the business, and some of those new technologies that hopefully we can find a home for, could be game-changers,” Mr de Wit said.
“In fact, I was with Clearlake last week in the US and talking to a car company about the knitted seats so, fingers crossed, one day we will get some traction on that.”The new seat is formed by knitting a manmade fibre, which can be shipped flat to an assembly plant before being pulled over a seat-shaped form and heated.
This triggers the impregnated setting agent in the fibre, forming a hard seat.
Hard points for mounting motors and hinges are bonded into the knitted seat during setting, and the seat can be trimmed as normal on the outside, and stay hollow on the inside. It can save around 10kg a vehicle.
Other participants in the research were the CSIRO, Deakin University, UniSA and Melbourne’s RMIT.
