Supplier woes could suspend Ford Oz production

A COMPONENT supplier in financial strife could cause Ford Australia’s production lines in Geelong and Broadmeadows to grind to a halt by the end of this week, causing around 1800 workers to be temporarily stood down.

According to unions, if production is suspended, other Ford suppliers may also be forced to temporarily stand down their workers as a knock-on effect because Ford uses a ‘just in time’ supply system and has little capacity to carry stocks of the parts it requires.

Around 80 workers at suspension parts supplier CMI were locked out of the company’s Campbellfield factory last week due to a dispute with the landlord over unpaid rent, and the company was expected to go into administration.

If a resolution is not found quickly, Ford will run out of CMI-manufactured parts by Thursday night and be forced to temporarily stop production of its Falcon and Territory.

The news comes as 12 Toyota workers sacked in last week’s layoffs launch Federal Court action, which will be heard on Thursday, claiming they were discriminated against due to their positions as union delegates and health and safety officers.

Unions, workers and supporters also staged a protest outside Toyota’s Altona plant today in response to the sackings.

Ford, which launched its four-cylinder EcoBoost Falcon sedan yesterday, was already on the back foot, having just recovered from the Christmas Day hail storm that damaged around 2000 vehicles.

Ford Australia public affairs director Sinead Phipps told GoAuto the situation was expected to be resolved today and that CMI has had financial pressures for some time.

“They’re working through a plan for how their business can be viable going forward, and we are assisting them with developing that plan,” she said.

Ms Phipps confirmed there would be no production stoppages if a resolution was reached today, but the pressure is on because of the Anzac Day public holiday.

She said if production had to stop, Ford would work with the unions to find the fairest way of temporarily standing down the workers, for example bringing forward scheduled down days.

“Down days are traditionally about 60 per cent pay, and employees normally top them up with annual leave entitlements and things like that.”

From top: Ford Falcon EcoBoost and Ford Territory

While Ford may act to protect its workers, Australian Manufacturing Workers Union (AMWU) spokesman Steve Dargavel told GoAuto there are concerns about other companies that supply Ford on a ‘just in time’ basis also being forced to suspend production and stand down workers until the situation is resolved.

It has been reported that up to 9000 workers could be affected and Mr Dargavel said the automotive supply chain is already under a lot of pressure.

“We are concerned about any further stand-downs in the industry,” he said.

Mr Dargavel said the damage to the rest of CMI’s operations as a result of the situation at Campbellfield is also concerning employees that work at its four other sites.

There may be light at the end of the tunnel, though, as federal minister for workplace relations Bill Shorten told the ABC that CMI is in the process of appointing a voluntary administrator.

State manufacturing minister Richard Dalla-Riva said the government is in discussions with CMI about its financial situation with a view to offer assistance where possible.

Although Ford is looking at alternative suppliers in case the situation becomes unresolvable, it is committed to keeping CMI as a supplier and has provided financial assistance in the past.

However, Ms Phipps said CMI has to become a viable business and cannot lurch from crisis to crisis.

“We’ve given them financial assistance in the past, but in this instance we’re saying they need to look at their business structure we can’t just keep giving them money,” she said.

As well as the CMI situation and the gloom over 350 sacked Toyota workers, Coburg-based automotive supplier APV also hit the skids earlier this month.

Ms Phipps likened the CMI situation to that of APV, which went into receivership earlier this month but was able to continue trading with the help of 34 of its 124 employees taking voluntary redundancy, plus guaranteed orders from car companies and temporary price increases.

“There are multiple ways we can help (CMI) and those are the details we’re working out at the moment.” Ms Phipps said the situation is unlikely to last more than a day or two.

“We’ve never had a week-long stand-down as a result of supply issues.

“It tends to bring everything into very sharp focus, and we will have people working tomorrow (on a public holiday) to try and resolve whatever is not resolved today. The fact that it is a public holiday is irrelevant.

“We’ve had issues like this in the past, and people work round the clock, over weekends, whatever it takes because no-one wants to be down.”