Blow for Air International in Melbourne

The launch of the VF Commodore in April will deliver something of a setback for the Air International plant at Fishermens Bend in Melbourne.

GM Holden has decided to source all its Commodore heating, ventilation and cooling (HVAC) systems from Air International’s Australian rival Denso, also based in Melbourne.

Previously GM Holden had split the Commodore HVAC business between the two suppliers under a dual sourcing approach, with one supplier producing units for the right hand model and the other doing the left hand drive export cars.

The Air International plant and research centre employs around 40 people and the loss of the GM Holden contract will leave the company with the challenge of finding new contracts to keep the plant operating efficiently.

Air International directors were concerned about the situation, according to the deputy general manager of Air International’s Thai operations, NarongritPotsirisilpa.

“We are talking to Ford about the possibility of extending our business with them,” Mr Potsirisilpa said at the company’s Rayong plant in Thailand.

Air International supplies the Falcon HVAC system and other components related to heat exchange.

If the company is unable to secure production volume to replace the GMH business, there is a possibility that employment levels may have to be cut. The loss of the GMH contract will take a bite out of Air International’s Australian revenues of $36 million.

The Fishermen’s Bend site houses a research and development unit, including a wind tunnel, as well as the final assembly stage for the HVAC system. The company’s main research and development centre is located at the Shanghai head office.

The manufacturing side receives sub-assemblies from Thailand and adds the unique housings and components required for the Commodore and Falcon installations.

Air International was founded in Australia in 1967 and won its first contract to supply an HVAC system to a carmaker, GMH, in 1979.

It was bought by the listed investment company Futuris (now Elders Ltd). It successfully expanded into China in 1995 (selling air conditioning systems for trains) and also won a big contract with General Motors in the US in 1997.

Futuris sold 65 per cent of Air International in 2005 to a private equity group called Unitas and sold the remainder in 2011.

Air is now headquartered in Shanghai and has operations around the world, including Thailand.

Mr Potsirisilpa said the company now had a joint venture HVAC operation with the giant Shanghai Automotive and was preparing to bid for a contract with Shanghai Automotive when it starts operations in Thailand in the fourth quarter of 2013.

Ian Porter travelled to Thailand as a guest of the Thai Board of Investment