Ford hunts new gears after supplier failure

FORD Australia is working feverishly on a solution after supplies of its four-speed automatic transmission were abruptly cut off on Monday.

Albury-based Drivetrain Systems International (DSI) stopped production after it was placed in administration and receivership.

DSI ran into trouble after its major customer, SsangYong, narrowly avoided bankruptcy in January by being granted protection from its creditors by a South Korean court.

SsangYong has lost money in each of the past four quarters as sales of its sport utility vehicles fell sharply in response to fuel prices and, later, the global financial crisis.

Ford uses the four-speed unit in about 30 per cent of all Falcons, mainly the E-gas LPG model and the Falcon wagon. It is also used in the rear-wheel-drive Territory.

“We have the five-speed and the six-speed transmissions in our other vehicles, so we are looking at potentially changing the specs to use those transmissions,’’ said Ford spokeswoman Sinead McAlary.

The six-speed comes from ZF and is found in a range of other high-powered cars including several BMWs and the Jaguar XF. The five-speed unit comes from Ford’s Bordeaux plant in France.

Both transmissions are imported and, with the Australian dollar at relatively low levels, either choice would make for a more expensive Falcon.

“We don’t want to go down a more expensive route,” Ms McAlary said, “but the most expensive option would be to close the plant.” “We will do what we have to do.” A switch to a five or six-speed transmission for the E-gas Falcons would likely require a new suite of calibration and certification tests, which could take some time.

“That is something we are working through at the moment. We think it will be relatively easy, but it’s a matter of timing,” Ms McAlary said.

The receiver appointed to DSI, Stephen Longley, of PricewaterhouseCoopers, laid off DSI’s 400 workers on Monday after he was appointed.

He suspended production until he could reorganise operations and is aiming to resume production at the start of next week if he can make the necessary arrangements.

“With the co-operation of customers and suppliers, trading is anticipated to resume in a reduced operation next week,” he said in a statement.

“The receivers and managers will be talking with interested parties with the intention of selling the business as a going concern.” Ms McAlary would not be drawn on whether Ford would be prepared to make concessions on pricing to help DSI get back into production.

She said Ford would be happy to continue using the DSI transmission, but that work had to continue on finding an alternative, in case DSI did not resume production.

“The six speed is the better transmission, but there are whole lot of things we have to look at. We will do what we have to do to keep our plant operating.” DSI has survived a number of corporate failures and changes of ownership over the past 20 years.

The company was created by the US parts conglomerate Borg-Warner in 1958 when it acquired the long-established engineering company Coote and Jorgenson.

Borg-Warner Australia was listed on the Australian sharemarket until 1987 when it was acquired by the BTR Nylex group, which was led by Alan Jackson.

When BTR Nylex had to go into a managed sell-down of its assets, the Albury gearbox manufacturer was sold to the Ion group in April, 2002.

In 2003, the transmission plant employed 1100 people, but that number dropped sharply after Ford decided to use the imported ZF six-speed gearbox rather than a newly developed Ion six-speeder.

The Ion group subsequently ran into financial difficulty and was forced to sell the transmission plant in February 2006 to a consortium of local and international investors in a deal believed to be worth around $70 million.

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Albury transmission plant into receivership