Holden export fear

THE future of Holden’s lucrative, record-breaking global export business remained in limbo as GoAuto went to press, with the local General Motors subsidiary yet to find an engine block supplier to produce its new Alloytec V6 for both domestic and global consumption from 2006.

Holden currently sources Alloytec engine blocks from Mexico, but a decision by the Ion group’s administrator to abandon the Altona engine block project that was contracted to supply Holden’s $400 million Fishermen’s Bend engine plant from 2006 has left future Alloytec production in doubt.

The decision has cast a cloud over future Commodore/Monaro/Statesman production for both Australia and export markets, which last year took delivery of a record 52,372 vehicles and comprised New Zealand, South Africa, the UK, US, Brazil, Thailand, Malaysia, Singapore and the Middle East.

South Korea was added to the list this year and export to China of Holden’s Statesman, badged as a Buick Royaum and powered by a 155kW/250Nm 2.8-litre version of Alloytec, are due to begin in March.

Further valuable export market contracts expected to be announced in 2005, Holden’s 50th anniversary export year, will increase the pressure on GM’s global purchasing department search for an alternative block supplier, as will last week’s GM announcement that Holden will be the sole supplier of a new 2.8-litre turbo V6 for Saab. Alfa Romeo’s new 159 medium sedan, revealed yesterday, will employ yet another (3.2-litre) derivative of the Alloytec V6.

"There’s no change to the official position at this stage," Holden’s acting national media relations manager Emily Perry told GoAuto yesterday. “We currently source blocks out of Mexico and were planning to source blocks from Altona.

"We now need to source blocks from an alternative supplier and are continuing to leverage global resources to search for an alternative through our worldwide purchasing and order-to-delivery department, which is tapped into GM’s global souring process," she said.

The only other Alloytec engine plant is St Catherines in the US, which also sources blocks from Mexico. It’s believed continued sourcing from Mexico is one option for Holden, which had worked hard to find a local supplier for Alloytec blocks to reduce costs. Either way, a continued offshore engine block supply was likely.

"When we anticipated changeover (from Mexico from 2006) isn’t necessarily when they run out," said Ms Perry. "But supply contracts are commercial and confidential agreements.

"We make all our decisions based on quality and cost effectiveness and the reality is we’re investigating other possibilities around the world. Whether it’s a local or global supplier, our priorities remain the same.

"(But) At this stage we think the supplier will need to come from overseas. No other Australian manufacturer is able to produce the precision work necessary for block production and we’re currently scouring the world to get the best outcomes we can."Holden, which last year produced 165,252 vehicles at the rate of 835 per day, was to take delivery of 200,000 engine blocks annually from 2006, but Ion’s ill-fated Altona plant was designed to produce 350,000 pere annum and costs were reported to have blown out from $90 million to $160 million.

Holden would not comment on the potential impact continued overseas block sourcing may have on the cost of producing the Alloytec V6, which is already more expensive to produce than Commodore’s previous 3.8-litre Ecotec V6.

In 2004, Holden’s new Port Melbourne engine plant produced 55,599 Alloytec engines, in addition to the last 57,341 Ecotec V6s and 143,897 Family II four-cylinder engines for export to South Korea, China and South America.

Holden is also reviewing its relationship with another Ion plant in Wingfield, South Australia, which supplies Alloytec cylinder-heads. A third Ion group plant in Albury (formerly known as BTR) produces automatic transmissions for Ford Australia, which said its current contract is unlikely to be affected.