Redundancy vote seals exit deal for Toyota

TOYOTA has started calculating the bottom-line cost of its decision to quit Australian manufacturing after the car-maker’s 2500 blue-collar workers voted last week to accept a package of redundancy measures.

The vote last Wednesday, which approved a series of redundancy payments negotiated between the car-maker, unions and workers, will allow Toyota to give each worker who will be made redundant in 2017 an estimate of their entitlements.

However, more importantly for Toyota, it will allow the car-maker to prepare its full-year financial report, due in July, which will give the first measure of how much the decision to quit Australian manufacturing will cost it – expected to be a record-making loss in the hundreds of millions of dollars for the brand.

Toyota Australia media and external affairs manager Beck Angel said the worker vote on the redundancy measures was approved “as expected”, marking the end of the company’s negotiations over the final payouts.

Ms Angel said 88 percent of the car-maker’s 1900 award-wage earners had voted in favour of the redundancy measures.

“That’s all that ended now,” she said. “At least now at the end of the year we will be able to give our employees an estimate of what the package will be so then they can start planning for beyond 2017 – now they’ve got ample time to do that.” Under the deal negotiated with the company, Toyota workers will get four weeks of pay for each year of service, capped at 90 weeks, as well as a one-week loyalty bonus for each year of service that is uncapped.

Other entitlements include a 75 per cent payout of accumulated sick leave, and all holiday and long-service leave entitlements, with Toyota agreeing to start recognising long-service entitlements after just three years of employment.

The redundancy measures will also be offered to workers not on the award system.

Ms Angel said the cost of the redundancy package – and the write-down of plant and equipment that was upgraded as part of a multimillion-dollar modernisation of the company – would be accounted for in Toyota Australia’s annual report due in July.

“We will have exit costs that we will need to declare (in the annual results),” she said.

“I haven’t seen those sorts of costs before, as you can expect, but I think you can expect we will have exit costs that we will need to calculate into our results.” Ford and Holden have both revealed that the cost of closing their manufacturing plants will cost dearly, with Ford posting a $267 million loss for 2013, while Holden’s numbers blew out to $553.8 billion.

Toyota’s result is expected to be hit hard by the write-down of its $330 million engine-casting plant at Altona in Melbourne's west, which produced its first engine block in December 2012 – almost a year and a half ago.

The engine plant included a $63 million grant from the Australian taxpayer, with plans to produce 108,000 units a year and earn valuable export dollars.