Car parts makers watching Holden vote closely as auto industry splutters

The automotive industry has emerged yet again from a state of flux after Holden workers voted to freeze pay for the next three years and help secure the future of its Adelaide plant.

The move comes just months after Ford announced it would shut down its Melbourne plants and shed hundreds of jobs, and weeks after the federal government announced a $200 million aid package for the industry.

The fluctuations have been a struggle for the automotive component manufacturers, all of which depend on the security of local plants to survive.

Richard Reilly, head of the Federation of Automotive Products Manufacturers, told SmartCompany this morning the organisation was observing the Holden vote at a distance – but emphasised it’s been a tough few months.

The several hundred component manufacturers in Australia suffered a huge blow in May when Ford announced it would cut 1200 jobs over the next few years.

At the time, major economic groups, including the Australian Chamber of Commerce and Industry along with the FAPM, argued there was the potential for major layoffs in the industry.

While the latest Holden vote provides some certainty for component manufacturers, Reilly says the industry is still suffering.

“There are a lot of challenges out there,” he says.

According to recent research from IBISWorld, automotive component manufacturing revenue declined 3.9% each year during 2009-14. There are 972 businesses in the industry, employing more than 14,000 people.

“The shifting preferences of car buyers and the woes of car manufacturers indirectly affected component manufacturers,” the research states.

“The popularity of small imported cars grew, which put downward pressure on domestic motor vehicle production. Component manufacturers were heavily affected by the decline in motor vehicle production, particularly as most are small companies that are poorly equipped to deal with sustained periods of falling demand.”

Meanwhile, Holden workers voted yesterday to accept a three year wage freeze in order to secure the future of the Adelaide plant. Benefits including sick leave and overtime have also been changed.

The Manufacturing Workers Union approved of the vote, while South Australian Premier Jay Weatherill told the ABC the “strategically important industry” requires support.

The federal government also recently awarded the automotive industry another $200 million.