Ford, GM agreed to underwrite the $6.5 million debt of Autodom

Article by Christian A., on November 7, 2012

Autodom avoided a vehicle production shutdown after local units of Ford Motor Co and General Motors Co last Tuesday agreed to underwrite its $6.5 million debt. Two plants in Australia owned by Autodom were closed last week. Autodom supplies parts to the local units of Ford, Toyota Motor Co and the General Motors Holden unit of GM.

Because of these closures, many feared that the production of Ford and GM Holden will end possibly this week. Under this deal, Ford Australia and GM Holden will roughly share the debt liability of Autodom. The agreement was finalized upon the appointment of receivers McGrathNicol Pty Ltd. Autodom is set to resume production very soon, maybe on Wednesday.

GM Holden released a statement that Holden's participation in the process recognizes how valuable the domestic supply chain is to the automotive sector.

Holden also sees that the broader economy, as well as employment, is affected by the Australian auto industry. Australia's automotive industry, primarily in the southern Victoria and South Australia states, makes a significant contribution to Australia's manufacturing base with three manufacturers reporting exports of vehicles each year valued at around $3.3 billion with the help of about 160 component makers.

The industry hasn’t been very successful in retaining manufacturing jobs even with the huge subsidies from the government and tariff support with a value of A$2.5 billion ($2.60 billion) annually.

In fact, the Australian arm of Japan's Mitsubishi Motors Corp had shut down its auto factories in 2008. GM Holden also announced bad news that coincided with Autodom’s problems. Last week, GM Holden said that because of the decreasing demand for vehicles built locally, it will cut 170 jobs at its Adelaide assembly plant. The deal last Tuesday meant that receivers had to be named for Autodom. This leads to a restructuring within the company. Autodom has about 400 staff employees.

Topics: ford, gm

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