New voice for local parts-makers

A NEW association of automotive parts-makers has been formed in a bid to prompt the federal government to recognise that there will be a viable and growing components business in Australia after 2017.

Established under the umbrella of the Australian Automotive Aftermarket Association (AAAA), the Automotive Products Manufacturers & Exporters Council (APMEC) has been created to play an active role in the formation of government policy aimed at encouraging innovation and exports by the continuing automotive parts sector.

AAAA president Bob Pattison also moved to end the bitter divisions that have split the parts sector for decades.

Companies that had supply contracts with the three major car-makers – Toyota, Holden and Ford, all of which are preparing to quit local manufacturing – were able to access assistance that was made available under many car industry plans, while other companies that were developing and selling their own unique products in the aftermarket did not qualify for assistance.

“All of us here make auto products,” Mr Pattison said. “It doesn’t matter who the customer is.

“Efforts to divide us into OE (original equipment) versus aftermarket, or heavy versus light, or passenger motor vehicles versus recreational vehicles, these distinctions are all wrong.

“They don’t matter and we need to stand together united as one.” APMEC will help fill the void left when the Federation of Automotive Products Manufacturers (FAPM) went into voluntary liquidation earlier this year and handed its residual responsibilities to the Victorian Automobile Chamber of Commerce (VACC).

Mr Pattison said APMEC already had almost 80 members and that this was expected to grow to more than 100 in coming months.

“This is all about combining the strengths of our auto parts producers to grow our industry, to work together, collaborating in business and influencing the government.” APMEC was officially launched on Monday night by Victorian shadow minister for trade, investment and jobs Craig Ondarchie.

Mr Ondarchie is a strong supporter of the automotive parts sector and recently travelled to Las Vegas to attend the SEMA show, one of the world’s largest auto parts exhibitions.

He said there were many commentators who were saying the automotive sector will die when the three car-makers pull out.

“I’ll tell you what, I am not going to the funeral because manufacturing is alive and well in this country because, in this room, we have people determined to make that happen.” The chairman of the new council, Arnold Mouw of Dayco Australia, stressed that the council was for companies that manufactured locally and that use locally developed intellectual property.

“It is important to stress that local IP is an asset that can and should be leveraged,” he said, adding that APMEC wanted to encourage companies to take the next step and start exporting, if they were not already doing so.

“Currently goods and services worth more than $800 million are being exported every year by APMEC members.” He said Australian manufacturers had some great advantages.

“We all have core ingredients for success: a great skilled workforce, good infrastructure and financial system and accessible, sophisticated design engineering and production techniques and, finally now, an Australian dollar that is more export friendly.” Mr Mouw said if parts-makers had not already changed their business models to recognise that the three local car-makers would be gone after 2017, then they faced “some additional challenges”.

“We are not focusing on the pending closure of car manufacturing. It’s done,” he said.

“What we do want to focus on is how we can continue support the industry in other areas, be it in export, the domestic aftermarket or service areas.

“We also think the government has a role to play, but we need to decide what that role will be.” He said the APMEC would not just be looking for government funding.

“It would be about working together for a sustainable future and it’s about influencing government policy in all areas that impact our industry,” he said.

“It needs to support lasting initiatives and profitable growth for industry.” Mr Mouw did have a crack at the departing OE manufacturers, saying that years of government funding for the car industry had seen little or no flow-on effect from the manufacturers themselves.

“In most cases, suppliers have been required to offer year-over-year price downs. Volumes are down so low now that the economies of scale have been eroded,” he said.

“In some cases, it is almost unprofitable to supply.” Mr Mouw said key activities in the council’s first year will include, but not be limited to, marketing and influencing representatives on behalf of our members to appropriate decision-makers and research into opportunities for international trade and exports.

The council will provide knowledge about export markets and contacts in key markets to help members start to export.

But parts-makers should not ignore the aftermarket, he said.

Mr Mouw said Dayco had decided 12 years ago to focus more attention on the aftermarket and, while Dayco’s business with Ford had declined from 70 per cent of revenue to less than three per cent, the extra revenue from the aftermarket operations had more than made up for that.

He said an AAAA survey had shown the aftermarket sales of parts and accessories was worth $6 billion a year, more than the $5.4 billion generated by the OE suppliers.

In addition, the service sector was worth $13.9 billion a year, including parts and labour.

“The aftermarket continues to grow, with the national car parc growing at 2.9 per cent a year. It will not be impacted by manufacturing closing,” he said.