Death knell for Autoliv

AN Australian automotive parts and safety engineering company that employed more than 1000 people at its peak about six years ago will be left with a staff of just eight by Easter, when engineering and administration staff join their factory colleagues in the redundancy queue.

Autoliv Australia Pty Ltd – a subsidiary of the giant Swedish-American auto safety systems conglomerate that supplies all of the world’s largest car-makers with items such as airbags and seatbelts – is also trying to sell its crash test centre in Melbourne as it winds down its local operations.

The company moved its original-equipment manufacturing operation to Thailand in December, effectively closing the factory at Campbellfield, down the road from one of its biggest customers, Ford Australia.

That Autoliv plant supplied safety systems to all three Australian car-makers and at least 12 overseas customers.

The engineering department is set to close on April 21, leaving a team of about eight in a local office to liaise with Ford, Toyota and Holden on behalf of Autoliv’s overseas engineering and manufacturing centres.

The company’s aftermarket division, Klippan, will continue making some aftermarket seatbelts and safety harnesses in Australia, but only in small volumes. The division currently employs about 50 people.

Just last week another high-profile parts supplier, Robert Bosch Australia, announced that it was planning to relocate about three quarters of its local manufacturing to overseas factories with the loss of 380 jobs by 2013.

Like Bosch, Autoliv Australia has been regarded as a cutting edge tier-one automotive supplier, with global-class export quality.

The company reached its peak in the mid-2000s, when it was supplying seatbelts and other safety components to Australian car-makers and export markets on a large scale.

The problems started when a contract to supply seatbelt systems to a South Korean car-maker lapsed with the end of particular model in the mid-2000s, and a subsequent contract was filled by Autoliv’s South Korean factory.

In a double whammy, Autoliv also missed out on a major contract to supply restraint systems to Holden for its VE Commodore when it was launched in 2006.

While it continued to supply child seat restraint anchors to Holden – as well as full safety systems to Ford Australian and some systems to Toyota – the loss of the VE business to an offshore competitor was a blow to the viability of the local manufacturing operation.

In 2009, rumours that Autoliv was planning to move offshore surfaced during enterprise bargaining negotiations.

Then Autoliv Australia managing director Seamus Power told GoAuto at the time that the rumours were unfounded and that they had been triggered by the company’s offer of a modest pay rise over the first two years of the three-year EBA, with a larger rise in the third year, giving rise to speculation that local manufacturing would be shut within two years.

GoAuto understands Mr Power left Autoliv Australia in February.

The company’s general manager of engineering and marketing, Andrew Baldacchino – himself facing redundancy on April 21 with the rest of his team – told GoAuto today that he believed Autoliv management here and overseas had no plans in 2009 to shut the local original-equipment manufacturing and engineering operation.

He said global pressures had subsequently forced the decision, with local staff being told in April last year that the operation would be wound back.

Mr Baldacchino said Autoliv’s human resources department had organised a jobs fair that was attended by about 25 companies looking to recruit staff.

He said a good number of the Autoliv staff had found work, including three of his engineers who were leaving this week.

“Come Easter this year, myself and the remainder of my department finish up, and all the other functions – financial, quality, purchasing and all that kind of activity – finishes up pretty much all as well,” he said.

“There is a Klippan organisation, which is our aftermarket group, that’s still remaining, in the order of 50 people. They make seatbelt systems and special safety harnesses for the aftermarket.

“Effectively, Autoliv has ceased OE (original-equipment) production.

“On-going, what will remain is a small technical and sales office, to handle the account management to service the customers.

“So there will be a small sales team with application engineering and some quality support roles. That will be a small office of about probably eight people, and they will be the interface between the car-makers and our manufacturing and technical sites.” Mr Baldacchino said he was not in a position to discuss the proposed sale of the Autoliv crash test centre.

GoAuto understands that sale is being handled by Autoliv Australia chief financial officer Glenn McKinney, who could not be contacted today.

The centre, regarded as one of the finest independent car crash test facilities in Australia, is understood to be manned by a small staff while its future is decided.

Mr Baldacchino said the decision to close the Autoliv OE manufacturing and engineering operation had been disappointing, but had to be respected.

“That’s the nature of the beast, but it is a shame because there is a lot of expertise in terms of restraint systems and occupant safety, as well as a very highly awarded history in terms of manufacturing capability and skill sets, and that has unfortunately left the Australian market,” he said.

“We were the only manufacturer (of seatbelt systems) in this country and not just providing a product but all the engineering and technical skills that go along with providing that, as well as our manufacturing footprint in terms of the skill sets there.”

Autoliv, which has its headquarters in Sweden, has 80 facilities in 29 countries, with a global workforce of 43,000.

In its 2010 financial year, it reported a gross profit of $US1.6 billion on sales of $7.1 billion – a gross profit margin of 22.2 per cent.

Autoliv has 10 facilities in China, announcing another $6 million factory there just last week.