The industry group representing automotive component manufacturers has warned some jobs could be lost in the supply chain as a result of Ford’s decision to lay off 440 workers and reduce production from 209 vehicles per day to just 148 from later this year.
Ford’s move has left federal and state governments defending a decision to pay out millions to car manufacturers earlier this year.
Richard Reilly, chief executive of the Federation of Automotive Products Manufacturers, says there is “no doubt” the decision will hurt the supply chain.
“First of all, the number of products that are being made will be reduced, so we’re obviously still working through the numbers, to judge the potential impact.”
“But we believe there will be some impact on employment, yes.”
The decision comes during a tumultuous period for automotive production and manufacturing in general. Back in April, car parts maker APV collapsed into receivership, with the failure of the company linked to a reduction in the production of Australian made vehicles.
There is a disconnection between the payments made by governments earlier this year and what’s happening with suppliers, Reilly says. That funding was to be used for production in 2014-16, so it would be false to attribute the potential impact of that funding to the current situation.
Nevertheless, Reilly says it’s a disappointing turn of events, especially as the component manufacturing sector remains under pressure.
“This is just another issue they’re going to have to deal with. There has been a lot of restructuring, and supply chain companies are continuing to do that and to look for ways to just increase local content for vehicles.”
“It’s easy to say, but very hard to do,” he says.
Reilly says more businesses are realising what they have to do in order to survive.
“They have to diversify and innovate. They know what they need to do, and that’s just the mantra that needs to be reinforced.”
This article first appeared at SmartCompany.