Supply chain businesses in the automotive sector are fearful vital industry grants will be impacted by the upcoming May budget, with federal discretionary grants currently on hold.
Federation of Automotive Products Manufacturers national president Jim Griffin told SmartCompany there has been little information or news provided recently about the future of numerous grant programs such as the Automotive New Markets Program and the Geelong Region Innovation and Investment Fund.
“The problem we have at the moment is most of these programs are on hold and there is a lot of uncertainty as to their status,” he says.
“There has been little news coming out of these programs. My company Diver Consolidated Industries is working on some great projects and I’d like to put a grant application in for some of them, but I don’t know when the next round will be. I’m hoping to hell there will be a new round announced.”
Many SMEs in the automotive sector are currently under considerable pressure to diversify, with the end of auto manufacturing in Australia announced for 2017.
Griffin says these grants are crucial to allow many small businesses to pivot and take advantage of new opportunities.
“I’m concerned about the content of the May federal budget and I fear the government will adopt the attitude that now the car companies have announced their closure, none of the businesses in the sector need to be supported anymore,” he says.
“But our current situation couldn’t be worse. Without an ongoing plan and a support scheme I fear there will be significant job losses, so I hope the government doesn’t take this attitude.”
Griffin says the entire manufacturing sector needs support.
“I’m aware the federal government thinks manufacturing is a black hole and I’m worried there will be significant cuts to spending programs,” he says. “I fear we won’t be supported.”
Other grant programs currently in existence to support the automotive sector include the Melbourne’s North Investment and Innovation Fund and in Victoria the Investing in Manufacturing Technology program.
Ben Cusack, founder of grants consultancy Bulletpoint, told SmartCompany the grants were designed to help companies respond to the pressures of the decline in automotive manufacturing.
“They certainly help with market readjustment. Other manufacturers are able to employ some of the automotive workers using the grants and the ANMP grants can help component supply companies change markets,” he says.
“Many of these grants were released as a response to the way the automotive industry was going, but I don’t think many people envisaged that the auto manufacturing market would be totally shut down.”
Cusack says he would be surprised if the grants were cut, as there is currently a large amount of unspent money in many of the programs.
“In the ANMP round one there was $6.49 million given out, in round two there was $7.29 million and in round three so far there has been $4.75 million,” he says.
“There is plenty of money still available in that fund, but whether or not the government intends to change this I don’t know.”
The ANMP has $42 million in funding and is jointly supported by the Australian and Victorian governments and delivered in collaboration with the South Australian government.
Cusack says the GRIIF program is also important, as it supports businesses hiring workers from the automotive sector.
“Businesses are able to get money for capital investment, but they need to be employing new staff and the staff they will be employing will likely come from the automotive sector,” he says.
The GRIIF program is a $24.5 million competitive, merit-based grants program and in round one of the program this year Geelong-based business Carbon Revolution was given $5 million to upgrade its factory to enable commercial scale production of carbon fibre wheels.
Round two of this program closes on Thursday May 29, 2014.
But Griffin says even if these programs are allowed to continue, many of the programs need “tweaking” to better support the sector.
“The programs are often based on rounds and many businesses will be aware of the programs, but not know when the rounds open and close,” he says.
“The appraisal and grant approval process is often also far too long and businesses miss out on other grant opportunities because they’re waiting to hear if their applications have been approved.”