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Metal Casting Technologies : March 2009
BRIEFINGS automotive components manufacturers. A delegation from China’s Hefei municipality suggests that it could be the beginning of a new bond between Victoria and the growing Chinese industrial city. Located in Anhui Province in central China, Hefei is home to JAC, which manufactures trucks and buses. The company is looking to diversify into passenger vehicle production. Prior relationships between Victoria and Hefei were facilitated by the China Victoria Automotive Cluster group, which linked Victorian component and services companies to supply opportunities in China’s automotive industry. Hefei University of Technology and Deakin University are also entering a cooperation agreement for developing automotive materials and technology. Auto parts – interesting times – Australia As it happens some fascinating things are happening in the automotive parts industry. A couple of years ago when the Australian dollar was rising, the auto companies decided to source more of their parts from China and those decisions are now hitting the parts industry hard. Long-term contracts and years of expertise are being shifted to Asia and workers are losing their jobs and entitlements. But the auto makers have been caught because the overseas parts are often more costly than those sourced in Australia, due to: the fall in the dollar; the difficulty in obtaining finance for the increased requirement for stock; shipping costs and the big contraction in China. There is now a scramble to rectify mistakes and try and lift Australian sourcing, but of course it takes a long time to execute these changes and the damage is done. Interestingly, the Americans are being a lot smarter than Australians 12 www.metals.rala.com.au in the way they are handling their automotive problems. The big lumps of US government money will not be forthcoming unless there is a clear plan but, unlike Canberra, they know that it is nonsense to require companies to actually implement and finance changes before deciding whether to give a grant. For General Motors and Chrysler the US investigation is like being in official administration without creditors missing out. The entire operations of both US companies are being reviewed, which includes GM in Australia. GM and Chrysler will come out with a much lower cost base. Value of Thai exports shrinks – auto industry cuts back The ongoing political problems in Thailand have not only damaged the tourist and service industry but have also worsened the conditions for manufacturing companies who were already suffering from the global economic situation. The Thai Chamber of Commerce reported that the value exports from Thailand contracted for a second consecutive month in December. Compared to the figures for 2007 export values fell by 20.5% in November, the largest drop in 17 years, while for December the fall was 14.5%. During November the Thai manufacturing production index contracted by 6.6 per cent, the lowest performance since May 1998, while capacity utilization was only 61.2 per cent, the lowest level since April 2002. Although overall year on year Thai export growth was around 15% the worrying news for the Thai cast parts suppliers was that, compared to the previous year, the figure for December 2008 exports from the automotive and electrical appliances industries was down by over 20%. Figures from the Thai Industries’ Automotive Industry Club show that Thailand produced just over 1.39 million vehicles in 2008 of which 776,140 were exported showing a 12.5% increase on the 2007 export level. However the number of units exported during December fell by 36% compared to December 2007 due to reduced demand from Asia, Australia, Central and South America, and Europe. Due to the global financial crisis it is expected that vehicles sales worldwide could drop by up to 14 million units. As vehicle producers everywhere cut back on production Thai automotive foundries are becoming increasingly concerned over future orders. Mitsubishi in Thailand with an annual production capacity of 200,000 units, 95% of which are pick-up trucks, has already planned to cut production by 50% down to 50,000 units during the first 6 months of this year. Mitsubishi also announced that although it had planned to start production of its eco-car in 2010 this date would be put back due to the economic uncertainty. The eco-car projects proposed by Toyota and Suzuki are also likely to be postponed to 2011 at the earliest. There are real concerns that the eco- car programme, an earlier policy from the Thai government to encourage development of smaller, more fuel- efficient cars, could be completely shelved. Last year, General Motors (GM) in Thailand produced more than 100,000 pickup trucks and passenger cars at its Rayong plant but this year it plans to manufacture only 77,000 units as global demand is down by about 23% year-on-year. In August last year GM started a 15 billion baht diesel-engine production project with the aim of producing 2.5- and 2.8-litre pick-up engines with an annual output of 100,000 within 2-3 years. The new facility, next to its assembly plant