Ford, GM agree on $6.5 million rescue deal for Australian supplier
Deal avoids production shutdown by GM, Ford, others
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CANBERRA (Reuters) -- Top Australian auto parts supplier Autodom Ltd. was thrown a lifeline today when local units of Ford Motor Co. and General Motors Co. agreed to underwrite the company's $6.5 million debt to avoid a crippling vehicle production shutdown.
Autodom, a supplier of parts to local units of Ford, Toyota Motor Corp., and the General Motors Holden unit of GM, last week closed its plants in two Australian cities. The closings raised fears the shutdown would halt Ford and GM Holden production as soon as this week.
The deal, under which Ford Australia and GM Holden will roughly share the strategically-vital company's debt liability, was finalized with the appointment of receiver McGrathNicol, allowing Autodom to resume production as soon as Wednesday.
"Holden's involvement in the process recognizes the importance of the domestic supply chain to the automotive sector and the multiplier effect on employment that an Australian auto industry has on the broader economy," GM Holden said in a statement.
Australia's automotive industry, based mainly in southern Victoria and South Australia states, is a major contributor to Australia's manufacturing base with three manufacturers exporting $3.3 billion worth of vehicles a year with the aid of around 160 component makers.
Despite hefty government subsidies and tariff support worth around A$2.5 billion ($2.60 billion) a year, the industry has struggled to maintain manufacturing jobs, with the Australian arm of Japan's Mitsubishi Motors Corp. closing its car plants in 2008.
Coinciding with Autodom's woes, GM Holden said last week it was cutting 170 jobs at its Adelaide assembly plant because of falling demand for locally-built vehicles.
Today's deal allowed receivers to be appointed for Autodom, which employs around 400 people, and paves the way for the company to be restructured.
Under the deal neither Ford nor GM Holden are to become owners of Autodom, Australia's largest press metal manufacturer and supplier of complex metal and plastic components to carmakers, company sources told Reuters.
Ford, which buys hundreds of components from Autodom for its locally-built Falcon sedan and Territory SUV, had been expected to be most affected by the shutdown.
Ford workers were on holiday today, but Holden said disruptions to production of large Commodore sedans and smaller Cruze sedan would now be minor and the company might only be forced to retrofit some components.
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