Automotive Industry

The Hon. D.G.E. HOOD (15:14): I seek leave to make a brief explanation before asking the Minister for Manufacturing and Innovation, and the Minister for Automotive Transformation, a question about component manufacturers in South Australia.

Leave granted.

The Hon. D.G.E. HOOD: With the looming closure of Holden, it has been well documented that South Australian component manufacturers face an uncertain future. The only certainty is the challenge ahead. The Asian automotive economy, of course, is highly efficient both in terms of labour costs and production times, and some claim this means that South Australian component manufacturers are unlikely to be able to offer competitive tenders to break into the various markets overseas.

Greg Combet of the Automotive Transformation Taskforce was quoted in April as saying that the reality is that much of the rest of the industry is going to close down. South Australia is facing significant job losses not only from Holden's closure but also from the component manufacturing system that supplies Holden and other manufacturers it seems. My questions to the minister are:

1. How is the government working with these component manufacturers, in particular to help them deliver business plans and to ensure they know of any relevant grants or government assistance available to them?

2. What is the government doing to assist component manufacturers to diversify to ensure they stay in business and, importantly, employ many South Australians?

The Hon. K.J. MAHER (Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Aboriginal Affairs and Reconciliation) (15:15): I thank the honourable member for his very important question. It is a difficult time in the automotive labour manufacturing sector in South Australia. With the closure of Holden by the end of 2017 after the withdrawal of federal government support for the industry, there are other manufacturers that will be adversely affected.

There are approximately 33 tier 1 component manufacturers here in Adelaide whose businesses are very largely reliant not just on Holden, but also on Ford and Toyota. I have visited many of the workplaces, most recently in the last couple of weeks Hirotec and Futuris near the Holden plant in the north.

There are a number of manufacturers who for a number of reasons will not be manufacturing after the closure of Holden by the end of 2017. A number of our tier 1 manufacturers are multinational companies that have operations in many other countries around the world that, with the demise of the Australian automotive industry, will produce in other countries, but not in Australia any more.

There are some other companies that have specialised to such a degree that they have been quite honest and said that they do not see themselves as diversifying, but there are some component manufacturing companies that are interested and have done a lot to diversify what they do.

I mentioned earlier this week, through the state government's Automotive Supplier Diversification Program, three recent government grants to ZF Lemforder, Trident Plastics and to one other company to help them diversify into other areas. Some of the manufacturers are metal fabrication or plastics that can look to other areas.

Our automotive transformation team has visited all of the tier 1 suppliers at least once to talk to them directly about what they see themselves doing and if there is any way that they could look to diversify out of auto manufacturing. Some of those are taking up some of the suggestions by government which has led to some of the grants that have already been made. There is still money in that fund.

We recognise, as we come closer to the end of 2017, that there will be future calls and there will be more that a government needs to do. Certainly, we are now focusing on those tier 2 supply companies that supply things to the supply chain, but are not quite as reliant in as high a proportion to automotive manufacturing. We are looking to see how we could support those companies.

I know in a number of these programs that as we go along we are readjusting what we do. I do not have the figures in front of me. We have reduced the percentage of exposure that a company has to have to the auto industry to be eligible for some of these grants so that we can cover more companies. We will keep responding as a government as we understand the changing needs of many automotive supplier companies, but the automotive transformation people within government have been out to see all of the tier 1 companies and we are working through seeing many of the major tier 2 companies.