In another blow to Australian manufacturing, US motorcycle producer Harley-Davidson will close its South Australian subsidiary producer of cast wheels and wheel hubs, New Castalloy.
President and chief operating officer of Harley-Davidson, Matt Levatich, made the announcement in the US yesterday.
“The company’s decision on wheel production follows a review of the long-term fit and competitiveness of the New Castalloy business with our strategy and was not made lightly,” he said.
“New Castalloy has been a valued part of the Harley-Davidson team. We appreciate the many significant contributions of New Castalloy’s employees over the years.”
The company plans to wind down operations at the plant over the next 18 months, after which it will outsource production of the components to current suppliers in China. The move is expected to save it $9 million a year.
SA industry minister Tom Koutsantonis described the decision as “pure maths”.
He said at a press conference that the company had given the Government no indications about the closure.
Koutsantonis said the State or Federal Governments would have helped to keep the foundry operating, but neither was asked for support. In 2007, the South Australian Government bought the land on the site in a bid to keep the previous owner, Ion, afloat.
“What Harley-Davidson have done today, they have taken their operations somewhere cheaper with lower environmental standards,” he said, adding that global uncertainty and a high Australian dollar were putting pressure on the manufacturing sector.
The South Australian Government will offer the 212 sacked employees $3,000 to $5,000 to help them retrain for other industries.
The closure follows on from sobering news for the manufacturing sector in recent weeks.
Last month’s release of the National Australia Bank’s inaugural Manufacturing Index showed that activity indices for all sectors excluding textiles, clothing and footwear deteriorated over the September quarter.
The index also found that business confidence in the sector fell to -11 points in the third quarter, after broadly neutral levels the previous quarter.
“When compared with other industries, manufacturing records below average levels of confidence,” the bank said.
“Ongoing uncertainty in the global economy, the weak state of domestic demand and continued competitive pressures due to the high currency has led to subdued sentiment in the manufacturing sector.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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