SMEs adapt or perish as car plant closure looms

SMEs servicing Adelaide’s Mitsubishi car manufacturing plant will face immediate pressure to adapt and seize new opportunities if they are to stay afloat following the expected announcement of the plant’s closure this afternoon.

The board of Mitsubishi is expected to decide to close the plant when it meets in Japan today, a decision that would put close to 1000 workers out of jobs and affect hundreds of related SMEs and their employees.

But there are opportunities out there for both SMEs and employees affected by the closure, according to John Mellor, a motor industry analyst and publisher of the GoAuto motor industry newsletter.

Mellor says while the expected loss of Mistubishi’s 10,000 per year car run will hurt the SMEs who supply the plant, many of those will be in a position to take advantage of an expected increase in production at Holden’s Adelaide plant to 40,000 cars annually.

“If I was making brakes for the Mitsubishi 380 (the key car manufactured at the plant) and am able to adapt for the Holden Commodore, then I’m going to be seeing volumes of brakes required at four times the volume of the brakes that they were selling to Mitsubishi,” Mellor says.

Retraining could enable workers, who could lose their jobs if the plant closes, to take up other opportunities in the automotive industry, Mellor says.

“It will be difficult for people on the floor to make the transition, but there are jobs in the sector. For example, there is a massive shortage of technicians to service cars in Australia; dealers are so desperate they’re bringing in workers for overseas,” Mellor says. “If I had worked on an assembly line and knew my way around a car, there are thousands of jobs available right now.”

The likely closure of the Adelaide plant, and the fate of the car industry more generally, reflects changes in the structure of the broader manufacturing sector away from mass production and towards high-end niche activities.

“There are good things happening in the industry – Holden has 1200 designers and engineers in Australia designing cars for the US, and Ford has 1000 engineers at Broadmeadows in Victoria designing a compact pick-up truck,” Mellor says.

“So what is going on is that the car industry is moving, the expansion isn’t in production plants but in much higher value added jobs in different parts of the manufacturing chain.”