The Australian Automotive Aftermarket Association (AAAA) is convinced that local original equipment (OE) and aftermarket parts and accessories manufacturers can face the future with confidence.
AAAA Executive Director Stuart Charity believes automotive manufacturing in Australia is not dead: “Although Ford, GM Holden and Toyota will close their vehicle plants by 2017, there is powerful contemporary evidence that innovative Australian automotive manufacturers can compete in today’s international market place.”
According to Charity, AAAA members now manufacture and export $800m worth of product a year. Australian products are going to vehicle manufacturers and to the aftermarket in Asia, Europe and the Americas. These products range from precision OE driveline components, to electrical systems and electronic devices, off-road vehicle protection and suspension equipment, and high-performance parts for use on the road and on the racetrack.
“This local export success confirms the global market recognises Australian manufacturers’ design, engineering and production quality,” Charity adds. “We encourage all local automotive manufacturers to explore the potential of a new business plan that encompasses export.”
To support Australia’s large and diverse automotive manufacturing sector, the AAAA recently formed the Automotive Products Manufacturers and Exporters Council (APMEC). The Council will assist member companies engaged in producing automotive products for both the OE and aftermarket sectors and is open to businesses engaged in research, design, product development or production.
“The APMEC will conduct research to identify and quantify business opportunities for Australian component manufacturers,” says Charity. “It will also go the next step to help formulate new and innovative ways for members to expand their businesses.”
The inaugural Council is being led by Dayco Australia Managing Director Arnold Mouw (see page 62).
“While Government previously recognised and supported only the manufacturing segment supplying local vehicle manufacturers, all other automotive businesses had to work independently to build their local and international markets,” Mouw explains. “The APMEC will be a welcome addition to Australia’s automotive landscape. It will help companies develop products and access new markets.”
Capitalise on existing human and capital resources
The AAAA has consulted widely with the Federal and State Governments to focus attention on the need for policy that promotes innovation, commercialisation of new products and growth in those parts of the automotive industry that will remain after 2017.
“Automotive manufacturing is at the pointy end – it is a complex, high-technology sector,” says Charity. “It would be a tragedy to lose Victoria’s automotive manufacturing capability. It is anticipated that 35,000 direct jobs will be lost in 2017 when Ford, GM Holden and Toyota close their local plants. Millions of dollars worth of sophisticated manufacturing equipment will be made redundant. Australia will lose those skilled people and those precision production processes.”
The APMEC is focusing on transitioning both automotive businesses and their workers to help capture new opportunities in different markets.
“Automotive technologies are applicable to military vehicles, buses and trucks, rail and tram, agriculture and construction equipment, aircraft and other sectors, such as medical and scientific equipment,” Charity stresses. “There are a number of Australian OE component manufacturers successfully exporting to car makers overseas. We believe many more local companies can follow this example.
“We also know that Australia’s strong aftermarket parts and accessories sector can further expand and provide new jobs. An important role for APMEC will be to help automotive manufacturers to diversify the products they make and the markets they reach.”
Automotive manufacturing and exporting success
Among almost 2,000 members of the AAAA, about 270 are manufacturers. Most of those businesses are also exporters. These successful companies are proof that with innovative product development and strategic marketing, Australian automotive businesses can compete in international markets.
There is a great diversity of Australian-made products being exported. Goods range from lubricants to rubber parts, electronic devices, chassis, suspension and drive train components. The common links are the creative approach and international focus of the company’s managements. These Australian automotive manufacturing and export leaders are happy to share their businesses’ priorities and strategies for success.
Composite Materials Engineering
Composite Materials Engineering (CME) is a family owned specialist manufacturer of advanced glass reinforced composite materials and components. The company compression moulds its own raw materials to produce lightweight class-A body panels, structural impact beams, under-body shields, spare wheel wells, and other components for Australian vehicle manufacturers.
Based in Melbourne, CME employs 100 people and also exports proprietary products in the non-auto sector to more than 30 countries in Asia, Europe and the UK. Managing Director Brian Hughes says that to be successful in export markets Australian businesses need:
- Sound technology capability across the operation.
- Lean production facilities.
- The best people.
- A commitment to invest.
“Australian businesses have many advantages,” says Hughes. “Our technical proficiency and flexibility are great strengths. Coupled with our can-do attitude and preparedness to take risks, these attributes make us easy to deal with. However, Australia’s international competitiveness could be boosted. We need Government policies that reduce the cost of employing people and that reduce the logistics and transport costs of moving product.”
Lumen Australia
Lumen Australia’s Melbourne-based manufacturing, testing laboratory and marketing operations employ more than 130 people. The product range includes a wide range of wiring harnesses, electronic and plastic components for the automotive OE and genuine accessory fitment markets. The company’s services include technical development and in-vehicle systems integration and it has specialist facilities in Asia, Europe, North America, South Africa and New Zealand.
Group Sales Manager Rod Wilson cites various key survival strategies for today’s international automotive marketplace, including an expansionary vision beyond Australian shores, support for product manufacturing in low-cost countries, and a global distribution system.
“We believe that core activities and head office must remain in Australia,” says Wilson. “To compete successfully, the business must be innovative and have a can-do attitude. Patience and on-the-ground commitment in export markets are essential to expanding manufacturing of Australian products. Providing a full service covering support from concept to final product is rewarded.
“The Australian characteristics of a strong quality ethic, flexibility, desire to have a go, and exceeding customer expectations give us important advantages. Another Australian advantage is that we do not bring ‘baggage’ to the table… it is our can-do attitude that appeals.
“To keep the core development activities and head offices in Australia we need Government financial and administrative support for offshore expansion that is conditional on head office and core development activities remaining in Australia.”
Mackay Consolidated Industries
Mackay Consolidated Industries is a family-owned business with an 83-year history and 155 employees. It designs and manufactures a broad range of engineered rubber components for the automotive, defence and industrial markets. About 20% of sales are from exports and key markets include the Middle East, New Zealand, Singapore and USA.
Mackay Chief Executive Officer Les Zanati says the vital attributes required to be successful in international automotive markets vary according to whether the targets are OE customers or the aftermarket.
“In the OE market, you either compete on uniqueness, which often manifests itself as advanced technology or innovation, or you compete on price,” says Zanati. “Quality and service are always ‘givens’ and a local footprint can help sharpen your price advantage.
“Brand is critical in the aftermarket. This sector is all about your range and product availability at a value perceived to be higher than your competitors. The aftermarket is also about growing your product offerings and applications. You can win business by giving your customer (distributor) greater opportunities to grow sales themselves.”
According to Zanati, Australian automotive manufacturers have a number of advantages to help them compete with companies from other countries. They are smarter, with in-house expertise, are geared for lower volumes, and are experienced exporters (they’ve had to be to survive). They are innovative, and are willing to work collaboratively within industry. They also have strong industry associations, and enjoy a reputation for high quality, consistency, and even integrity.
Zanati believes that Australian Governments can support automotive manufacturing and export by assisting with intelligence gathering in international markets, facilitating links between universities and manufacturing, and adopting investment policies to help local OE component manufacturers to transition to new markets.
APMEC industry support
Through its APMEC initiative and international trade delegation program, the AAAA offers local automotive businesses a range of support services. The APMEC will focus on advocacy on behalf of the automotive manufacturing sector and industry collaboration opportunities. The Council will work to influence the Government’s industry and trade policies to remove impediments and to improve research, product design and development infrastructure and incentives.
The new body is creating fresh opportunities to work with other members to secure materials, undertake product development, source manufacturing processes and share export distribution infrastructure. With more than 90 members representing OE and aftermarket suppliers, the APMEC boasts the full range of businesses required for networking and market intelligence gathering with other companies engaged in automotive product development and manufacturing.