Aussie Car Bailout Boosts Lubes

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Australia announced last month that it would not scrap an automotive bailout fund as previously planned, eliciting sighs of relief from automakers and lubricants companies alike.

The Liberal-National Coalition said shortly after winning office in September 2013 that it would close the Labor Party’s previous industry fund, known as the Automotive Transformation Scheme.

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ATS, commenced in January 2011 and scheduled through 2020, would provide close to AU $3 billion in assistance to vehicle producers, vehicle components and tools makers, and automotive services providers.

The Coalition’s stance triggered Toyota and GM Holden to announce in late 2013 and early 2014, respectively, that they would cease production in Australia by the end of 2017. Ford, the only other car maker in Australia, had previously announced its intention to nix production from 2016. In the past year, there were concerns that the car makers would shut down even earlier than planned.

The Coalition has since had a change of heart, and on March 10 it opened the door to as much as $500 million in funds for the three car makers and hundreds of automotive components makers in Australia to use by 2017. Another $400 million has been set aside to be used between 2017 and 2020.

Now that the [funding program] is no longer going to be withdrawn, that’s terrific news for the automotive components industry and the downstream players, said Richard Reilly, CEO of the Federation of Automotive Products Manufacturers (FAPM).

Car making and automotive components production has been estimated to account for as much as 7 percent of manufacturing in Australia and employ as many as 100,000 in its supply chain, according to FAPM. Other data show vehicle production in Australia reduced to 200,000 units in 2013 from 300,000 in 2006.

As the leading producer and supplier of metalworking fluids to the automotive industry, this ATS announcement is extremely important to us and many other automotive industry suppliers and gives us greater confidence in a sustainable metal manufacturing industry future, said Ross Hibbs, managing director at Houghton Australia. Houghton has a strong alliance with both original equipment manufacturers and components manufacturers in the automotive industry.

The retention of the automotive assistance funds is certainly positive news, said Sam Collyer, a spokesman for Caltex Australia. It provides a timeframe for component manufacturers to explore export opportunities and to develop products for other industries outside their traditional automotive customer base.

Caltex Australia has long been a supplier of lubricants to all three local vehicle manufacturers. It supplies industrial oils such as metalworking fluids used in the manufacturing processes and also factory-fill lubricants, engine oil, driveline fluids and coolants.

Maintaining this industry and the subsequent demand for industrial lubricants is important from a blending perspective, as the fluids required provide significant volume throughput through lubes blending facilities here in Australia, Collyer said.