Industry Minister Kim Carr claims “exceptional circumstances” forced the Government to spend $7 million to bail out a Tasmanian car parts manufacturer.
The Federal Government will spend $7 million to prevent bearings maker ACL Bearings going into administration and protect the jobs of 280 workers. Carr says car makers Ford and Toyota would have been forced to shut down their plants had the Tasmanian firm become insolvent.
“This is a decision in the national interest. If ACL had collapsed, Ford and Toyota would have been in very difficult circumstances. Thousands of workers would have been stood down and production lines would have halted,” Carr said.
“I take the view that placing a company of this importance under administration left the industry as a whole very vulnerable.”
Carr made his announcement in conjunction with Jodie Campbell, Labour representative for the Federal seat of Bass. Campbell won the seat from the Liberal party with a margin of just 1% at the last election.
The grant was made under the Automotive Industry Structural Adjustment Program. It is conditional on the company restructuring its operations over the next three years, making new investments from its own resources and reaching “agreed milestones”.
Toyota and Ford have also pledged assistance for ACL and the company’s workers have agreed to save costs by moving to a four-day-a-week roster.
The Tasmanian Government did not provide funding for ACL after the company’s directors refused to give personal guarantees for any loans.
Carr has also defended the decision to prop up this company after a steady stream of company collapses throughout the automotive sector (and the wider economy) in the last 12 months.
“I’m not able to give undertakings in regard to all other companies, I’m only able to give undertakings in regard to this company and these circumstances, which are exceptional, and under these terms and conditions,” he told reporters.
Do you agree with the Government’s decision to spend more on the car sector? Should taxpayer funds be used to prop up other failing companies? Let us know in the comments section below.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
