Vic: Parts company shutdown to hit car industry

AAP General News (Australia)
08-18-2006
Vic: Parts company shutdown to hit car industry

EDS NOTE: corrects location to Melbourne's south-east, NOT west as earlier reported

MELBOURNE, Aug 18 AAP - Production in Victoria's car manufacturing industry was set
to slow today after workers at a Melbourne car components plant were stood down, the company's
administrator said.

Ajax Engineered Fasteners, in south-east suburban Braeside, has been battling mounting
debts and a row over almost $12 million owed in employee entitlements.

Administrator Stephen Longley of PricewaterhouseCoopers stood down the 189 workers
this morning after negotiations with car companies, which it was hoped would keep the
company going, ground to a halt last night.

He said talks had reached an impasse on how underlying future losses were going to
be shared between the car companies.

Mr Longley said today's shutdown would result in a significant disruption to supplies
to the automotive industry, complicated by the fact that the furnaces had been turned
off and took seven days to restart.

"We actually don't have any cash at the moment to trade the business," he told ABC Radio.

"We've spent the last of it this week in paying the payroll and received some non-refundable
contributions from their customers to be able to pay the payroll and keep the doors open
to date.

"We can't keep trading the business for the benefit of the customers without their
longer term commitment over the next month to fund the operations."

Mr Longley said today's shutdown would have a flow-on effect on the industry.

"I think the effects of even a shutdown for today - even if the customers came back
and resolved the matter to our satisfaction today - I think there would be disruptions
to production at our direct customers, if not the manufacturers."

Federal Treasurer Peter Costello said he hoped the business could be saved to support
Victoria's critical car manufacturing industry.

Either way, workers' entitlements would be safe, he said.

"The federal government has a scheme which we put in place to guarantee employee entitlements,
(but) if they can be paid out of the assets of the company they should be," Mr Costello
told ABC Radio.

"In relation to the car industry, particularly in relation to the components industry,
I would hope that the business itself would continue, particularly if this is one of only
a small number of businesses capable of supplying those components.

AAP hmg/cmb/ce/sp

KEYWORD: AJAX ADMINISTRATOR

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