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30 June, 2008
Australia will be left with only one tyre manufacturing plant at the close of 2008, following Goodyear Tire and Rubber Co.’s decision to close its wholly-owned subsidiary, South Pacific Tyres. The company announced on 26 June that 600 rubber workers will lose their jobs when its Somerton car and light truck tyre operation shuts in the northern suburbs of Melbourne, Victoria.
The decision is blamed on imports, the high value of the Australian dollar, and supplier contracts that allow manufacturers the option to demand lower prices during the life of a supply contract. Australia’s National Union of Workers (NUW), the union representing the majority of Somerton’s workers, said the closure could cause a ripple effect costing 2,000 other jobs in some 130 other supplying companies.
The NUW blamed South Pacific for closing a heavy truck tyre plant in Australia in the year 2000. The union said the company missed out on the opportunity to capitalise on the current mining boom, with manufacture of heavy tyres for trucks and equipment servicing that sector.
“They showed a lack of foresight then, and are lacking foresight now by acting ahead of a refocusing of Australian automotive that should deliver a sustainable future for local industry based on production of more efficient and greener vehicles,” said Antony Thow, NUW’s Victoria Secretary.
Australia is currently undergoing a review of the automotive sector by former Victoria Premier Steve Bracks. His commission is aimed at revamping the country’s Automotive Competitiveness and Investment Scheme, as well as a green car fund proposed by the Kevin Rudd government. The Bracks Commission is examining whether to retain the 10% tariff on imports beyond 2010, or half it to 5%, as recommended by the Productivity Commission.
The Somerton plant produces Dunlop, Goodyear, and Olympic tyres, and supplies 100% of Ford’s new car tyres, as well as a product to Toyota. It also sells to major retail outlets in the after-market. The plant opened in 1961 and currently produces 10,000 units per day.
Goodyear took a 50% stake in South Pacific with Pacific Dunlop in 1987. The American company retained that stake when Ansell Ltd. bought Pacific Dunlop’s assets. And then in January 2006, Goodyear bought Ansell’s 50% stake for US$90.3 million.
In first quarter 2007, Goodyear shuttered a South Pacific tyre plant near Wellington, New Zealand, costing 430 unionised workers their jobs. The Somerton closing, in which workers are expected to receive up to 18 months in severance payments through their enterprise labour agreement, is part of a Goodyear restructuring to achieve US$150 million in costs savings by reducing tyre production by 25 million units per day. Somerton accounts for three million annual units, and Goodyear will realise a US$35 million in costs savings.
Following 31 December 2008, Australia’s lone remaining tyre production facility will be the Bridgestone Salisbury plant near Adelaide, South Australia.