Car-parts supplier DENSO to cease local manufacturing

DENSO Automotive Systems Australia has fallen victim to the exit of the car manufacturing industry from Australia, announcing it will cease all local manufacturing and assembly operations.

The number of job losses is not yet known but could be more than 90% of the workforce. DENSO, which locally manufactures parts including engine-cooling systems, air conditioning and air intake systems, has been operating in Australia since 1972 and currently employs 390 permanent employees with an average length of service of 12 years.

In a submission to the Productivity Commission in 2013, the company warned that its contribution to Australian economic activity would be “permanently lost” should motor-vehicle manufacturing cease.

“If that occurs, the remaining DENSO Australian operations will be limited to an import and distribution facility expected to employ less than 10% of today’s numbers,” the submission stated.

In the past 12 months, Holden, Ford and Toyota all announced they would cease manufacturing in Australia by 2017.

DENSO global president and chief executive Nobuaki Katoh said “almost all” of the company’s business was for vehicle manufacturing and, while the company had attempted to diversify into non-automotive sectors, and some of this activity had been successful, it could not replace the scale of production lost through the departure of the local vehicle producers.

Australian DENSO president and chief executive Russell Jopson said the duplication of facilities within the DENSO global manufacturing footprint, combined with the ever-escalating manufacturing cost base in this country, also made the case for transitioning the Australian operation into a global export base not viable.