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Acl Bearings Lands Bailout Financing

Release time : 2015-06-15 13:04:41
ACL Bearings (Australia, a division of Automotive Components Ltd.) has been given a government-backed bailout of AU $4.5 million (USD $3.1 million) from an auto industry bailout package, assuring ACL's ability to continue operating for at least the next six months in the absence of commercial funding options. Founded in 1949, ACL is Australia's only engine bearing manufacturer. The company is the sole supplier to Ford, Holden, and Toyota in Australia, and holds a major portion of the aftermarket. In addition to its Aluglide and Duraglide engine bearings, ACL manufactures bushings, cam bearings, thrust washers, and bearings for rocker arms, gudgeon pins, power steering units, transaxles, and similar components. ACL does all this from a single facility, located in Launceston, Tasmania and employing close to 300 workers. The Launceston bearing factory is vertically integrated, from strip to finished bearings. Over the past year, ACL has cut its bearing operations workforce by 25%, and employment is down almost 50% from its peak. Approximately half of ACL's output is exported, to more than 55 countries. Annual sales are in the neighborhood of $50 million. This past April, the company said it had been less than 48 hours from shutting down when a government bailout package for its parent company was announced. With parent ACL Group facing deep financial troubles and a liquidity crisis threatening its ability to secure raw materials, the specter of ACL's bearing division shutdown hung over the Australian auto industry. One of ACL's customers had been Mitsubishi, which shuttered its plant in Adelaide less than a year ago. An engine bearing shortage in Australia would "create a domino effect" of production interruptions and "tens of thousands" of layoffs at the three customer automakers. Reportedly, at least one shut down temporarily in early 2008 due to a shortage of engine bearings. The troubled company had worked hard to land the much-needed replacement financing package from GE Commercial in early 2008. However, GE has since decided to withdraw from the Australian market, leaving ACL with no open options when its loan term expires in February 2009. The $4.5 million from GE will now be replaced by $2 million from the Australian government, carved out of a $6.2 billion aid package approved for Australia's auto industry. The remaining $2.5 million will be supplied by the Tasmanian government. Ivan James, ACL's Chairman, noted the funding package has been secured and guaranteed after the government delayed it for several days with no explanation.