Release time : 2015-06-15 11:40:11
ACL Bearings (a division of Automotive Components Ltd., Australia) has received a financial bailout package worth at least AU$2.5 million (USD $2.3 million), allowing it to continue operating while the parent ACL seeks strategic alternatives.
Founded in 1949, ACL manufactures engine bearings and similar plain bearings and bushings, and is the sole supplier to Ford, Holden, and Toyota in Australia. As the only engine bearing manufacturer in Australia, it also holds a major portion of the aftermarket. Approximately half the company's production is exported, to more than 55 countries. Its plant in Launceston, Tasmania employs close to 300 workers and is vertically integrated, from strip to finished bearings. ACL Bearings reportedly has annual sales of just over $50 million.
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.
Facing deep financial troubles and a liquidity crisis which threatened even its ability to secure raw materials, the specter of ACL's bearing division shutdown hung over the Australian auto industry. One of ACL's other customers had been Mitsubishi, which recently shuttered its plant in Adelaide.
An engine bearing shortage would create a domino effect of production interruptions and "tens of thousands" of layoffs at the three customer automakers. Reportedly, at least one was down to having only a few days of bearing inventory remaining.
ACL Bearing's parent ACL is operating under bankruptcy protection and reportedly needs to secure nearly $30 million in additional loans just to continue operations. Last month, ACL shuttered its National Parts auto parts distribution business and AutoPro retail stores; ACL had been trying to sell off National Parts for at least three years. But National Parts' inability to refinance $20 million in outstanding debt became its immediate cause for shutting down.
ACL Group was formed in 1986 to facilitate the management buyout of ACL Bearing Company, ACL Gasket Company, and ACL Comcork, the manufacturing operations of Repco Corporation. Since 1986, ACL Group has acquired other companies, including Repco Glacier Bearings NZ, Vandervell America, Nilsens Sintered Products, Federal Mogul Australia, and six others. ACL Group bought and later sold off three operations, including Bimetal Bearings India.
But as long ago as 2004, ACL Group sought to sell itself off, in whole or in part, as a way of pursuing "strategic alternatives" for the troubled auto parts conglomerate.
Ivan James, Chairman of ACL, said the ACL Bearings division was less than 48 hours from collapse when the bailout was announced. Over the past year, ACL has cut its bearing operations workforce by 25%, and employment is down almost 50% from its peak.
The Australian government contributed $2 million (USD $1.9 million), while the Tasmanian government added $330,000 ($315,000).
But the bailout comes with covenants and restrictions, such as ACL agreeing to adopt more advanced efficiency and productivity initiatives, agree to continuous monitoring, and hit specific performance objectives and milestones.
Kim Carr, Minister for Innovation, Industry, Science and Research, said: "The Rudd government believes Australian manufacturing has a strong future, but we understand that the automotive industry is facing new challenges and opportunities. That's why we've brought forward a review of the industry, examining all aspects of competitiveness, to look at how we can boost innovation in the sector and take full advantage of its strengths like the highly skilled workforce at ACL Bearings."
Paula Wriedt, Minister for Economic Development and Tourism, said: "ACL Bearings makes a significant contribution to the Tasmanian and Australian economies, and the package offers the company, and its 285 Launceston based staff, the security they need to get on with the job. Officers of the Department of Economic Development and Tourism will continue to work closely with the Australian Government to secure the long term viability of the company's operations and the security of its Launceston workforce."