The writing is on the wall for Australian car component makers. But, while some will surely die in the next couple of years, others are redirecting their energies to new challenges. Hartley Henderson writes.
Although many component suppliers to the automotive industry are confronted with significant challenges, some are finding new opportunities as car manufacturing grinds to a halt.
Such a transition often needs an entirely new business strategy and mindset to be developed, including a preparedness to seek new niche opportunities, and to be flexible and adaptive to new production and marketing requirements.
Precision Components in the Adelaide suburb of Beverley is a tier one automotive manufacturer to Holden, Ford and Toyota including the supply of high strength light weight complex stampings and sub-assembly automotive components.
The company now also manufactures heliostats and renewable products for HeliostaSA which designs, installs and commissions major solar energy projects.
The unique heliostat technology utilised by HeliostatSA was developed by CSIRO and consists of clusters of mirrors linked to a computer controller to track, reflect and concentrate the sun's heat onto a single receiver point to in turn create super-heated steam to drive a turbine and generate electricity.
According to the CSIRO's Solar Research Leader, Wes Stein, CSIRO has been working on the development of advanced heliostat technology as a critical part of the next generation of solar for over 10 years.
"Our commercialisation strategy involves starting with the energy market, then working back to develop the individual components such as heliostats. We have long held the view that this technology could not be successful without the expertise of the manufacturing industry," he said.
"In 2009, a Newcastle manufacturing company, Performance Engineering Group, built 450 heliostats to our design for one of our research fields. We also have a project, funded by the Australian Renewable Energy Agency, partnering with another automotive parts company, Diver Consolidated Industries, to develop heliostats for remote areas.
"Low cost, high precision heliostats are essential for the development of competitive medium to large scale solar power projects, not only for solar electricity but also for making transport fuel. CSIRO's heliostat design is unique in that it is smaller than conventional heliostats to benefit from mass production and uses an advanced control system to get high performance from inexpensive materials. Companies like HeliostatSA are crucial for the future of solar energy."
HeliostatSA was formed early in 2014 by Precision Components Managing Director, Darrin Spinks, as an automotive diversification initiative into renewable energy products after the announcement to withdraw from Australia by Holden, Ford and Toyota.
Chief Executive Officer at HeliostatSA, Jason May, says renewable energy is one of the largest and fastest growing industry sectors in the world.
"We hold the licence in Australia for CSIRO's heliostat technology and control system and have established a strategic long term relationship with the organisation as our technology partner. As well as technical support for projects, and research and development of solar technologies, the relationship includes the development of IP retained in Australia," he told Manufacturers' Monthly.
"Precision Components owns a 50 percent shareholding in HeliostaSA, May Brothers (an energy project development company) owns 20 percent, UniSA as the R&D partner has 15 percent, and Enersalt (a product developer) has 15 percent," he said.
"The federal government is supporting Precision Components with a $1M Automotive Diversification Programme grant for retooling to produce heliostats, whilst Precision Components has contributed $1.78M.
"A major beneficial factor in our diversification and transition from the auto industry is that the press lines and robots needed for auto manufacture have similar applications in the renewable sector."
HeliostatSA secured its first heliostat array export order with MHPS Japan in the first 6 months of its operation, but May says a key challenge is establishing an Australian company in the global renewable market, retooling, and retraining staff.
"Our technology is superior, our quality is second to none and we are competitive on price, but getting this message across takes time and money," he said.
"Our people are highly trained in using the latest equipment to produce ultra high volume quality products. Also, we have the perfect formula for success with government support for the next few years essential in securing a stake in the $5 trillion renewable market.
"HeliostatSA operates in the 1 MW to 10MW industrial scale sector, and in the 50MW plus utility scale sectors. Although HeliostatSA deploys photovoltaic technologies, the market is saturated, so our strategy is to adopt emerging technologies like CSP (concentrated solar power) and CSPV (the new super PV cells).
"We will continue to develop new technologies, as well as secure technologies through partnerships and acquisition.
"A global presence is progressively being developed with a prime focus on key markets in India, Africa and Australia. The aim is to grow HeliostatSA to a $1 billion company over the next five years."
The many challenges
Multi Slide Industries is another Adelaide-based company making a transition from the automotive industry. The company currently makes the rear seat frames for all Australian built Holden vehicles as well as the spring wire boot lid torsion bars and jack handles for Toyota.
Walker exhaust hanger brackets are also supplied for Holden, Toyota and Ford, and other components are provided to the auto industry for use in items such as rear view mirrors and air cleaners.
According to Multi Slide Managing Director, Rod Rebbeck, currently the sales value for all of the company's auto products is 49 per cent of total sales, whereas a year ago it was 58 per cent. At its height, the company ran two shifts with 158 employees, but now has 34 employees.
"It will be difficult to fully replace our automotive sales dollars, but we have recently engaged an external marketing consultant and employed a new sales engineer to search for new markets and to increase sales in existing areas," he told Manufacturers' Monthly.
"We already supply the agricultural and building industries with a range of products and want to expand that into aquaculture. Also, we are having to change our thinking from high volume, which has been the norm, to more low volume higher profit items, such as those used in niche furniture manufacture for example.
"In relation to manufacturing equipment, we need a new high tech CNC bending machine that is more easily programmable and capable of more intricate shapes in larger diameter material than we currently can handle. This would help open up new markets in the lower volume areas we are concentrating on.
"To assist us in the way forward, we have submitted a one-for-one grant application to the federal government through the Automotive Diversification Programme for such a machine. At present we are not receiving government assistance."
Rebbeck says other businesses that previously provided Multi Slide with services have shut or moved. "For example, heat treatment and plating is becoming a problem in that we now often have to send product interstate for processing, which adds to costs," he said.
"This business will survive because we are diversified and can continue to develop that strategy. We have a large customer base already, a range of equipment which can be readily adapted to new product, and we are financially sound."
Hartley Henderson has been a regular contributing writer to Manufacturers' Monthly for the past eight years, covering industry developments in Victoria and South Australia. Prior to that, he held senior positions in government, semi-government and business enterprises and was National Program Director with the Productivity Promotion Council of Australia.
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