Global car giant Ford has forced automotive parts maker Nexteer to refuse $63 million in government aid and scrap plans for a new factory in Melbourne.
Last year, Nexteer won state and Commonwealth grants to set up a factory in Victoria capable of producing upgraded electronic steering system for utes and SUVs, according to the AFR.
The project aimed to create 250 full-time jobs, however Nexteer has now confirmed it will decline the grant due to changing customer demands.
Ford has told Nexteer it will only purchase parts for its overseas-made utility vehicles if they are produced in China, to support global growth strategy.
Paul Difelice, the AMWU’s Victoria vehicle division secretary, explained that “Nexteer said that Ford has made a decision based on the economics to have this done in China. I’ve been told that the Australian dollar has to play a big part in it”.
Nexteer’s global external affairs director, Luis Canales, went on to say “we came to this decision based on the strategic needs of our key customers and a reduced internal demand for the foreseeable future”.
A federal grant of less than $2 million has been received by Nexteer and when asked about a refund, Canales said “Nexteer would comply with its agreements”.
A spokesperson for Ford confirmed that “this project will now not proceed, we understand that Nexteer will continue to manufacture other parts for the motor vehicle producers”.
Victoria’s manufacturing minister Richard Dalla-Riva commented that the state government will be disappointed if the project did not go ahead.
Ford is slowly closing down its automotive manufacturing, and it is believed that the company will pull out of Australia completely by 2016.