South Australia gets an automotive lifeline

A media announcement on 19 August 2004 highlighted the fact that all is not lost for South Australia's manufacturing base, despite the decision of Mitsubishi Motors to phase out an engine manufacturing plant in Adelaide as part of worldwide restructuring.

Japanese manufacturer Hirotec Corporation is to invest $70 million in a state of the art stamping and assembly plant to produce car doors, bonnets and boot lids for General Motors Holden. Federal Industry Minister Ian Macfarlane, recognising the importance of the investment, has granted Major Project Facilitation status to the venture.

“Australia's national inward investment agency, Invest Australia, has worked closely with Hirotec, the South Australian Department of Trade and Economic Development and the City of Playford to help bring about this project,” said Mr Macfarlane.

This could be seen as the first flowering of efforts to compensate for the Mitsubishi contraction. In mid year TenderSearch listed a notification of a Structural Adjustment Fund for South Australia. This is to compensate for the decision of Mitsubishi Motors Corporation to close the engine plant in Lonsdale, Adelaide and scale back assembly workers at the Tonsley Park Magna vehicle assembly facility.

The SAFSA is a pooled fund with $40 million from the Australian Government and $5 million from the South Australian Government. It will support investment projects which will create sustainable new jobs in South Australia, with a focus on Adelaide and a particular concentration on the southern districts of the city. Applications can be made through the SA Department of Trade and Economic Development.

This particular tender announcement illustrates the number of open-ended possibilities which turn up in the weekly lists of tenders in Australia. Projects of $1 million and above are eligible for consideration and individual grants can run as high as $10 million. The fund is to attract production ventures generating ongoing employment and economic activity. It is not for infrastructure, apart from that specifically needed for a new facility.

The tender advertisement sets out clearly what is, and what isn't, wanted. “Projects which result in new jobs in South Australia at the expense of jobs in other Australian locations will not be favoured,” it states. “Proposals to the Fund will be required to provide detailed business cases and will be assessed on a case-by-case basis.” Projects have to be consistent with international obligations including the World Trade Organisation criteria, and be viable without subsidy in the long term.


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Christopher Jay is a writer for the Australian Financial Review. He is a regular contributor to its Tenderwatch column in the Friday Government & Business Section.

As published in TenderSearch Magazine - Spring/Summer 04 Issue