Holden production threshold penaties to supplier

[bobthebilda]

WA Business News (subscription) - 15 Apr 2010

Page 5: Car maker GM Holden faces paying penalties of up to $153 million to a supplier if its vehicle production falls below certain thresholds in the years ...

I cant read the full above article (and it may be misleading), but it could explain one reason why Holden need to keep pumping out cars, regardless of how much they can sell them for.

[CAMS290]

Originally Posted by bobthebilda

I cant read the full above article (and it may be misleading), but it could explain one reason why Holden need to keep pumping out cars, regardless of how much they can sell them for.

I would imagine it would be something to do with an agreement Holden has with a parts supplier.

They may have signed an agreement for the supplier to supply say 100,000 steering shafts at a certain price, and if Holden breaks that agreement or contract than they have a termination payment to the supplier.

[Falc'man]

What! Are you suggesting VE is made at a loss?

If true the blame would lay squarely on GM's "promises" to Holden and the never ending "ZETA will be sold here, there, and everywhere".

[bobthebilda]

Car maker GM Holden faces paying penalties of up to $153 million to a supplier if its vehicle production falls below certain thresholds in the years out to 2014.
The penalties payable to the unnamed supplier are disclosed in Holdens annual report for the 2009 calendar year, recently filed with the Australian Securities Commission.
The annual report also reveals that Holden has a seperate $51 million dispute with the Australian Taxation Office over deductions claimed for royalty payments to US parent Company General Motors.
The accounts say Holden eneterd into a supply agreement in 2005 which covered the period from 2006 tp 2014 and contained scaled penalties if it did not reach set volume thresholds.
"Planned vehicle production forecasts indicate that contractual volumes may not be met,"it says.
"In the event that an invoice is issued by the supplier, GM Holden will be liable for penalties."

So In 2005 Holden signed a contract with a japanese panel supplier to supply the doors, boot and hood skins . The contract started sometime in 2006. It all fits in nicely. If the contract was written up using 2006 production numbers (2 shifts), then one would think Holden are up for alot of money.

[XR8putts]

I have a feeling the s..t is about to hit the fan sometime real soon at Holden, I'm just curious how the media will react.

[Bossxr8]

Holden will be solidly profitable this year according to the new CEO, and they also have the RHD Camaro and Hybrid Commodore to come, as well as 70 gazillion US cop cars on order. Its all coming up roses.

[vztrt]

Originally Posted by CAMS290

I would imagine it would be something to do with an agreement Holden has with a parts supplier.

They may have signed an agreement for the supplier to supply say 100,000 steering shafts at a certain price, and if Holden breaks that agreement or contract than they have a termination payment to the supplier.

Ford had the same issue with Futuris back in 06 during their down balance.

[Swordsman88]

Originally Posted by Bossxr8

Holden will be solidly profitable this year according to the new CEO, and they also have the RHD Camaro and Hybrid Commodore to come, as well as 70 gazillion US cop cars on order. Its all coming up roses.

ITs great living in la la land isn't it. I dont' want Holden to fail, for a whole range of reasons not least of which it hardly help Ford. But to be honest, even with economic turn around hapening, these guys are not looking to great. To make matters worse, its not like Ford is bereft of new product coming in the near future, local or imported.....

[jpd80]

That article mentions scaled penalties, I'm wondering whether the $150 million penalty
only applies to full cancellation in 2006. If so, Holden could be looking at an annual
shortfall penalty of about a million bucks or so, not too much each year but what if
several other contracts have the same clause as well.

Maybe there's a deeper reason as to why Holden are resisting down balancing and one shift,
the supplier penalties combined with employee terminations may be greater than selling
thousands of Omegas for $29,990 drive away.....

[charles_wif_xf]

Originally Posted by bobthebilda

So In 2005 Holden signed a contract with a japanese panel supplier to supply the doors, boot and hood skins . The contract started sometime in 2006. It all fits in nicely. If the contract was written up using 2006 production numbers (2 shifts), then one would think Holden are up for alot of money.

They don't stamp the panels for the VE inhouse?

[bobthebilda]

Originally Posted by charles_wif_xf

They don't stamp the panels for the VE inhouse?

No, its done by a japanese firm a few kilometres from the plant. Then fed to Holden on a just in time basis. It all started sometime in 2006, in some sort of futuristic belief to save money lol. From memory, its only the doors, hoods and boot lids that have been out sourced, the rest are still down inhouse.

All indications are that the company spent over $100 million dollars to set up the factory, new greenfeild site (and equipment), so they would have been reluctant to spend so much money, without a guarantee from Holden.

[Nikked]

thats the first i've heard of outsorceing panels in that way...

[Mr12345678x]

Wait, so this means they're going to keep VE's until 2014?!

[ltd]

Originally Posted by juzza

Wait, so this means they're going to keep VE's until 2014?!

Yep, and probably longer in one guise or another. The billion dollar baby has truly grown up into the multi billion dollar putana.

[charles_wif_xf]

Originally Posted by ltd

Yep, and probably longer in one guise or another. The billion dollar baby has truly grown up into the multi billion dollar putana.

ROFLMAO!!! That has to be the line of the year!!!

[bobthebilda]

Originally Posted by Nikked

thats the first i've heard of outsorceing panels in that way...

Dont take my word for it. Just follow the link.

http://www.bluescopesteel.com.au/go/...roject-revs-up

[svo supporter]

The just in time system at Holden has been operating for at least 15 years I'm aware of.

As for the contract stuff. Yeah, it's quite possible both supplier and Holden have signed a contract whereby so many parts will be supplied otherwise there is some sort of recourse involved.

Seeing Holden have the pulling power to demand suppliers set up shop in close proximity of their factory, the suppliers need some form of safety net to fall back on, to justify the expense of setting up shop close by.

As for panels being pressed away from the site. Can't say I've ever seen panels getting trucked into the site. I live and work within spitting distance of the factory too. I have seen trucks taking big rolls of sheet metal into the factory on a regular basis.

I do know someone fairly high up within the plant as well. So I'll do some snooping with him over all this

[bobthebilda]

Originally Posted by svo supporter

The just in time system at Holden has been operating for at least 15 years I'm aware of.

As for the contract stuff. Yeah, it's quite possible both supplier and Holden have signed a contract whereby so many parts will be supplied otherwise there is some sort of recourse involved.

Seeing Holden have the pulling power to demand suppliers set up shop in close proximity of their factory, the suppliers need some form of safety net to fall back on, to justify the expense of setting up shop close by.

As for panels being pressed away from the site. Can't say I've ever seen panels getting trucked into the site. I live and work within spitting distance of the factory too. I have seen trucks taking big rolls of sheet metal into the factory on a regular basis.

I do know someone fairly high up within the plant as well. So I'll do some snooping with him over all this

SVO, you have some Gall. Previously, you have tried to discredit me (via attacks in the forum threads or personal messages), and yet you now say you know so little of what actually takes place at GM Elizabeth. For the record, the panels for the commodore travel as per the following link

http://www.hotfrog.com.au/Companies/Hirotec-Corp

down east avenue, then west avenue, then the supply road, into the Plant, on the way bypassing alot of empty factories, that tenants have closed down because Holden have outsourced supply contracts to overseas.

Big rolls of sheet metal still go into the plant, because Holden Still make the car Body, and the majority of the Ute (Ute sides are all one panel). Holden still make the body, probably so they can retain the notion that they have some roll in making the commodore.

Do you somehow think that you are going to see a truck, with car panels (engineered to give a finely smooth surface) that are exposed to the elements, travelling 60kmh down a public road.

Dont take this personally, but if you associate with someone high up at Holden, then I might just be able to isolate exactly what the issue is with Holdens.

Normally I would say you do no credit to the people who live around you, but since you have said you live in the salisbury area, then I would say you fit the norm.

[Sprint XR8]

HIROTEC VISIT

April 28th 2009
Hirotec Australia Pty Ltd is a Japanese joint venture company supplying closure parts (doors, bonnets, boot lids etc) to the Australian automotive industry. Its ultra-modern South Australian plant started mass production in June 2006 and became the latest in a stable of manufacturing sites around the world.The planning, construction and operation of the Elizabeth plant benefitted from the technological advances and production expertise developed in Hirotec’s overseas facilities. Its Quick Die Change and Laser Welding Systems are world’s best practice. As a result, GM Holden has subcontracted all its closure panels to Hirotec.The visit to Hirotec on the 28th of April was the Centre for Innovation’s second Innovation Showcase at the site.The tour was fully booked, with representatives from:• Ellex Medical• TAD _Technical• Seley International• Lean Experience• ADTech Engineering• NAMIG (Northern Adelaide Manufacturing Industry Group) Inc • Softwoods Timberyards Pty Ltd• Visiocorp• Technica Industries• Bridgestone T.G.Australia Pty Ltd• RM Williams
As the participants were shown around the plant, the Centre for Innovation’s Paul Nolan remarked that two things were immediately apparent. First, something he remembered from the last visit - a spotlessly clean and tidy facility. Second, something that wasn’t there last time, a large stockpile of product.

http://docs.google.com/viewer?a=v&q=...c88uKHfz308d-Q

[jpd80]

During VE Commodore planning, wasn't $300M of that often quoted $1 Billion dollars spent on new stamping equipment?

LINK
The biggest car plant in the country will shut down for two weeks while Holden conducts the next phase of its $440 million expansion of the Elizabeth assembly plant.
------------------------------------------
The plant will receive an 1100-tonne press that will give the company a second press capable of stamping the whole side of a car in one action.

Virtually the whole stamping shop will be replaced as most of it dates back to when the plant was built in 1960.

[pottery beige]

Could be in even bigger poop if there is a few more of these contract's out there..

[4Vman]

Nice to see a supplier get a win for once.... how many have the car manufacturers ground into liquidation over the years...?

Holdens plight is becoming more and more clear as are the reasons for it.

[Iggypoppin']

Leave the Digs at peoples suburb choice out of this bob, topic at hand is of more importance than living in Salisbury.

As an SA lad I can say there are far worse places to live than salisbury.

[svo supporter]

Originally Posted by bobthebilda

SVO, you have some Gall. Previously, you have tried to discredit me (via attacks in the forum threads or personal messages), and yet you now say you know so little of what actually takes place at GM Elizabeth. For the record, the panels for the commodore travel as per the following link

http://www.hotfrog.com.au/Companies/Hirotec-Corp

down east avenue, then west avenue, then the supply road, into the Plant, on the way bypassing alot of empty factories, that tenants have closed down because Holden have outsourced supply contracts to overseas.

Big rolls of sheet metal still go into the plant, because Holden Still make the car Body, and the majority of the Ute (Ute sides are all one panel). Holden still make the body, probably so they can retain the notion that they have some roll in making the commodore.

Do you somehow think that you are going to see a truck, with car panels (engineered to give a finely smooth surface) that are exposed to the elements, travelling 60kmh down a public road.

Dont take this personally, but if you associate with someone high up at Holden, then I might just be able to isolate exactly what the issue is with Holdens.

Normally I would say you do no credit to the people who live around you, but since you have said you live in the salisbury area, then I would say you fit the norm.

Firstly, when did I say I lived in Salisbury? Never. To be precise, I live in Elizabeth which is the next burb over. My route to work takes me past the back of Holdens manufacturing plant, underneath the bridge leading straight into the factory itself. I also work within spitting distance of the factory, so I see the trucks heading towards the place.

So how would I see what goes into the place. Mate, you tell me. The trucks would be fitted with taughtliner trailers.

As for knowing high up people in the company. What, are you jealous? Or is it a case of I shouldn't mention that I know people that work for an opposition manufacturer on a forum like this? It just so happens, I'm a member of a car club in S.A and one of the members of that club has a high up position within Holden. Now is that a crime?

Also. Those vacant factories. What vacant ones? The area which was was initially released by the S.A defence force, to help Holden supply companies forfill their obligations to the plant itself is flurishing. Not only are there supply companies for the plant itself, there are other companies building in the area which have nothing to do with Holden itself. Perhaps you'd like me to post pictures of the area itself, so you can judge for yourself. The only vacant buildings in the area are old defence force houses.

Yes, there are parts supplied to all car manufacturers from overseas. The reason being is labour is cheaper overseas compared to this country and ALL car manufacturers are trying to keep their cars prices competative with imported vehicles.

All my postings is related to start with is, why these contracts would exist for and the possibility of providing an insite into what goes on within the factory when it comes to body panelling.

Now if you consider this a personal attack on you you're in desperate need of professional medical attention.

As for a previous thread. That wasn't any form of attack on you. I was mearly pointing out how you weren't looking at a big picture, just a small one. You just couldn't see it and it appears you can't see it still. So I'd suggest dropping it right here, as neither of us need to air this sort of stuff on a friendly forum like this.

[bobthebilda]

svo supporter]Firstly, when did I say I lived in Salisbury? Never. To be precise, I live in Elizabeth which is the next burb over. My route to work takes me past the back of Holdens manufacturing plant, underneath the bridge leading straight into the factory itself. I also work within spitting distance of the factory, so I see the trucks heading towards the place.

So how would I see what goes into the place. Mate, you tell me. The trucks would be fitted with taughtliner trailers.

Exactly, so saying "Cant say I've ever seen panels get trucked into this site", is a completely irrelevant thing to say, if you cant see whats in the trailers.

As for knowing high up people in the company. What, are you jealous? Or is it a case of I shouldn't mention that I know people that work for an opposition manufacturer on a forum like this? It just so happens, I'm a member of a car club in S.A and one of the members of that club has a high up position within Holden. Now is that a crime?

Its probably not a crime at the moment, but once the government wakes up to the frauds that Holden have committed, then knowing some high up at Holden may just be aiding and abetting. And yes, I am quite jealous, I know only a few little people at Holden, and its probably an indictment on Holden that the little people know where the parts for a commodore come from, but the ones who are high up dont (or your high up friend just doesnt trust you with the truth)

Also. Those vacant factories. What vacant ones? The area which was was initially released by the S.A defence force, to help Holden supply companies forfill their obligations to the plant itself is flurishing. Not only are there supply companies for the plant itself, there are other companies building in the area which have nothing to do with Holden itself. Perhaps you'd like me to post pictures of the area itself, so you can judge for yourself. The only vacant buildings in the area are old defence force houses.

The building on the corner of West avenue (approx 10,000 sq meters) and the supply road, was vacated by Johnson controls in 2007, and is still vacant, The building occupied by Holdens Carpet Supplier (just been vacated), and alot of the buildings on the supply road, half empty. And not to mention how many buildings and how much land in the Holden compound is not being used due to all the outsourcing it has done.

As for a previous thread. That wasn't any form of attack on you. I was mearly pointing out how you weren't looking at a big picture, just a small one.

Whatever picture I was looking at, was the one that came with the facts.

[pottery beige]

nice ******** weak stab at Salisbury bobman.. an insight to your true intelligence..

[SB076]

Originally Posted by 4Vman

Nice to see a supplier get a win for once.... how many have the car manufacturers ground into liquidation over the years...?

Agreed - although at this stage it appears to be simply a provision - will be interesting if they actually cough up the dough.

I hate to think how many suppliers have gone in liquidation supplying the automotive industry.

[svo supporter]

IGGYPOPIN and POTTERY BEIGE. Thanks for the defence. I appreciate it. To me it does sound like a bit of sour grapes on BOBS behalf.

As for what's goping round the area, BOB. Some people do take an interest on what's happening in their neighbour hood, as it can and in my case, does effect my employment. It seems as plain as the nose on my face, you just want to see the place shut down and put plenty of hard working people sitting at the dole office. Not to mention, hoping the court house filled up with surposed fraud related offenses.

Now if you've got nothing intelligent to add to this subject, I would suggest you buzz off.

[burnz]

Originally Posted by bobthebilda

Its probably not a crime at the moment, but once the government wakes up to the frauds that Holden have committed,

Whatever picture I was looking at, was the one that came with the facts.

care to elaborate bob ??

[GT-E]

I was fortunate enough to do the full tour of the Elizabeth plant about 4 years ago.
I was told it cost Holden $14k per hour to stop the production line and that is should never stop except for maintenance.
During the tour the line stopped at 10am, all the staff just walked out for smoko as they had run out of body shells. The line remained shut for most of the day and had not started when I left at 5pm. Massive place to go through and you have to watchout for the trolly trucks as they do nto give way to people, you give way to them as it is just in time production and they need the parts NOW.
I was also suprised that Toyota does all the trolley trucks for Holden.