Rescue package for Vic car parts factory

A manufacturing union says a crisis has been averted in the Victorian vehicle industry after workers at a troubled car components factory accepted a $1 million rescue package.

Forty-nine workers at Coghlan and Russell Engineering at Geelong, southwest of Melbourne, on Monday voted to support the $1 million rescue package, throwing a lifeline to the Victorian car manufacturing industry, which was threatening to shed hundreds of jobs.

The workers were stood down without pay 10 days ago after the car parts manufacturer went into administration.

Administrator Rod Slattery, of PPB, confirmed the workers had accepted the proposal from customers Ford and Delphi - which supplies Holden - to keep the company afloat.

Mr Slattery said the rescue package allowed Coghlan and Russell to resume operating until it could be sold or restructured as a viable business.

"It's really an opportunity for a period of time to allow the administrators to run the business to cover the outgoing costs, being wages and supplies," he said.

A condition of the deal was that once the business was sold both Ford and Delphi had agreed to long term supply contracts, which would see them buy parts for between one and three years.

Australian Manufacturing Workers Union (AMWU) acting Victorian secretary Steve Dargavel said the deal had averted a crisis in the state's car manufacturing industry.

"What the deal has averted is a dissolution of Coghlan and Russell, and in the first instance (the loss of) 49 jobs and workers' entitlements," Mr Dargavel said.

"It has prevented larger scale stand-downs in at least two major vehicle builders (Ford and Holden) and that in turn has averted many thousands of stand-downs that may have arisen from their suppliers."

The breakthrough enables the reinstatement of 400 Ford workers, who were stood down without pay at the company's Geelong engine plant on Friday.

It was feared up to 3500 Ford jobs could be on the line.

Ford spokeswoman Sinead McAlary confirmed the company had contributed $500,000 to the rescue package, enabling its staff to return to work.

"They will go back to work tomorrow and we have managed to avoid stand-downs for the rest of our operation," Ms McAlary said.

Mr Dargavel said the deal also gave Coghlan and Russell's employees confidence that their jobs would be secure at least in the short term.

"Prior to the discussions which led to this outcome there was no certainty about entitlements and no certainty about jobs," Mr Dargavel said.

"Accrued leave entitlements will be paid, and the approved redundancy payments are conditional upon a sale."

The workers are chasing $1.8 million in entitlements.

Mr Slattery said entitlements were not an issue while the company was still trading.

He said a decision on whether the business would be sold was not expected for two to three weeks.

Source: AAP 2007

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