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Jeremy Bass21 Dec 2013
NEWS

LPG push could fill Holden, Ford void

Plants vacated by Ford and Holden could find new life in high-tech LPG conversion, creating 500 jobs

Victoria’s Automotive Chamber of Commerce (VACC) has teamed up with gas-fuels peak body Gas Energy Australia with a proposal to fill the gap left in Australia’s auto industry by the pending departures of Ford and Holden.

The pair has pitched to Victorian premier Denis Napthine’s auto industry round table to take up part of the slack by setting up “world-class” LPG conversion facilities in Melbourne, Geelong and Adelaide.

The proposed facilities would open the way to market a wide range of vehicles extending beyond the handful of Fords, Holdens and Toyotas that currently make up the bulk of LPG conversions.

VACC and Gas Energy Australia envisage it extending to SUVs, compact and light cars, light commercials and even hybrids. They gauge production capacity to be around 45,000 vehicles a year, with about 15,000 coming from each plant.
“This is an opportunity to create our own world-class LPG manufacturing facilities, using European and American production methods,” said Gas Energy Australia CEO Michael Carmody in a joint statement.

“It will also reduce our dependency on oil, improve Australia’s energy security, utilise an indigenous resource and reduce vehicle greenhouse gases.”

VACC executive director David Purchase added that setting up such niche manufacturing capability and making LPG viable for new car buyers will require some industry and government fostering in the name of long-term sustainability.

“These vehicles are not the LPG-converted vehicles we know now. The vehicles rolling off the new production lines will utilise the most advanced LPG technology and include production of LPG-powered hybrid vehicles,” Mr Purchase said.

Central to the pitch is the creation of more than 500 new jobs, the efficient absorption of skilled workforces from the outgoing carmakers, VACC spokesman Murray Collins told motoring.com.au.

“We see that as relatively straightforward, retraining current production plant workers from Ford and Holden.

“Our three facilities would be new, high-tech production lines that should entail familiar process work. We’d also have room for skilled converters already working in the LPG industry, of course.”

VACC and Gas Energy Australia envisage further advantages in the potential uptake of existing plant facilities once they’ve been vacated.

“That’s an important part of the project as we envisage it – we’re looking to existing facilities to help keep the start-up costs down.

“We’re looking at kitting the facilities out along the lines of well-established US and European conversion plants, so it’s not a pie-in-the-sky idea.”

An example: “In Italy, BRC Gas Equipment produces 1800 new LPG vehicles per month. We would model our facilities on BRC and similar businesses.”

The proposal is not without its potential barriers, however -- particularly in terms of rising costs.

The federal government’s LPG vehicle scheme, offering subsidies of up to $2000, ends in on June 30, 2014.

Excise on the fuel, introduced two years ago and currently sitting at 7.5 cents a litre, is scheduled to reach 12.5 cents a litre by 2015.

And with the northern winter sparking massive hikes in global demand for LPG, local prices have blown out from around 70 cents to nearly a dollar a litre this month.

Collins says that by VACC estimates, consumer acceptance and therefore the viability of the scheme is contingent on the maintenance of a 50CPL price advantage.

“And we might need a federal government buy-in to achieve that,” he said, adding that utilising Australia’s abundant indigenous supply would reduce local demand for imported finished fuel (including oil) by 218 million litres – 7.1 million barrels – per year.

“And the introduction of 270,000 LPG vehicles is projected to reduce our greenhouse gas emissions by 153,000 tonnes per year. So there’s plenty of incentive to go with the supply.”

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Written byJeremy Bass
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