License article

JSF delays ground Aust parts maker

The trouble-plagued F-35 Joint Strike Fighter project has claimed its first Australian scalp with a 65-year-old company forced into liquidation this month.

Sources close to Production Parts, a respected Melbourne Airport West business which employed 85 people, said the firm had spent up big on equipment needed to fill JSF contracts worth more than $40 million.

''Then the schedules didn't pan out - both in time frames and in quantity,'' The Canberra Times was told.

Victorian manufacturer of the year in 2007, Production Parts was considering doubling its staff to 170 last September as a result of its JSF participation.

It had invested $6.25 million between 2008 and 2010, including $1.4 million on a German-made milling machine, and was contracted to make up to 12 different parts for the jet.

Workers manufactured the first of what was expected to be 1500 high-compressor cases for the JSF's Pratt and Whitney 135 engine late last year. Production Parts also held contracts for work on the second-string engine, the F136 being developed by Rolls Royce and General Electric.


Company managing director Peter Nicholls cited the cancellation of that engine as a major factor when the firm went into voluntary administration last month. The strength of the Australian dollar and the slow-down in Defence spending had also contributed.

Creditors voted to shut the company down at a meeting in Melbourne on September 2.

When attempts to sell the business as a going concern failed, the assets, including the millions of dollars worth of recently purchased plant and equipment, were put up for sale.

Repeated attempts to contact liquidators, Rodgers Reidy, to find out if a buyer had been found were unsuccessful yesterday.

Sources have told The Canberra Times that if the assets had not already been sold then an agreement was very near.

The motion to wind up was moved by the Australian Taxation Office representative and seconded by the agent from the Westpac Bank, the largest single creditor.

A Defence contractor, who did not wish to be named, said this was ironic as the Australian Government had encouraged Production Parts and other small to medium defence and aeronautical firms to get involved in the JSF in the first place.

The Department of Innovation, Industry, Science and Research website says, ''The Australian Government's JSF Industry Team is represented by [Innovation] and the Department of Defence and works to maximise Australian industry opportunities in the $300 billion JSF program.''

While it may be the first high-profile JSF supplier to go under, Production Parts is not expected to be the last.

''Production Parts could be 'the canary in the mine','' one contractor said.

''Having a contract is one thing but when the orders don't come through there is no cash flow.

''I've never seen anything like it [the push to get smaller businesses involved],'' he said.

''Small and medium sized enterprises don't have the resources to weather the upheavals the JSF program has been experiencing.''

As of late July Production Parts was more than $10 million in debt. Of this $8.6 million was made up of borrowings. A further $1.56million was owed to the Tax Office.

The company's annual revenue had recently been estimated at about $8 million a year.