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Iveco undergoes change of heart

Iveco Australia’s much anticipated announcement that it will move to full importation of its heavy-duty truck range is set to close the curtain on Australia’s oldest truck manufacturing plant. Built by International Harvester and producing its first truck in 1952, the vast Dandenong (Vic) facility will inevitably cease operations mid-way through 2022


Right now, Australia has three truck manufacturing plants. Soon, there will be two. Mid-way through 2022, the sprawling Dandenong (Vic) production facility, built in 1952 by International Harvester as a safeguard against reliance on overseas suppliers during Australia’s post-war construction boom, will build no more.

In its long history, the factory has produced almost quarter of a million trucks, or more than three times the current number of trucks built by either Paccar Australia’s Bayswater (Vic) facility or Volvo Group Australia’s Wacol (Qld) plant.

However, after a long and stellar performance during the halcyon years of International Harvester, the factory and its thousands of employees have also endured many challenging times.

In 1992, for instance, with International Harvester suffering dire economic distress, the brand’s Australian operation and its Dandenong production facility were rescued from economic oblivion by European conglomerate Iveco.

But now, 30 years on, the Dandenong plant’s history as a truck builder is about to be closed by what Iveco Australia cites as, ‘a global transformation process.’

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News of the facility’s ultimate demise after 70 years as a local manufacturer came in a recent and carefully crafted press release announcing Iveco Australia’s ‘development of the Customisation & Innovation Centre (CIC) and related changes that will impact its Australian manufacturing arm’.

From the end of June 2022, Iveco’s heavy-duty models will be fully imported from a manufacturing facility in Madrid, Spain.

Speculation has been rife for several years that Iveco Australia’s increasingly poor heavy-duty sales volumes – dropping to less than three percent of the heavy-duty sector despite a booming 2021 market – and its earlier decision to fully import medium-duty models in addition to its light-duty line-up, would inevitably sound the death knell for the huge Dandenong facility’s viability as a truck production factory.

What’s more, the plant sits on a vast expanse of land in a major development area of south-eastern Melbourne, leading to further speculation that the site’s worth as a manufacturing asset is massively outweighed by its real estate value.

Even so, managing director of Iveco Australia and New Zealand, Michael May, would not be drawn on details regarding the plant’s future.

The fully imported Iveco Daily has been a light-duty success story for Iveco

May was appointed to the managing director’s role at Iveco Australia in February 2020 after a successful 20-year career with Daimler Trucks Australia, eventually becoming the head of Mercedes-Benz truck operations.

An erudite and carefully considered corporate executive, his move to Iveco was a surprise for many people, not least because of the company’s negative reputation as a merry-go-round of short-lived executive appointments led by a seemingly endless stream of mediocre managing directors.

It was, however, a convincing May who forecast a progressive new era for the brand when interviewed six months after taking the reins at Iveco. Still, an intensely cautious and typically corporate response emerged when asked if his ultimate task was to wind down manufacturing and assembly at the historic Dandenong factory, cash in on the sprawling facility’s massive land value, and become a full importer?

“We have opportunities to evolve provided we can bring adaptability and flexibility to the market and what it requires,” he answered earnestly before adding, “The door’s open for a number of possibilities but all things will be pragmatically assessed and evaluated. It will take time.”

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Predictably perhaps, he would not discuss what those possibilities might be and nowadays his role is simply described as bringing ‘… a renewed focus to our on-highway business.’

Yet when Michael May was recently asked by email if the formation of CIC means that the Dandenong facility, or part thereof, will be surplus to requirements and ultimately sold, a response arrived from Ella Letiagina, Iveco Australia’s head of network, product and marketing. ‘We have focused first on our staff with the early notification so as to create a smooth transition as we develop CIC,’ she stated. ‘This evolution will enable us to better assess facility requirements.’

Likewise, when asked how many jobs are expected to be lost in the transition to CIC, her statement indicated that details are still being determined: ‘We currently have 300 Iveco staff in our region ANZ (Australia and New Zealand). As we develop more detail on the needs of our future business model we will be in a position to better estimate the impact.’

Obviously enough, the company and its executives are far more forthcoming on the formation and suggested benefits of the Customisation and Innovation Centre, describing it as ‘… a business unit that will further leverage Iveco’s local engineering and manufacturing expertise, transforming the company’s focus towards the customisation and innovation of its vehicles for local markets.’

The EuroCargo-based ACCO will now become a critical part of Iveco’s Customisation and Innovation Centre

Moreover, a company statement enthuses, ‘The CIC is being developed to better assist Iveco customers and body-builders – particularly those with complex body types – to achieve a more streamlined design and body fitment process for their vehicles.’

And, Iveco will be ‘… placed to work more closely with Europe and local partners to explore areas such as alternative propulsion solutions, digitisation, connectivity and autonomous driving.’

Drawing on the Dandenong facility’s history will be a critical benefit for the CIC initiative, Michael May states in Iveco’s press release.

“Historically, our most unique value proposition has been our ability to customise and specialise vehicles for our market, leveraging the expertise of our local engineering team and the local facility,” he says.

But just how much of that local engineering team and local facility remain after the end of June this year, remain to be seen.

So, too, does it remain to be seen if the creation of CIC will transform Iveco’s flagging heavy and medium-duty fortunes in our part of the world.

Whatever, and despite the apparent inevitability of its demise, the end of the Dandenong plant’s 70 years of truck manufacturing marks the despairing departure of yet another true icon of Australian manufacturing.

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