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Tyre factory to shut down Melbourne plant -

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ELEANOR HALL: The bad news is piling up for Australia's manufacturing sector, especially in the car

Just weeks ago Holden announced that it would close a manufacturing plant in Victoria. Now Goodyear
is pulling out.

The company says it is closing down its operations in Australia because consumers no longer want
the 12-inch tyres its north Melbourne factory makes.

But its decision will force Australia to import more tyres while about 600 Victorians will join the
unemployment queue.

In Melbourne, Simon Lauder reports.

SIMON LAUDER: The South Pacific Tyres plant at Somerton, in Melbourne's north, employs hundreds of
people who found out this morning the plant will shut down in six months. It comes just weeks after
Holden announced plans to shut down its engine factory at a cost of 500 jobs.

The state Premier John Brumby:

JOHN BRUMBY: You know this is a very disappointing decision by South Pacific and I think the
Goodyear board. It's a lot of jobs. It'll be very difficult obviously for all of those families.
And, you know, my understanding is that they were still producing a competitive product and we'd
been proud of the fact that this is the last tyre manufacturing facility anywhere in Australia.

SIMON LAUDER: The company which owns South Pacific Tyres, Goodyear, doesn't agree that the tyres it
makes in Australia are a competitive product. Speaking from the US, Goodyear spokesman Keith Price
told The World Today the Somerton plant makes tyres no-one wants to buy anymore.

KEITH PRICE: We have closed plants in England, Morocco, Canada, the US and New Zealand as part of
this reduction effort we've had.

SIMON LAUDER: And what are the high value added products that the market is demanding at the

KEITH PRICE: The best way to describe them are that they are larger sized diameter tyres, tyres
with speed rated performance characteristics.

Today the small cars, if you're looking at like a Ford Fiesta or some of the Mazdas and various
products out there, none of them are coming with 12 inch tyres. They're coming with 16, 17, 18 inch
tyres and that is where the market is moving and we are moving as a company to produce more of
those tyres that our customers are wanting, that includes customers in Australia.

SIMON LAUDER: The CEO of South Pacific Tyres, Judith Swales, says 587 workers will lose their jobs.

JUDITH SWALES: We will work with them to offer them support services to help them transition into
future employment.

SIMON LAUDER: The reason for the closure, it's not only because the factory is making less popular
products now is it? The global scene has changed.

JUDITH SWALES: The factory is not cost competitive on a global basis. Its conversion cost, which is
how we measure cost competitiveness, is nearly double that of the global Goodyear average.

SIMON LAUDER: Did you seek any help from the Federal Government to keep the plant going?

JUDITH SWALES: Look, we've had support and advice from the Government and we've kept them informed
of some of the challenges that the factory faces.

But to be honest we did not feel that it was a prudent use of taxpayers' money to invest the
$150-million plus that was required to upgrade the factory, given the fact that it's not cost
competitive on a global basis.

SIMON LAUDER: The Victorian secretary of the National Union of Workers, Antony Thow, says the
company shouldn't be closing down manufacturing while a review of the automotive industry is still

ANTONY THOW: I believe that Goodyear has pulled out of Australian manufacturing far too early. It's
a decision that the NUW and all unions in the auto sector will not support.

We've got the Bracks automotive review that's about to go to the Federal Government. We've got the
Federal Government chipping in $500-million for more fuel efficient, greener vehicles.

Goodyear could have been part of that success story, I think, that hopefully is around the corner,
yet they've made this short term decision and pulled out without, I think, good reason.

SIMON LAUDER: The Federal Minister for Innovation and Industry Kim Carr says the Government will
help the workers who will lose their jobs.

KIM CARR: The average age of the workers at this plant is some 45 years. People have been working
there for a great many years.

This is an industry of course that is under considerable pressure as a result of the movement
towards China by international companies, and so the pressures are on in terms of providing
alternative employment.

We'll be working closely with those families, workers and their families to ensure that every
opportunity is taken to find alternative employment.

SIMON LAUDER: After opening in 1960, the South Pacific Tyres plant will roll out its last tyre on
New Years' Eve.

ELEANOR HALL: Simon Lauder reporting.