Autocare Services – Customer updates

You are advised that today, Autocare Services Pty Limited, a wholly owned subsidiary of LINX Cargo Care Group, was placed into voluntary administration.

Autocare Services has taken the difficult decision to enter voluntary administration to allow the business to affect restructuring activities with the intent it can emerge post the voluntary administration process in a sustainable and viable position.

Christopher Hill, Joseph Hansell and Ross Blakeley of FTI Consulting, have been appointed as the administrators to review the ongoing viability and sustainability of the Autocare Services business, with a view to ensuring maximum value is preserved and returned to the Autocare Services creditors.

Will Autocare Services continue to operate?

Autocare Services intends to continue operating and servicing its many customers across Australia during the voluntary administration process under administrator management.

We will continue to work with you directly to minimise service disruptions, if any, during the voluntary administration process.

The length of the administration process from appointment to completion is anticipated to be three months, pending the Administrators’ review of the business’ operations.

Why has Autocare Services entered voluntary administration?

Recent years of operating amongst volatile market conditions, declining vehicle volumes and increasing operating costs, have significantly impacted Autocare Services’ ongoing financial viability.

As you are aware, Autocare Services has been working closely with you, our customers, and the wider supply chain, to evolve the business in alignment with the changing market conditions however, the material movement and volatility has been heightened by the ongoing COVID-19 pandemic.

Voluntary administration can provide Autocare Services with a pathway for the tough, but necessary, change it needs for the evolution of its business model to keep delivering services valued by customers today, and into the future, to the Australian automotive industry.

Contact

You will be updated and informed as the voluntary administration process progresses and may be directly contacted by the administrators.

For any enquiries about the administration process, please contact the Administrators’ representatives:

• Patrick O’Brien – FTI Consulting 0488 073 352
• Matthew O’Keefe – FTI Consulting 0438 809 928
• Jonathan Chee – FTI Consulting 0407 533 714

For any operational matters, please contact Autocare Services’ EGM, Simon Abela, National Customer Manager Michael Feltscheer, your Autocare Services Client Partnership Manager or account representative.

LINX Cargo Care Group’s official statement can be found on the Autocare Services website.

Further to recent communications regarding Autocare Services’ ongoing response to challenging market conditions and changing customer requirements, we release another update about more operational changes for the business.

The shape of the Autocare business is not the same as it was earlier this year; there has been great material change and movement in our markets, further amplified due to the COVID-19 pandemic, and we have been working to adjust our operations to uphold our commitments to you.

JobKeeper payments to cease

As you aware, the Government’s JobKeeper payment scheme gave us time to plan strategies for how to prepare Autocare for future sustainability and mitigate further financial losses. During that time and still today, we are heavily focused on a significant volume of business improvement work that is delivering moderately positive results for us to continue to provide your critical services.

Unfortunately, Autocare did not qualify for ongoing payments under the second phase of JobKeeper so we are now faced with making more substantial changes to our operations to keep evolving our business in accordance with your changing requirements.

Changes to Vehicle Processing in our business

Sadly today, we announce another difficult operational decision for Autocare Services. Our Vehicle Processing division has been one of the hardest hit this year, struggling with over-capacity for volumes now, and those you’ve forecast to come. Market trends and ongoing forecasts indicate that these volumes can no longer sustain the current workforce.

To help offset some of the significant financial losses we will experience as JobKeeper payments now cease, and for us to operate more sustainably, we must reduce the size of our operational workforce in Vehicle Processing in Queensland, Victoria and South Australia.

Approximately 75 positions will no longer be required. In the first instance, operational employees at impacted locations being offered voluntary redundancy packages.

We are committed to actively supporting our people through this change as we progress through the next few weeks. Those employees who will exit the business will have access to appropriate support and services to help them navigate the transition.

We are focused on future sustainability

We remain focused on adjusting the way our business operates, optimising our business strategy to evolve with the market and engaging with you to ensure we are aligned with your needs.

Thank you for your ongoing support and business, as we strive to continue to uphold our supply chain commitments to our customer base across the country.

If you have any questions or concerns, please don’t hesitate to contact your Customer Partnership Manager.

Unfortunately, and as you are aware, the new car market decline over the last three consecutive years, has been recently accelerated by the COVID-19 pandemic and continues to have a considerable impact on the Australian economy, presenting Autocare with significant operational challenges.

As you are responding to this market decline and general volatility by optimising your supply chains, Autocare has also been working with you to establish what the market could look like in the medium to long-term, so we can continue to provide relevant and valued services in this evolving industry.

In NSW, we have three operating sites – Port Kembla situated on-wharf and two inland sites, Dapto and Ingleburn. To keep providing cost effective and efficient service delivery in this region for our customers, we are optimising our NSW operations which has resulted in the difficult decision to exit our operations at Ingleburn, closing the site effective 30 September 2020.

While many options to make the NSW site footprint sustainably viable were considered, the decision to exit the Ingleburn site operations provides Autocare with the ability to strategically align our business together with you and our market for the industry’s future.

This decision was not made lightly or easily, and we sadly acknowledge our Ingleburn employees are directly impacted as a result. We commenced a consultation process with our people today and are providing them with the appropriate support as they understand and process what this development means for them. The option of redeployment to our Dapto site is available to approximately half of our Ingleburn employees.

We are focused on ensuring a smooth transition for our customers to Dapto, with no disruption to our service delivery. From today, our customer team will reach out directly to all impacted customers to discuss what this means for them and to ensure they are supported during this time.

If you have any questions or concerns, please don’t hesitate to contact your Customer Partnership Manager.

Since the Victorian Government’s announcement that Melbourne has moved to a Stage 4 restrictions, we have been carefully reviewing the new requirements for businesses and determining how these requirements affect our business.

Following our review, we confirm that Autocare Services is an exempt business and will continue to provide regular services during the Stage 4 restrictions. Autocare will adhere to the Victorian Government’s requirements including:

• having a High Risk COVID Safe Plan in place that is regularly updated;
• unless an exemption applies, ensure that workers do not work across multiple sites;
• report any positive cases of COVID-19 to DHHS, Worksafe, Health and Safety Representatives, and notify our workforce and Group Pandemic Management Team;
• regularly clean facilities, shared spaces and provide additional cleaning supplies and protective equipment e.g. masks; and
• undertake risk assessments for cleaning and the potential closure of our workplaces in certain situations.

Additionally, as a business that can remain operational, LINX Cargo Care Group has provided Autocare with a compliant High Risk COVID Safe Plan that:

• sets out our actions to help prevent the introduction of COVID-19;
• sets the required level of face-covering or Personal Protective Equipment (PPE);
• outlines how we are prepared to respond to a suspected or confirmed case of COVID-19 in our workplace; and
• demonstrates how we will meet all of the requirements set by the Victorian Government.

The additional processes and procedures which have been implemented are entirely necessary to comply with directions issued by the Victorian Government but more importantly, to protect the health and safety of our personnel and to allow us to continue to operate. This letter is intended to advise of the anticipated impact to our operations at this point in time and to communicate how you can assist us to mitigate the adverse effects of the Stage 4 restrictions on our operations for our mutual benefit.

KPI Performance

Based on these tightened restrictions, there may be impacts to KPI performance in Victoria during the Stage 4 lockdown and potentially post the initial six week period. We will endeavor to advise customers in advance of any known impact, however, due to the changing nature of the situation, this may not always be possible. This is a very dynamic situation and one that can change quickly. We appreciate your patience during this period.

Transport Operations

Autocare’s Victorian operations have been processing and delivering vehicles as normal over the past few days, however we do not intend to deliver any vehicles to dealers within the Stage 4 restricted areas on Thursday 6^th and Friday 7^th August.  Please confirm specifically, which Victorian dealers cannot receive vehicles as we are able to recommence deliveries to Stage 4 restricted area’s from Monday 10^th August.  Please note until we receive your confirmed list, we will hold vehicles in storage.  Any dealers identified as ‘closed’, will not have any vehicles planned for delivery and we ask that you do not allocate any vehicles to these dealers to reduce unnecessary administration. Rural and Tasmanian vehicle deliveries will continue to be planned during this time.

In line with existing border controls, there are now further interstate transport restrictions. Increasingly, non-Victorian jurisdictions are adding further restrictions on cross border movements of drivers who have been in Victoria. Therefore, we will be restricting the movement of drivers to ensure we adhere to these requirements. This may impact our ability to meet applicable KPIs and as such, we are actively working to provide sea freight options to supplement the existing road based interstate network.

Processing and Storage Operations

Processing, storage and preservation services will continue to operate, however due to the high risk obligations to which we must adhere, we anticipate some impacts to performance. Our ability to remove vehicles from wharf into Webb Dock for on-wharf processing may be impacted thereby creating the risk of demurrage.

Please provide your current stock position, including forecast data on arrivals and projected stock position over the next six weeks. Whilst volume has recently declined across the industry, we are aware of the potential for this to change rapidly and we wish to be best placed to meet customer requirements, including with respect to securing temporary excess storage space, if required.

Post existing Stage 4 Restrictions

As we transition out of Stage 4, hopefully in six weeks’ time, there will be a large backlog of metropolitan deliveries requiring transport. Based on this, we would expect there to be delays as we work our way through the backlog. We look forward to working with you closely to understand and best plan the release of these vehicles.

If you have any questions in relation to this update, please reach out to your Client Partnership Manager or National Customer Manager, Michael Feltscheer. We will keep you informed of any significant developments in due course.

As Australia’s response to the COVID-19 pandemic slowly turns towards a recovery for most states and territories, our thoughts continue with those in other countries still battling through some of its truly devastating social impacts.

We’d like to thank all our customers for your support, cooperation and understanding as our Group has operationally responded to the changes and challenges the pandemic has created for us all over the last four months. Whilst effective, these changes require patience, strength and resilience and we thank you for yours, as we continue to uphold our commitments to you during this unpredictable and uncertain time. We’re proud to continue to support you navigate market demand volatility with the ongoing flexibility of our frontline workforce and wider operational and customer service teams.

Given our country’s pleasing progress, LINX Cargo Care Group is now carefully implementing a safe and staged plan to allow people to return to the office (where needed) from July. This approach aligns with federal and state/territory government directions and unless this advice changes, we aim to allow people who need office access to return to the office from 6 July. A date for a full return however, is yet to be set. The recent increase in virus spread in Victoria means this won’t apply for our people there until the state government advises it is safe to do so.

To ensure our people’s health and safety upon returning to the office, they will be required to keep upholding health and hygiene protective measures. We’ve prepared our offices with directional signage, additional sanitisation items and guides to help our people safely return to working in a shared space.

We will see you (in person) soon

If national and state/territory advice stays current, we intend to re-commence limited direct customer engagement in July. We look forward to meeting you in person when the relevant state or territory health advice and your company policies permit. We will, however, continue to limit interstate travel until August, at which time it will be reviewed.

Looking ahead

While we continue to manage our response to COVID-19, we are also firmly focused on our Group’s future, and are planning our strategic response to the market changes and trends.

The majority of our Australian markets continue to be negatively impacted economically however, our Group’s New Zealand industries are settling into Alert Level 1 and building their recovery from the COVID-19 pandemic, with markets experiencing various levels of demand.

We maintain our care for the health and wellbeing of all our people and on keeping our culture alive, as we resolve to take on what this pandemic could still bring over the months to come.

Our operational and service responsiveness is a priority as we sustain our relevance and value for our customers as we together shape our markets for the post-pandemic world.

Across Australia, we are seeing positive signs related to the spread of COVID-19. New infection rates are declining and this is mainly due to industry and community adherence to the Government’s enforced measures and restrictions. This is promising news and evidence the adjustments we’ve made as a society are working.

However, we’re not immune from the global impacts to trade and combined with the local adherence to those enforced measures and restrictions, we are observing an adverse impact on our markets, industry volumes and our customers. The current ‘suppression’ phase of our country’s pandemic response is not to be mistaken for a quick jog to the finish line…we will be here for some time yet and it’s therefore never been more important for a resilient, long-term mindset.

As we evaluate the expert information of both the duration and impacts this pandemic will continue to have on our business and the wider economy in the coming months, LINX Cargo Care Group continues to be focused on our people’s safety, wellbeing and ongoing employment, and the Group’s sustainability and positioning once the current restrictions begin to relax and the economy starts to rebound.

One of the ways we are responding to achieve these objectives, is the implementation of temporary changes to employee working arrangements from May to July 2020 in order to manage our labour costs through the period. Our aim for our customers through this time is to ensure these measures have minimal impact on services and customers continue to experience strong operational delivery throughout.

We will regularly review this approach over the coming months to ensure its continued responsiveness to ongoing pandemic conditions and so that we are best positioned to return to full capacity when government advice permits and markets respond accordingly.

We trust you understand our proactive approach is to be prudent and prepared for business recovery post COVID-19. LINX Cargo Care Group remains committed to our customers every step of the way, we are stronger when we work together.

Please read below for further details specific to Autocare Services.

As previously advised, Autocare Services is experiencing significant operational impacts because of the COVID-19 pandemic. Autocare Services has implemented distancing measures and many other processes in line with the Government and customer directions. We remain focused on the health and safety of our people and customers and service continuity whilst ensuring minimal service disruptions.

As interstate vehicle transport volumes are being negatively impacted at this time, services in our transport network will change as we adjust. As we respond to customers’ forecast volumes, some interstate vehicle deliveries will experience delays and in certain circumstances, some routes will see reductions in either frequency or availability.

Unfortunately, we expect these service changes to continue in the short term however, we remain focused on mitigating the disruption experienced by our customers.

We hereby advise that due to being impacted by these matters which are beyond Autocare Services’ control, there may be some scenarios where service levels are affected in respect of interstate deliveries.

We remain committed to service delivery for our customers and as such will be reviewing interstate volumes and performance regularly and will make adjustments to the fleet where required.

Revised ETA dates will be provided for vehicles where necessary and your Client Partnership Manager and Account Coordinator will work closely with you to ensure that you are aware of the current operating conditions as we navigate the next few months of extremely low volumes together. Your assistance to work with us and consolidate allocations for interstate vehicles would be greatly appreciated.

Please note that rail services to and from WA are currently not impacted by these restrictions.

Working as part of LINX Cargo Care Group’s Pandemic Management Team (which meets multiple times per week as part of the Group’s Pandemic Management Plan), and together with your Autocare Services customer and operational contacts, we’re closely monitoring the business impacts COVID-19 is having on the Australian supply chain. Our planned response has been activated to manage our employee and customer’s health and safety, while upholding your service delivery requirements.

The priority actions below have been implemented to ensure full compliance with government directions and employee management requirements for the safe continuation of your service, while ensuring minimal service disruptions and potential virus spread by:

• Prioritising employee safety by internally communicating the relevant Government notices to ensure employees feel empowered and supported by Autocare Services regarding their personal health and together with our stakeholders, understand the required processes for transport and site operations.
• Sharing with our teams the information customers are providing on how they are managing their individual sites in relation to people interactions and changes to site access protocols e.g. increased isolation, distancing and hygiene measures. Also modifying the site access protocols to comply at the sites we operate on behalf of our customers to increase protection of employee and contractor safety.
• Regularly communicating fluidly updated Pandemic Management briefing packs with frontline leaders.
• Ensuring the LINX CCG Health, Safety and Environment team continues to provide support with increased hygiene management onsite and in our heavy vehicles, in alignment with government health agency guidelines e.g. updates and reminders during toolbox talks on new measures such as how to ‘stop the spread’, sharing hygiene educational resources via posters onsite and increasing accessibility and availability of sanitisation products.
• Actively managing isolation requirements with any employee who has recently travelled overseas by making sure employees are aware of the specific rules and advice via posters and toolbox talks.
• Actively managing anyone who may have had close exposure to a person who has tested positive to COVID-19. Additionally, in the event Autocare Services becomes aware an employee has tested positive to COVID-19, Autocare Services has a detailed Employee Checklist for site management to execute urgently, which includes measures such as sending the employee immediately home, alerting staff who have been in close proximity, providing self-isolation advice and guidance, and advising on access to health and wellbeing services such as EAP etc.
• Actively engaging with relevant unions on employee communications and health and wellbeing management on site via ongoing communications and daily interaction.
• Delivering prompt customer communications on potential unforeseen delays or issues.

We understand your business and industry circumstances are evolving and changing weekly, if not daily, and we will continue to be flexible and responsive, while implementing measures and appropriate and considered actions that meets your needs, and complies with industry and Government advice and protocols.

A message from Anthony Jones – LINX Cargo Care Group, CEO

As the Australian and New Zealand Governments put further measures in place to stem the rising spread of COVID-19, our freight and logistics services continue to operate.

Supply chain services are now more important than ever, as we help make essential goods and cargo accessible to communities across Australia and New Zealand and keep our economies moving.

Freight and logistics remains an essential service

Throughout the recent announcements, freight and logistics has continued to be referred to by all governments as an essential industry and one that will help Australia and New Zealand get through the COVID-19 crisis.

To maintain business continuity and continue to deliver to our customers throughout the evolving pandemic, the LINX Cargo Care Group Senior Leadership Team and Pandemic Management Team are working with our management teams to implement business continuity plans and specific actions which will ensure we can quickly adapt to the changing situation for our customers.

We understand your business and industry circumstances are also evolving and changing weekly, if not daily, and we will continue to be flexible and responsive, while implementing measures and considered actions that meets your needs, and complies with Government and health authorities advice and protocols.

Employee health and wellbeing

The recent announcements of further restrictions across non-essential services, including strict new social distance measures and closures has definitely changed everyday life as we know it. No doubt, these measures have directly impacted your family, friends or many people you know who work in those industries. As addressed, these measures are for the benefit of all citizens and aimed at slowing the virus and saving lives.

In our workplaces, this means we are working with our front line staff to find ways to minimise exposure through increased hygiene and modified work practices.

You will soon hear directly from our senior management teams who will provide more detail on the implemented priority actions for each of our companies. These will ensure full compliance with government directions and employee management requirements for the safe continuation of your service, while ensuring minimal service disruptions and potential virus spread.

Keeping you informed

We will continue to monitor the COVID-19 pandemic globally and locally and keep you regularly updated on our response as we partner together through the difficult times ahead.

As an organisation, we are operating in unprecedented times and will be forced to make difficult decisions and appropriate adjustments while navigating the current climate. We look forward to trying new things together and doing things differently during this time to ensure we remain sustainable for the long-term, for our valued customers and people.

A message from Anthony Jones – LINX Cargo Care Group, CEO

We have implemented our Group Pandemic Management Plan, which aligns and complies with current Federal and State Government directions:

• We’ve increased our general preventative measures to ensure the health and wellbeing of our employees and minimise community spread, including international and domestic travel restrictions until further notice.
• Many of our office-based employees are now working from home and we continue to work through options to encourage and facilitate others to do so, while we ensure adequate support for our frontline workforce who are providing your essential services.
• During the global pandemic, we will facilitate meetings with you over the phone or by video conference so you can maintain contact with our teams, while at the same time limiting unnecessary person-to-person contact.

Our business continuity plans are in place to ensure we continue to provide services during the pandemic, and we are developing specific operations plans to ensure we uphold our service delivery to you through this difficult period. Importantly, we aim for flexibility and responsiveness in our interactions with you as we know your circumstances, and those of the wider industry and global impacts, require reactions and measures that can be adjusted on a weekly, if not daily, basis.