Proposal to end Automotive Transformation Scheme will create job loss 'avalanche' in SA: Nick Xenophon

Plans to cut a scheme supporting innovation in the car industry will create "an avalanche of job losses", South Australian Senator Nick Xenophon has warned.

The Federal Government wants to end the Automotive Transformation Scheme (ATS) at the start of 2018 in a move that would save it $900 million.

It said it was in line with plans by Ford and Holden to stop manufacturing cars in Australia in the next two years.

Senator Xenophon said the fund was designed for a continuing industry and "now that the industry is in transition, it needs sensible, targeted assistance more than ever".

"Unless the Government changes its tact there will be an avalanche of job losses and the consequences of that will be catastrophic," he said.

"We could see a collapse in the supply chain early and if that's the case you will see tens of thousands of job losses between now and 2017."

Component suppliers to be hit hard by Holden's closure

Almost 3,000 people will lose their jobs when Holden stops manufacturing cars at Elizabeth in Adelaide's northern suburbs, but far more workers are expected to be affected.

Hundreds of Adelaide businesses are expected to take a hit, especially component manufacturers, which supply both Ford and Holden.

The SA Government expects 90 businesses in southern Adelaide that employ up to 2,000 workers will be among those affected.

SA Automotive Transformation Minister Kyam Maher today opened a new centre at Warradale in Adelaide's south to support and retrain workers affected by the closure of Holden.

"Some people will continue working for companies who will diversify and do other things in manufacturing," he said.

"There'll be some people who'll be looking for careers that are slightly different to what they've had in the past, but there will be others who will look to gain new skills to work in completely different careers."

Mr Maher said people had to be realistic in their expectations for transforming the industry.

He said many business would have to significantly downsize and some would close altogether.

SA Automotive Transformation Taskforce (SAATT) chief executive Len Piro told guests at the centre's launch that tough times lay ahead.

"I know when Mitsubishi closed here, it was bad times for the community, there's no question about that," he said.

"But Mitsubishi didn't have a big supplier footprint at the time and that was able to be absorbed for the most part.

"What we're talking about here is not the closure of a company, but the closure of an industry, a sector."

The SA Government said it would push the Federal Government to reconsider cutting the ATS.