After announcing an after-tax operating loss of A$141m for the 2012 financial year, following a A$290m loss in 2011, Ford has finally thrown in the manufacturing towel in Australia and will close its factories in 2016.

The move, long expected as sales of the large, rear-drive Falcon have been falling for years, will leave just General Motors' Holden and Toyota manufacturing cars 'down under'.

Local manufacturing or kit assembly was long encouraged in Australia by import controls and tariffs on built-up cars and, during the industry's heyday, Holden, Chrysler, Ford, Volkswagen and Leyland Australia all operated full manufacturing plants. Leyland and Volkswagen quit in the mid-1970s, Nissan, which had taken over VW's factory in the mid-70s, pulled out in the 1990s and Mitsubishi, which took over Chrysler Australia in the 1980s, stopped manufacturing early in the 2000s.

Ford itself closed its Sydney plant in Homebush in 1994, switching to importing Lasers (a variant of Mazda's 323) from Japan rather than assembling locally. The office section of the plant was subsequently used by importer Ateco.

In recent years, Australia has reduced tariffs on imported cars and established a free trade agreement with Thailand, now a major source of cars and light commercials for the ASEAN region. The high value of the Australian dollar has also made car exports increasingly uncompetitive.

Announcing the end of manufacturing in October 2016, Ford Australia said the decision "was driven by increasingly challenging market conditions – including market fragmentation and the high cost of manufacturing".

Losses in Australia in the last five years had totalled about A$600m.

Ford Australia president and CEO Bob Graziano said that, given the changing dynamics of the auto industry, a number of business scenarios were reviewed during the past year to determine the next steps for the automaker's Australian business.

"All viable alternatives were evaluated as part of the process including manufacturing various types and combinations of vehicles for local sale as well as the viability of a significant export programme.

"The scenarios investigated also included varying levels of government support, manufacturing cost reductions and productivity improvements."

Ford noted Australia has annual sales of around 1.1m new vehicles with 65 brands and 365 models on sale.

"This makes Australia one of the most competitive and crowded automotive markets in the world."

“Given the fragmented marketplace and the low model volumes that result, we decided that manufacturing locally is no longer viable,” said Graziano.

The axe will fall in 2016 on about 1,200 jobs at the Broadmeadows car assembly and Geelong engine manufacturing and stamping plants.

Ford said all manufacturing employees’ benefits will be provided in line with current agreements and, during the next three years, Ford "will work with affected employees and their representatives on support arrangements and provide clarity about the closure process".

“We know this announcement is very difficult, especially for our employees,” said Graziano. “Providing support to those in our team whose roles will be affected is a key priority for us during this three-year transition period.”

The automaker still plans to launch updated versions of the locally made Falcon, its pickup variant and the Falcon-based Territory SUV in 2014, as well as offering the imported Kuga, Ranger and Focus.

"The company will also strengthen its product lineup even further with a 30% increase in the number of new vehicles offered to Australian customers by 2016," Ford promised.

The company will retain 1,500 staff and about 200 dealers nationwide.

“All of us at Ford remain committed to our long history of serving Australian customers with the very best vehicles that deliver cutting edge technology at an affordable cost,” said Graziano.

“Unfortunately, due to challenging market conditions we are unable to do that longer-term while continuing to manufacture locally.”

Product development for designing, engineering and testing global vehicles will continue in Australia.

Ford Australia history highlights [courtesy Wikipedia

1925:  Established as an outpost of Ford Motor Company of Canada to which Henry Ford had granted the manufacturing rights to Ford in the British Empire (later Commonwealth) countries (except the UK). Ford Australia and New Zealand both had factories based on a Canadian design with steep roofs designed to shed snow - which doesn't fall in either Sydney or Wellington. Model T asssembly begins in Geelong

1928: Model A build starts

1932: Ford V8 build starts

1934: Ford launches the world's first coupe utility [a pickup truck is still called a 'utility' or 'ute' in Australia] developed by company engineer Lewis Bandt. During the Depression, banks would not extend credit to farmers to purchase passenger cars- in the belief they were unnecessary luxuries. However, they would lend money for the purchase of "working" vehicles. The coupe utility fulfilled the need of farmers to have a workhorse which could also be used "to take the wife to church on Sunday and to the market on Monday".

1956: Ford buys land in the northern Melbourne suburb of Broadmeadows and in July 1961 announced the new Melbourne factory would become the company headquarters.

1960: Following years of local assembly of Canadian and English Ford models, full manufacture of US-designed Falcon starts. The right hand drive Australian line soon diverges from its US counterpart and an all-local model, the XA, is introduced in 1972. Widely exported to New Zealand and some Asian markets - a few shipped as far as England.

1969: Ford Europe Capri assembly starts at Homebush plant in Sydney. Production ended in 1972

1972: Unique locally developed Mark III Cortina launched with Falcon I6 shoehorned in. Falcon six was also fitted to locally assembled Transit van.

1981: Mazda 323 variant Laser replaces Escort. Assembled in Homebush plant in Sydney.

1989: Mazda 323-based Capri four-seat convertible launched. Built until 1994 as RHD Ford for Australasia and Asia and, from 1991, LHD Mercury for North America - Ford Australia's only LHD export model.

1994: Capri production stopped, Homebush closed, Laser now imported from Japan.

2004: Territory SUV spinoff from Falcon launched

2012: First ever four cylinder Falcon launched using two-litre EcoBoost I4 engine

Show the press release

 

Important announcement from Ford Australia

Thu, May 23, 2013

Ford Accelerates Australian Business Transformation

  • Ford is transforming its Australian business by accelerating the introduction of new products for Australian customers, enhancing the sales and service experience, and improving its business efficiency and profitability
  • To better position the company to compete in a highly fragmented and competitive market, Ford will cease local manufacturing in October 2016. All entitlements are protected for the 1200 employees whose jobs are affected, and the company will work through the next three years to provide support
  • Ford will proceed with plans to launch updated versions of the Falcon, Falcon Ute and Territory in 2014, as well as offering other world-class products, such as the Ford Kuga, Ranger and Focus. The company will also strengthen its product lineup even further with a 30 per cent increase in the number of new vehicles offered to Australian customers by 2016
  • Ford’s presence in Australia will remain significant – with 1500 team members, more than 200 dealers nationwide and a continued strong commitment to supporting the communities in which the company operates

MELBOURNE, Australia, 23 May 2013 – Ford Motor Company is transforming its business operations in Australia to provide customers with even more new products, and improved sales and service, while creating a more efficient and profitable business structure.

Ford announced the plan today, including its intention to cease its local manufacturing operations in October 2016. The decision on local manufacturing was driven by increasingly challenging market conditions – including market fragmentation and the high cost of manufacturing. Ford losses in Australia in the last five years have totaled approximately $600 million (AUD).

“All of us at Ford remain committed to our long history of serving Australian customers with the very best vehicles that deliver cutting edge technology at an affordable cost,” said Bob Graziano, president and CEO of Ford Australia. “Unfortunately, due to challenging market conditions we are unable to do that longer-term while continuing to manufacture locally.”

Support for Employees

Approximately 1200 jobs in Ford’s Broadmeadows and Geelong manufacturing plants will become redundant when manufacturing at those sites ceases in 2016.

All manufacturing employees’ benefits will be provided in line with current agreements. During the next three years, Ford will work with affected employees and their representatives on support arrangements and provide clarity about the closure process.

“We know this announcement is very difficult, especially for our employees,” said Graziano. “Providing support to those in our team whose roles will be affected is a key priority for us during this three-year transition period.”

Future vision for Ford Australia

While the way Ford is structured is changing, Ford’s commitment to Australia remains strong.

“Ford will remain a significant employer in Australia, with more than 1500 team members, as will our network of more than 200 dealers around the country,” said Graziano. “The Australian team’s role as a global centre of excellence for vehicle development also will continue to be an important focus for us.”

Australia is currently one of four product development hubs for Ford globally. Recently, the Australian team has been responsible for designing, engineering and testing global vehicles, including the Ford Ranger and Ford Figo, and will continue this expertise.

Today, Ford has more than 1000 team members in product development in Australia, giving the company more designers and engineers than any other auto company in Australia.

“Our customers will buy and service Ford vehicles through the same great dealers we have throughout the country today, and we will continue to support the communities in which we operate,” said Graziano.

Decision follows comprehensive review process

Given the changing dynamics of the auto industry, a number of business scenarios were reviewed during the past year to determine next steps for Ford’s Australian business.

All viable alternatives were evaluated as part of the process including manufacturing various types and combinations of vehicles for local sale as well as the viability of a significant export program. The scenarios investigated also included varying levels of government support, manufacturing cost reductions and productivity improvements.

Australia has annual sales of approximately 1.1 million new vehicles, and customers have access to more than 65 brands and 365 models available for sale. This makes Australia one of the most competitive and crowded automotive markets in the world.

“Given the fragmented marketplace and the low model volumes that result, we decided that manufacturing locally is no longer viable,” said Graziano.

More New Products

As part of the transformation, Ford has aggressive plans to introduce even more new products for Australian customers – including a 30 per cent increase in the number of new vehicles offered to Australian customers by 2016. That is in addition to already announced new versions of the Ford Falcon, Falcon Ute and Territory, as well the new Ford Kuga, Ranger and Focus.

“We will be introducing a number of exciting new vehicles and technologies during the next few years that will excite our Australian customers,” said Graziano. “The breadth of our line-up will increase by more than 30 per cent, ensuring we continue to offer our customers an outstanding range of cars, SUVs and light trucks long into the future.”

Upgraded Sales and Service Experience

Ford also is significantly enhancing its approach to the sales and service experience. The company has appointed a dedicated Consumer Experience team to introduce a series of initiatives to provide customers with even better after-sales care.

“We have a range of projects under way to significantly enhance our customer’s experience with Ford,” said Graziano. “This includes one of the only programs in Australia that provides a capped price on all servicing costs for seven years.”

Ford continues to be part of Australian communities

“Ford vehicles have been part of the automotive landscape in Australia for almost 110 years and we have manufactured here since 1925. We are proud of that history. We are proud of our role in Australia and we haven’t made this decision lightly.

“Overall, we are changing, but our commitment to Australia remains strong. We’ll move through this transition and continue to be a vibrant and strong part of the Australian driving experience,” said Graziano.

 

Original source: http://www.ford.com.au/about/newsroom-result?article=1249024395989