Proposed price increases by BHP Steel have provoked Ford Australia into considering importing as much as $A8 million of its needs, according to a report in the Sydney Morning Herald (SMH).
Ford#;s Down Under operation yesterday announced its second consecutive operating loss and president Geoff Polites made it clear to journalists that the proposed steel price rise was unwelcome, the SMH said.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The SMH said that BHP Steel supplies about 18,000 of the 66,000 tonnes of steel used to make Ford#;s locally-designed Falcons every year and that the company could switch to importing as much as half that volume.
Polites told the SMH that some small-volume items and pre-slit blanks supplied by BHP Steel could not be sourced elsewhere.
Ford Australia already imports about 48,000 tonnes of steel each year, mostly from Japan and mostly for use in critical outer body panels, the newspaper added.
The Sydney Morning Herald said there had been problems with BHP Steel bake-hardenable steel once supplied to Ford for the outer panels of its AU Falcon range launched in 1998.
“BHP Steel has the capability to make bake-hardenable steel and we used it for the Falcon but we had some issues, mainly on consistency of quality and price,” another Ford executive told the newspaper. “We had to take our bake-hardenable steel business to Japan.”
He added that BHP Steel had worked hard on the product and “eventually got there”, but it was better overall to rely on imports, the SMH said.
The SMH said that Ford posted a loss of $A5.5 million for calendar 2001, against a loss of $16.1 million in 2000, after holding revenue at $2.81 billion.
Polites told the newspaper that it was counting every dollar as it invested in two projects worth $980 million – a much-revamped Falcon, known as Barra, to be launched later this year, and an all-wheel drive E265 model due in 2004.
The newspaper said the result was helped by profits on the sale of the old Capri factory and other land around the Broadmeadows plant near Melbourne which the company owned for over 40 years.
Polites told the Sydney Morning Herald that the $5.5 million loss was better than expected thanks to improved efficiency and cost savings.
He told the newspaper that profits would not be much better this year with Ford budgeting to break even in a year when a new model was launched.
“The big benefit from Barra will come in 2003 when the marketing starts to take effect,” Polites told the Sydney Morning Herald.
