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’.
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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
