Workers at the Ford plant in Geelong, whose future lies under a cloud.
Photo: Wayne Taylor
Ford will cut 1200 jobs at its Victorian plants in October 2016 when it ceases motor-vehicle production, ending its 90-year history of car manufacture in Australia.
Ford Australia president Bob Graziano announced the company’s decision to transform local operations to a product development facility and retail operation only on Thursday, at the same time as he said the company’s $141 million after-tax loss brought its five-year total losses to approximately $600 million.
Ford has a network of 200 dealerships around the country and it employs 1000 people locally already in product development. Australia is one of four such product development hubs the company has globally.
The decision will mean the loss of 650 jobs at Ford Australia’s Broadmeadows assembly plant north of Melbourne, and a further 510 jobs at its Geelong body shop and engine plant. The company currently produces the Falcon, Falcon Ute and Territory vehicles locally.
“Manufacturing is not viable for Ford in Australia in the long term,” Graziano said.
The decision also means the end of the Falcon, a car predominantly associated with Australia, he said.
“We will retire that name when we retire the vehicle,” he said.
The company has previously said it will keep producing the Falcon model in Australia until 2016, but has not given any commitment beyond that. Speculation that the company would close its loss-making Australian operations and become an importer only grew after former Ford chief executive Jacques Nasser last month said an end to automotive manufacturing was inevitable.
If Ford shuts shop, it is only a matter of time before the two other auto manufacturers, Holden and Toyota, do the same, as the loss of Ford’s business would render unviable many of the components manufacturers supply to all three companies, some commentators say.
Graziano declined to put a figure on the value of parts the company sources from the local supply chain.
“We have a significant percentage of vehicles that is locally produced or locally sourced,” he said. “Many of our supply base are also supporting Holden and Toyota and our intention over the next three years is to continue to work with them as we transition through this phase.”
‘Worth fighting for’
Responding to the announcement, manufacturing lobby Ai Group said all efforts should be on supporting the supply chain.
“A key part of transitional support for employees should be assistance in reorientating the businesses in supply chains linked to Ford’s domestic assembly operations and in developing new opportunities, particularly in export markets,” Ai Group chief executive Innes Willox said.
“The Australian auto industry is worth fighting for and while this announcement is a major blow for all concerned, we still have competitive auto makers and parts manufacturers in Australia who are adapting and building export markets.”
In a joint announcement with Prime Minister Julia Gillard, acting Industry Minister Craig Emerson sought to highlight the difference between Ford and the operations of General Motors-owned Holden and Toyota in Australia. Ford was producing fewer than 40,000 vehicles a year, while the other two were each making more than 90,000, Emerson said.
“Ford operates on a small scale by international standards,” he said, standing in for Industry Minister Greg Combet, who is ill.
Federal, state support
Gillard, who said the government had been notified by Ford about the decision on Sunday, said the government would offer the affected Ford works all the assistance it could make available.
“For those working people, as they absorb this news, we want to say we will make sure you are not left behind,” she said.
Gillard said the federal and Victorian governments were making two funds available to support suppliers and communities affected by the decision. One fund of $12 million – $10 million from the federal government and $2 million from the state – would be “to assist those who work in the supply chain”, she said.
The second fund, comprising $30 million from the federal government and $9 million from the state, would be to help find new work in the Geelong and Broadmeadows communities. Ford should also stump up to such a fund, she said.
“I call on Ford to make a substantial contribution to this fund as well,” Gillard said.
I call on Ford to make a substantial contribution to this fund as well.
Gillard said the significance of the vehicle industry was not just limited to making cars. It provided a training ground for many people to work in other areas of industry such as aeronautical component manufacture.
“It’s an important component to a broader manufacturing sector,” she said.
In February, 50,370 people were employed in motor vehicle and parts manufacturing, government figures show.
The closure is probablyl linked to the start of the Euro 5 emission standards on November 1, 2016, The Australian Financial Review reports. Ford’s current engines have only just met the Euro 4 standards, and the Geelong plant would need a massive rebuild to meet the tougher regulations.
Australian car production has fallen over the past decade, at the same time as imports have increased and exports have fallen, industry figures show. In 2003, the local industry produced about 400,000 vehicles, almost three-quarters of which were bought domestically, an industry report shows. By 2010, however, the total had fallen to about 250,000 vehicles, with just 150,000 of those for the domestic market.
Between 2009 and 2012, the value of motor vehicles imported into Australia jumped 60 per cent to $26.4 billion from $17 billion. Over the same time, the value of exports grew just 16 per cent to $2.1 billion from $1.8 billion, government figures show.
Holden last month said it would cut 400 of the 2100 jobs from the Elizabeth assembly plant outside Adelaide – at the same time as saying it would cut 100 of the 900 jobs at its engineering operation in Melbourne.