Confirmed: Ford shutting down Australian plants

Ford Australia made a loss of $141 million after tax in the last financial year, with a loss of $600 million over the last five years. Photo / Getty Images
Ford Australia made a loss of $141 million after tax in the last financial year, with a loss of $600 million over the last five years. Photo / Getty Images

Ford will cease its manufacturing operations in Australia by October 2016 with the loss of 1200 jobs.

Ford Australia President and CEO Bob Graziano said the company made a loss of $141 million after tax in the last financial year, with a loss of $600 million over the last five years.

Ford Australia employs more than 3500 people at its manufacturing plants at Broadmeadows, in Melbourne's north, and Geelong.

In January last year, the federal government contributed $34 million to Ford's $103 million production upgrade, and the Victorian government an unspecified amount.

At the time the company said the upgrade would mean the Territory and Falcon models would continue to be made in Victoria until 2016.

Ford New Zealand spokesman Tom Clancy said that while the news would "have a major impact on our co-workers across the Tasman, the restructure does not extend to Ford New Zealand."

"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. And Ford Australia and Ford New Zealand will proceed with plans to launch updated versions of the Falcon and Territory in 2014, as well as offering other world-class products, such as the Fiesta, Focus, Ranger and Kuga."

Clancy said the company would also strengthen its product lineup even further with a 30 per cent increase in the number of new vehicles offered to Australian & New Zealand customers by 2016.

Driven editor Matt Greenop said Ford Australia had struggled in recent years - as had all manufacturers of large cars.

"The writing has been on the wall for a while. Holden developed the upcoming VF Commodore as a joint venture with the US, and already sell a left-hand drive version of the car as Chevy SS. That was a clever move to keep development costs down, as the markets change their focus to smaller cars and crossover SUVs. Ford didn't really have that option with the Falcon, in fact there have been rumours that it would be replaced with the global platform Taurus in the near future. Obviously the future is nearly here."

Greenop said Ford New Zealand will continue to source vehicles from Australia until the plants close, but even now brings in products from Europe and Asia.

"The company had hoped to stem the flow of customers out of Falcon with an EcoBoost engine, which was a highly advanced two-litre turbo four-cylinder as opposed to the traditional six-cylinder. Unfortunately, even though the EcoBoost Falcon is a fantastic vehicle out of Australia, the reality was that Falcon buyers don't want a little four-pot, and buyers stayed away."

"Ford's managing director told me that there will be no significant impact on New Zealand operations, and that support for the Falcon and Territory will continue until 2026 and beyond.

"Ford is a global company with a strong presence in Europe, so is taking some big financial hits at the moment, and with petrol prices as high as they are in Australia and here, people just aren't buying big cars. Unfortunately for Ford Australia, their locally-built Falcon and Territory are both sizable machines."

Ford Australia's Bob Graziano said the costs of manufacturing cars in Australia was uncompetitive.

"Manufacturing is not viable for Ford in the long term," he told reporters today.

Graziano said all entitlements would be protected for the 1200 employees whose jobs are affected, and the company will work through the next three years to provide support.

The reduced demand for large cars was a factor in the company's decision, Graziano said.

"There's been a significant change in terms of the total number of vehicles sold in the large car segment," he said.

The company would still roll out the new models of the Falcon and Territory next year but production would cease in October 2016, Graziano said.

Ford would maintain a presence in Australia beyond that date.

"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," he said.

Graziano said despite efforts to restructure the business, locally made products continued to be unprofitable while imported products were profitable.

"Our cost structure remained uncompetitive ... it is double that of Europe and four times that of Ford in Asia," he said.

Graziano said the company had made aggressive assumptions about possible future government car industry support and lower labour costs, which he did not think would be acceptable by Australians and would not have made the business profitable.

"We did not leave any stone unturned but even with these assumptions the business case did not stack up," he said.

Graziano said around 650 jobs would be lost in Broadmeadows, while 510 positions would go at Geelong.

He said no decisions had been taken on the company's motorsport teams or about its premium car brand Ford Performance Vehicles.

Australian Manufacturing Workers Union assistant state secretary Leigh Diehm said workers were shocked and devastated by the news.

Diehm said the union would meet with Ford bosses this afternoon to discuss the implications of the decision.

He said it was too early to know what impact the closures would have on the auto components industry, which employs hundreds of thousands of people.

"We're really concerned about it .. the auto components industry not only supplies Ford, (it) also supplies Holden and Toyota. There are hundreds of thousands of Australians employed by these companies. We're really concerned about what the flow-on effects are."

Diehm said car manufacturing was a vital industry for the country and it needed to survive.

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