Ford NA Boss Reveals Logic Behind Australian Manufacturing Exit Photo:
2012_ford_falcon_fg_ii_03 Photo: tmr
2012_ford_falcon_fg_ii_01a Photo: tmr
2012_ford_falcon_fg_ii_01 Photo: tmr
2012_ford_falcon_fg_ii_02 Photo: tmr
Mike Stevens | Jul, 03 2013 | 2 Comments

Less than two months ago, Ford announced it would shut-down its Australian manufacturing operations in 2016, citing "challenging market conditions".

That, of course, was a statement of the obvious: declining sales of its two 'orphan' cars, the Falcon and Territory, and mounting annual losses, made its exit an inevitability.

But beyond that, Ford revealed little of the boardroom nuances behind that decision.

This week, speaking in Canada, Ford North America President Joe Hinrichs shed some light on the corporate reasoning that brought the axe to its Australian manufacturing operations.

In an interview with Canada's The Globe and Mail, Hinrichs said Australia is not a good location for a global carmaker to manufacture, with high costs, geographical isolation and a relatively low-volume market making it a poor option logistically.

Hinrichs said that Ford's Canadian operations being based in a high-volume market means it will survive, despite having some of the highest manufacturing costs in the world.

“The combination of the high Australian dollar and isolated location doesn’t make it a good export base and not a big enough total [sales] volume industry to support manufacturing,” Hinrichs told the paper.

“The Canadian situation is a little different than Australia because there is enough volume in the total North American industry to support high-volume plants, which makes up for some of those other issues.”

These conditions, Hinrichs said, combined with low tariffs that have led to a flood of imported models in the volume-selling market, have made Australian manufacturing untenable.

Hinrichs echoed comments from Holden boss Mike Devereux in recent weeks, saying that governments need to work with carmakers to support the automotive industry.

“I think we need to look at what’s been going on around the world including in the United States ... look at what the costs are for the next generation of workers coming into the auto industry,” he said

“We need government support – that by the way, happens everywhere in the world."

Last month, Holden announced it will enter talks with unions and employees on ways to reduce labour-related costs, but has yet to reveal details of any proposed plans.

Holden Chairman and Managing Director Mike Devereux said that the carmaker is near the edge of its ability to compete with imported models, as it battles the same high Australian dollar and low tariffs that are benefiting import brands.

"As a local manufacturer Holden is asking for a fair go – Australia must be able to compete fairly on the world stage," Devereux said.

“We need clear, consistent and competitive government policy to help secure a long-term future for manufacturing.”

Holden later joined Toyota and Ford in meeting with former Prime Minister Julia Gillard in Melbourne to discuss options to keep Australia's automotive industry competitive and profitable.

With a reshaped Labor government now in power, and with Kim Carr returning as minister for industry, it is unclear if the outcomes of that meeting will lead to any clear resolutions.

And, with a federal election looming, it may be some months before we see any concrete plans announced - if at all.

MORE: VFACTS - Ford, Holden: A Tale Of An Australia Lost.

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