Ford announced they would finish Falcon and Territory production by October 2016.
This will see the end of vehicle manufacturing and autoworker jobs for Ford in Australia.
What we think may have contributed to this decision:
1. Continued declining big car (Falcon) sales.
2. Tough local and global economic conditions.
3. A fragmented marketplace.
4. Over $140 million loss for Ford Australia in the 2012 financial year.
5. Over $600 million of losses for Ford Australia since 2008.
6. Australian made Ford’s remain unprofitable.
7. Imported Ford vehicles are profitable.
8. Ford’s cost structure in Australia remains uncompetitive.
9. Ford’s costs in Australia are double of that of Ford Europe.
10. Ford’s costs in Australia are nearly four times of that of Ford Asia.
Ford Australia is trying hard to manage the spin around this announcement, however it will be a difficult pill to swallow for those most affected. Remember there is a 56-year history behind the Falcon model and to see it disappear will be very sad for a lot of fans. On the other hand you could argue that the Falcon has been loosing fans for some time now and this is part of the reason for its demise.
Ford is reporting that it understands the impact that this will have on their team of workers and the final conclusion came only after thoroughly reviewing the business and exhausting all the alternatives. They have promised to be committed to looking after the outgoing workers, confirming that they will receive the full entitlements of their current employment agreements when the wind down occurs in October 2016.
The main impact will be felt by the 650 autoworkers from Broadmeadows assembly plant and over 500 autoworkers from the Geelong engine plant. They are also saying that opportunities for reemployment will be limited but every attempt to find new employment opportunities for the redundant workers will be undertaken.
On a more positive note, Ford wants to continue its presence in Australia beyond 2016, saying it’s committed to the future as a center for excellence in vehicle and product development. They are saying it still has a part to play in the global Ford Motor Company system. This will enable the jobs, of around 1,500 workers employed in non-manufacturing roles, to stay.
In the short term (the next 40 months) they are committed to continue with their plans to update the Falcon, the Ute and the Territory. Ford vehicles have been part of the automotive landscape in this part of the world for more than 100 years and they have been manufacturing in this region since 1925.
It was clear that Ford Australia had to change. We think Ford will look to move through this transition with a view to remain as a vibrant and strong player in this regions motoring experience.
The bottom line in all of this is Ford’s transformation should allow them to better align their products and services with what their customers want and the commitment will be to strengthen its range of imported global vehicles; they plan to increase the number of new vehicles offered to customers in 2016 by 30%.
The Prime Minister of Australia’s Labour Government, Julia Gillard, has followed the Ford announcement with a pledge of more than $A50 million to support the autoworkers, businesses and regions affected by Ford decision to close its manufacturing plants. She described the situation as a distressing day for the company’s workforce, for suppliers and the wider communities. She also confirmed that Ford Australia did not approach federal or state governments for any additional support before this announcement.
The Australian and Victorian governments are planning to work together to do everything they can to look after the interests of the Ford workforce, the automotive supply chain and the affected communities. Gillard has promised almost $40 million to what she is calling, a structural adjustment program to support the economic development and diversification for the affected regions.
The Government will also be seeking a meaningful contribution from Ford Australia. The support plan will include assistance for businesses and workers in the automotive supply chain by providing an additional $A10 million for an Automotive New Markets Program.
Ford Australia have benefited from hundreds of million of dollars in federal and state government support over the last 10 years, however sales of its once-dominant Falcon have steadily declined to unsustainable levels. They have not announced any immediate job losses, which should give workers time to look for new opportunities and employment.
The Australian government is committed to work with all of the main participants, including unions, local communities and business organization’s to design programs that will generate new and exciting opportunities for jobs and investment.