Ford US boss reveals reasons for Australian factory axe

[Jason[98.EL]]

interesting read

canada is about the same costings to build a car but they are staying

Originally Posted by the funny little fellow-* JD *

Australia is 'logistically not a good location'

A senior Ford executive in North America has spoken openly for the first time about the reasons behind the closure of the company's Australian manufacturing operations. Ford North America president Joe Hinrichs inadvertently made the revelations while trying to explain why Ford's Canadian factories would survive -- even though they too have a high cost base -- and Australia's could not


“Australia is isolated with an industry of about one million units. Logistically it is not a good location,” Hinrichs told Canada’s The Globe and Mail overnight.

“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 said.

“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.”

Ford Australia will close is Geelong engine and stamping plants and the Broadmeadows car assembly line no later than October 2016, axing 1500 jobs in the process. It will bring an end to 90 years of Ford manufacturing in Australia and see the Falcon name -- the third oldest in the automotive world -- become extinct.

But Ford's Canadian factories will survive because they are the doorstep of the world's second biggest car market, North America, whereas Australia had limited export potential due to the high value of the dollar, Hinrichs said. The increasing number of imported cars from low cost countries such as South Korea, Thailand and, soon, Indonesia also weighed on Ford's decision.

“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,” Hinrichs told The Globe and Mail. “We need government support – that by the way, happens everywhere in the world. We need to look for unique Canadian solutions, but at the same time move us forward to an overall more competitive manufacturing cost.”

The revelations from the top levels of Ford management come as Holden has asked its factory workers to take a pay cut and find new efficiencies or risk shutdown. The Holden negotiations are due to end in August. Meanwhile the Australian car industry has welcomed the return of Kim Carr as federal industry minister, following Kevin Rudd's return to the prime ministership.

“In politics you don’t often get a second chance,” Senator Carr said in media statement. “I believe we can take courage from the tenacity with which our firms have weathered the storm. This is not the time to yield. It is the time to renew our commitment to workers and their future and to building stronger management of our firms and modernising our production processes.”

[GTP-814]

volume is the difference which lowers unit costs

[Whitey-AMG]

How is any of that a surprise - we've known this for years

He also doesnt mention the fact that people have moved on from FORD's general offerings..........conveniently forgot that one. There is no guarantee that FORD will continue to sell very well here in AU even with Imports if they dont get their **** together with relevant cars / relevant marketing and competitive pricing. There are stacks of offerings from other manufacturers to compete with down here - maybe more than other countries have per capita ? And take out the fact that without the historical Falcon / FPV sales anyways there is no longer that BLUE BLOOD dedication to buy FORD at all costs...........so Good Luck.........

[ltd]

Sorry to say but it makes sense.
No massive shipping costs and no wild fluctuations of the Canadian Dollar against the US dollar; that and Americans and Canadians are proud to own a ford, whereas here we have governments, fleets and every other twit saying "I don't want a taxi".

Also, freight options in Canada include things like rail, road, sea, river and lake.
Ford Australia has to send exports by sea, which makes them too expensive.

[LeadFoot81]

Originally Posted by ESP

How is any of that a surprise - we've known this for years

He also doesnt mention the fact that people have moved on from FORD's general offerings..........conveniently forgot that one. There is no guarantee that FORD will continue to sell very well here in AU even with Imports if they dont get their **** together with relevant cars / relevant marketing and competitive pricing. There are stacks of offerings from other manufacturers to compete with down here - maybe more than other countries have per capita ? And take out the fact that without the historical Falcon / FPV sales anyways there is no longer that BLUE BLOOD dedication to buy FORD at all costs...........so Good Luck.........

Ford marketed the Kuga this year on The Voice, and the Focus last year on the same show. Add to that a tonne of ads on YouTube and webpage sidebars. They also advertise their 2.9% finance all over the ship as well. And they recently updated their website to U.S/international spec. Result? Mrs Leadfoot81 almost bought a Kuga, but ended up in a Focus Titanium (an incredible machine) at 2.9% finance.

She loves my Falcons and will cheer on FPR at Bathurst this year. However if Ford pulled out of the V8s, and I sold my Falcons, she would still upgrade to another Ford because if her experiences with a Festiva, 2 Fiestas, and now the Focus.

The world won't end with Falcon and (Aussie) Territory bowing out. If anything, based on the strengths of their new products Ford will become MORE relevant to MORE people.

[Gobes32]

They elaborate more in the GoAuto article...........



He said the fact that Australia was an isolated, high-cost market that had almost eliminated tariffs and allowed cars made in South Korea, China and Thailand to flood in had contributed to Ford’s decision.

Mr Hinrichs told The Globe and Mail that governments had to work with car-makers to support the 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.

[2011G6E]

We're surrounded by countries with huge population bases and a cost of living that means a "normal" wage for them, to us looks like "slave wages". The factories in India, Thailand, and China pay their workers appropriately, for their countries...but from our point of view, it looks pitiful. However, you simply can't compare what we make to what they make per hour...that's foolish and supremely naive. One moment, people here go to, say, Thailand on holidays and rave about how cheap everything is, how the cost of living there is very low...and then the next moment they complain about wages in those countries. It's all relative, and you simply cannot in any way compare what an auto worker here makes in an hour to what a worker there makes.

This is why so many of the big makers...even, surprisingly, Harley Davidson...are setting up shop in places like India. Good modern factories, quality product output, but the cost of production is tiny compared to the west.

[Brazen]

Volume, volume, volume. The Broadmeadows plant would be the cheapest plant on the planet if it was making 2million cars a year. Otherwise it is too expensive to make 30,000 cars a year.

[MAD]

Maybe Ford Aus should have run a special Taxi model ala. crown vic. to remove that "taxi" stigma.

It would be nice to see our government spending money paying Australian wages rather than cutting costs with no regard except for the pay rise they can give themselves at the end of the year.

[R-Design]

Makes a lot more sense than the BS Graziano was spouting on D-day, but I guess he had to be a bit more political in his announcement.

[FPV8U]

We don't have to like it, but everything they mention makes sense.

[Joe5619]

It annoys me when they use the “current” high dollar (which has already dropped 12% since the decision) as a reason for closure. Talk about being short sighted.

I'm going to laugh, if come 2016 the dollar is $0.60



Interesting they talk about Taff's too.. Bloody governments!!

[Whitey-AMG]

Originally Posted by LeadFoot81

Ford marketed the Kuga this year on The Voice, and the Focus last year on the same show. Add to that a tonne of ads on YouTube and webpage sidebars. They also advertise their 2.9% finance all over the ship as well. And they recently updated their website to U.S/international spec. Result? Mrs Leadfoot81 almost bought a Kuga, but ended up in a Focus Titanium (an incredible machine) at 2.9% finance.

She loves my Falcons and will cheer on FPR at Bathurst this year. However if Ford pulled out of the V8s, and I sold my Falcons, she would still upgrade to another Ford because if her experiences with a Festiva, 2 Fiestas, and now the Focus.

The world won't end with Falcon and (Aussie) Territory bowing out. If anything, based on the strengths of their new products Ford will become MORE relevant to MORE people.

Ford and Holden have traditionally been viable here in AU because they had a monopoly on the largest segment of the market - Big cheap low tech boofy sedans that appealed to the patriots. That market has disintegrated and self destructed. Their imported small cars / commercial vehicles are subject to stacks more competition - so without the historical Falcon base they will struggle as more and more buyers have moved to alternatives. I'm not suggesting that Ford will become defunct as a business here - but they will struggle like never before. Their sales operations here are likely to be scaled down as well as a result methinks.
All conjecture of course.......

There should already be sales figures for Focus and Fiesta and Mondeo to show how they are doing with those against the competion - right ?

[jpd80]

And right when those big cheap boofy RWD sedans disappear, the dollar will dip down to around 70 cents US
making all those imported hatches and SUVS an awful lot dearer with no insulation against currency shift..

[Road_Warrior]

If Australia is so isolated, why then is our new car market dominated by imports?

It can't be that isolated if a whole buttload of car makers have gone to the trouble and expense of sending shiploads of their products here to sell in a market of "...only one million units."

[Whitey-AMG]

Originally Posted by Road_Warrior

If Australia is so isolated, why then is our new car market dominated by imports?

It can't be that isolated if a whole buttload of car makers have gone to the trouble and expense of sending shiploads of their products here to sell in a market of "...only one million units."

He is talking about reverse logistics - it is the @SS end of the world in terms of exporting and the costs involved in doing that from Australia.

Economies of scale from Japan / Asia / USA / Europe still make it feasible to ship INTO Australia as it become one of the final legs in a much larger journey for a product that is mass produced globally.

[Dr Smith]

Originally Posted by Road_Warrior

If Australia is so isolated, why then is our new car market dominated by imports?

It can't be that isolated if a whole buttload of car makers have gone to the trouble and expense of sending shiploads of their products here to sell in a market of "...only one million units."

Maybe he means we're isolated in that with a relatively small domestic market for local manufacturing to survive on "we" aren't big enough to have Ford make money building our unique own cars and selling mostly internally. Then you have our virtually unrestricted market for imports coming here that isn't reciprocated when we try and export.

[westy73]

Originally Posted by ESP

He is talking about reverse logistics - it is the @SS end of the world in terms of exporting and the costs involved in doing that from Australia.

Economies of scale from Japan / Asia / USA / Europe still make it feasible to ship INTO Australia as it become one of the final legs in a much larger journey for a product that is mass produced globally.

But is it too expensive because the markets we may want to export too don't have FREE trade + zero tariffs like we do and never will ??
It's all about the willpower and being able to compete on level playing fields. I reckon if all those trade barriers were removed then instantly there is a business case to make in and export from Australia.

[Nikked]

Originally Posted by ESP

. There is no guarantee that FORD will continue to sell very well here in AU even with Imports if they dont get their **** together with relevant cars / relevant marketing and competitive pricing. There are stacks of offerings from other manufacturers to compete with down here - maybe more than other countries have per capita ? And take out the fact that without the historical Falcon / FPV sales anyways there is no longer that BLUE BLOOD dedication to buy FORD at all costs...........so Good Luck.........

Considering that ford are only 2500 units behind Toyota for sales leadership, and the Imported ranger is Fords highest selling productoutselling not only the commodore, but is nudging the Cruze...it tells me that Ford are doing quite well...


Plenty of "blue blood dedication" to by fords other quality range of products if pick your carcass up of the ground and look at what they are offering...

[Wretched]

Originally Posted by Nikked

Considering that ford are only 2500 units behind Toyota for sales leadership, and the Imported ranger is Fords highest selling productoutselling not only the commodore, but is nudging the Cruze...it tells me that Ford are doing quite well...


Plenty of "blue blood dedication" to by fords other quality range of products if pick your carcass up of the ground and look at what they are offering...

not only that, if I am not mistaken they have been bettering their sales each month compared to this time last year?

Ford's imported cars are very good products, are world class and are always at the pointy end of the segments they compete in (dynamically Focus and Fiesta are benchmarks). As a Ford fan I can only see a positive out of this. I just hope this momentum continues into future products.

[The G6ET Spot]

Originally Posted by ESP

Economies of scale from Japan / Asia / USA / Europe still make it feasible to ship INTO Australia as it become one of the final legs in a much larger journey for a product that is mass produced globally.

Especially when shipping containers from asian countries is actually cheaper than transport interstate in this country.

Example being $900 transport cost for a 20' container from china.

[MethodX]

Make a limited run of falcons in thailand... (I know wishful thinking)

[Whitey-AMG]

Originally Posted by Nikked

Considering that ford are only 2500 units behind Toyota for sales leadership, and the Imported ranger is Fords highest selling productoutselling not only the commodore, but is nudging the Cruze...it tells me that Ford are doing quite well...


Plenty of "blue blood dedication" to by fords other quality range of products if pick your carcass up of the ground and look at what they are offering...

Ranger has a limited market and limited appeal. It won't exactly be selling in those numbers consistently here in Australia. The Mazda BT50 is the same car as well - right - so it also shares the same market - cannibalising the Ford product further. I wonder what the split there is - if the BT50 is actually selling better.

[nstg8a]

Canada is lhd yeah?

So its relevance to the Aussie market is ?

Fords all about maximising profits, its as simple as that.

They make more coin by not building cars here, there is no real other reason.

[zilo]

Just wait a little while longer...we hit 90 cents against the US dollar today.

we'll soon regain our place as the cheap place to manufacture which has a stable fully manipulable political/economic/free trade system to facilitate cheap imports to the US.

[jpd80]

What gets me is that two seconds after we sign a free trade deal with Thailand, they turn around and impose
legal taxes on imported vehicles based on capacity, 30% for 2.0 to 2.9 litres and 60% for 3.0 litres and above.

I wonder what would happen if we imposed similar import taxes on vehicles from countries who do that to us...

[nstg8a]

Originally Posted by jpd80

What gets me is that two seconds after we sign a free trade deal with Thailand, they turn around and impose
legal taxes on imported vehicles based on capacity, 30% for 2.0 to 2.9 litres and 60% for 3.0 litres and above.

I wonder what would happen if we imposed similar import taxes on vehicles from countries who do that to us...

Not to mention they changed insurance laws so anything imported is bucketloads more expensive to insure

[XP6]

Bend over Austraila and take it in the rear you backwater... that is what they are really saying!

Maybe Ford should be offering its aussie workers to relocate to where they think they are more important than us...

[malazn mafia]

Originally Posted by MethodX

Make a limited run of falcons in thailand... (I know wishful thinking)

Or move the factory to some remote place like Nhill, where land is worth next to nothing, and let the Laos, Khmer, etc refugees build em in LHD for 1/10th of the cost and still be grateful they have a job. Wishful thinking?...

[KIWI-1]

Originally Posted by MAD

Maybe Ford Aus should have run a special Taxi model ala. crown vic. to remove that "taxi" stigma.

Forgotten the Forte? Ford invented the new name because the GLi was a Taxi. Then they built a whole lotta yellow Forte Taxis.