The Ford said it will end its Australian manufacturing operations on October 2016. The chief executive Ford announced it in May and revealed the losses of A$141m after tax in the last year.
He told the press that decision because local manufacturing is being driven by more and more challenging market conditions. Australia has sales of 1.1 million new vehicles and customers have approach to more than 65 brands and 365 models and it has made Australia one of the most crowded automotive markets in this world, and strong currency makes it harder for domestic car companies to fight with inexpensive imports.
There are too many reasons behind Ford’s decision, but all comes back to money. The Ford Australian plants Broad meadows and Stamps have lost $583 million in the last two years over the last five years the company tried their best to overcome this lost and reduced the production from 209 vehicles to 148 cars per day but with Falcon sales going from 80,000 annually to less than 20,000 now, there was hope, a little hope. The sales rejection can be qualified to a number of things. Gasoline prices are high in Australia over the past decade and the Australian dollar has valued significantly. So this all led to a huge increase in competition with more than 65 brands and 365 models challenging each other in market. The sales chart has also ditched the big Holdens and Ford and Mazda3, Toyota Corolla and Hyundai i30 are now the rulers! This year, the Holden is ninth in sales and the Falcon is 37th.
The Ford while announcing the decision, made sure that it has discovered all the options to maintain local production including exports, improvements in production efficiency, new models, cost reductions and government’s back regarding it, but couldn’t find any viable solution. The Ford’s president and CEO told in a press conference “Given the fragmented marketplace and the low model volumes that result, we decided that manufacturing locally is no longer viable” He said costs and prices are double in Europe and four times double from those in Asia.
However, the CEO has ended the press conference positively by promising to release new versions of the Falcon, Territory and Ute for 2014 and he said he’ll expand the lineup by 30 percent.
The product development place and the employees and other corporate staff will keep their jobs. The Ford and Holden have gained more than $11.6 billion in taxpayer subsidies from the Australian government over the past ten years. Last year, Ford Australia received more than $100 million in funding from Ford Motor Company and the Australian government.
The Ford in Australia is an icon. People love this car so much and it has been on sale fro generations.
The decision will rattle the Australia and global car companies. The loss of manufacturing Ford is going to hurt the suppliers in Australia and could not good news for Holden and Toyota, however, everyone involved in the Ford Australia has three years to make a new plan!