Car industry prepares for Ford Australia exit

[BroadyFord]

Very grim article which all but confirms our worst fears.

http://bit.ly/OvXytO

(sending link via iPhone so please let me know if link doesn't work and I'll post again later).

[Wretched]

Yep just heard about it on ABC.
A Ford employee had mentioned that Ford plans to move production overseas, that each quarter staff from other regions come over to be trained up on processes.

Interesting.

[BroadyFord]

I think we should all accept the fact that the once unthinkable is happening/will happen.

[EASYBOSS]

From the link


Peter Roberts

Companies and advisers involved in the car industry have begun talking openly about Ford, the No. 3 car maker, quitting local production in 2016.

Ford’s demise is seen as inevitable and suppliers are starting to factor it into business plans that are increasingly focused on product and *geographical diversification.

The company recently slashed *production to about 33,000 cars a year and laid off 440 workers.

A partner with PPB Advisory, Stephen Longley, who has acted as receiver to numerous faltering car parts suppliers, yesterday became the first to mention the unthinkable when he said Ford was finished as a local manufacturer. “It’s the elephant in the room, it is just not talked about openly,” Mr Longley said.

“The components industry is saying it is a foregone conclusion.”

Writing exclusively in The Australian Financial Review today, economist and former Reserve Bank of *Australia board member Warwick McKibbin warns that the high dollar, the carbon tax and high labour costs are driving rapid adjustment pressures on manufacturing that require Productivity Commission scrutiny. “Sectors that have rigid labour costs such as the automotive industry find it difficult to adapt,” he writes.

Mr Longley, who is receiver for APV Automotive Components, said components makers should be *working with Ford on a new model for 2016 but this was not occurring.

He was joined by components *makers which either have written Ford off or who talked openly about life without Ford.

Ford recently received $34 million from the federal government and further cash from Victoria to continue making the Falcon and Territory in Melbourne. However, sales have plunged to such a low level that few believe Ford can justify new investment, even with government help.

Director of automotive and defence manufacturer Abcor Group, James Kaias, said his peers in the components sector believed Ford would close as the Falcon came to the end of its life.

“They are going to be closing within two to three years,” said Mr Kaias. “That is the consensus. I think it is pretty obvious.”

Ford is one of three remaining car makers in Australia after Nissan left in the early 1990s and Mitsubishi ended local production in 2008.

A spokesman for industry minister Greg Combet declined to respond to “speculation”. “However, it is important to note that the government’s $5.4 billion New Car Plan will provide support for the automotive industry out to 2020, including through the Automotive Transformation Scheme, which supports production of motor vehicles and engines and for investment in R&D, plant and equipment,” the spokesman said.

A Ford spokesman said the company faced challenges over the next four years. “Ford Australia has been consistent in saying that the actions we’re taking to ‘right-size’ our business and be as efficient as possible . . . will ensure continued relevance for our local vehicles. We will use that time to develop our business case.”

Even Ford’s own suppliers are canvassing a future without the company and speeding up restructuring and diversification. The managing director of Axion Precision Engineers, Jim Grose, said more suppliers would go to the wall if Ford closed.

He supplies parts to both Ford and Ford performance vehicles. “A lot of companies don’t know how they are going to survive,” Mr Grose said. “Things are going to get tighter and tighter. You need a certain level of turnover to make your company viable.”

Receivers McGrathNicol this week announced CMI Industrial would close two components plants with the loss of 119 jobs.

Diver Consolidated Industries chief executive Jim Griffin said he was rapidly restructuring his business after winning contracts to provide automotive heat shields to BMW. “But not everyone can do it,” he said. “You need to have enough working capital.”

PPB’s Mr Longley suggested the federal government could modify a scheme that guarantees employee redundancy benefits after companies collapse. Funding before collapse could be used for restructuring that would save jobs and businesses.

Economist Nicholas Gruen, who helped write the government’s original car plan, said Ford was doing a “Mitsubishi shuffle”.

“Their global parents are not really thinking of their Australian operations as any important part of their global strategy,” he said.

With the latest cutbacks, Ford production is 148 cars a day – about twice Mitsubishi’s before it closed.

In Mitsubishi’s final days, South Australian government funds came with the promise they would be paid back if the company closed. However, it is understood no guarantee was obtained by the federal or Victorian government when they last backed Ford.


The Australian Financial Review

[KIWI-1]

A great chance for FoA to return to profitability. Let's hope they are smart enough to dish up quality imports and preserve the brand.

[aussie muscle]

i hope sales of the fully-imported Falcon meet with expectations, if that is the next step.

[Rodge]

I recently viewed a CNBC report on Thailand car production. Skilled workers there the earning the equilivent of $U.S2.00 hour.

[csv8]

Thats sad to hear..but Holden's VF will be the last also..Aussie car manufacturers have treated us like sheep.While imports have offered us vehicles with higher specifications for the same or lesser money..the new 300C is much better specified than the G6E for same price. Fiesta/Focus/Mondeo are well specced..Shame Ford never upped the specification level of the Falcon, over the years. Giving us token equipment up grades. Look at what the Taurus has to the Falcon is a case in point..bye bye Falcon, thanks for the miles over the years..

[big_landau]

quote
"I recently viewed a CNBC report on Thailand car production. Skilled workers there the earning the equilivent of $U.S2.00 hour"

thats where the problem is.

[Road_Warrior]

Everyone is of course assuming that Ford Australia's manufacturing future here is utterly dependent on the Falcon and Territory. It's not called Falcon Motor Company...

[Polyal]

Originally Posted by Road_Warrior

Everyone is of course assuming that Ford Australia's manufacturing future here is utterly dependent on the Falcon and Territory. It's not called Falcon Motor Company...

People are also assuming that Fords Engineer sector is safe too.

Perhaps there is a reason why they only hire 6/12 month contract basis now.

Its really sad and I give kudos to GM for atleast giving the Commodore a fighting chance by attempting to integrate it with there global plans. For x,y and z reasons Ford NA from the outside seem to have not made much effort.

Id be interested to hear what Mullaly has to say, they have all been very quite on the topic and when they do spit something out its very cliche.

This is a bitter pill for Ford fans...there is nothing really slated for work past 2016 with anything really. Its utter BS when the better product in the market isnt reaching the people, we know it, the press knows it (but wont openly state it)...WTF.

[KIWI-1]

Originally Posted by Road_Warrior

Everyone is of course assuming that Ford Australia's manufacturing future here is utterly dependent on the Falcon and Territory. It's not called Falcon Motor Company...

Many in the industry have called it that for years.

Biggest problem with imports is the stuff that gets stripped out of the Australian version... like $5 metal beams behind the bumper.

[Polyal]

BTW BroadyFord is it just me or are the majority your post typically about Ford dying?

Suppliers have been diversifying for years now..and those who haven't lack foresight.

[J.Molloy]

Guess it has been coming for a while but sad news to hear none the less,
Gotta feel for all the workers that are going to get laid off.

[XWGT]

Interesting part of the article is where it says current supliers are not engaged in any activities to design the new model.

I'm not sure if that would be a tad premature in the design phase but if its correct and nothing is happening then thats an ominous sign.

[Polyal]

Originally Posted by XWGT

Interesting part of the article is where it says current supliers are not engaged in any activities to design the new model.

I'm not sure if that would be a tad premature in the design phase but if its correct and nothing is happening then thats an ominous sign.

A post 2016 falcon technically should have started development in 2011/12...with parts being made say about 2013/2014.....so not all is lost but if there is no word then yeah I agree, its not flash.

[Yellow_Festiva]

Originally Posted by big_landau

quote
"I recently viewed a CNBC report on Thailand car production. Skilled workers there the earning the equilivent of $U.S2.00 hour"

thats where the problem is.

And if business were to make a profit, how can you compete with that?? Pay workers here $XX per hour with all government BS, unions and the benefits to the worker, or pay a person 1/10 that wage... The person who earns less knows that if they don't perform they don't eat...

Would the workers in Thailand be in a union?? Do they have anywhere near the entitlements we have?? Probably not? Don't know. Wonder who has more 'sick' days???

I hate the fact that local workers will be getting the boot. The problem is, with so much easy to access cheap labour if it isn't done now it will be done when times are worse..

Will the red team follow?? How many tens of thousands of people all the way up the line will be out of a job??

Not looking good.....

[BroadyFord]

Originally Posted by Road_Warrior

Everyone is of course assuming that Ford Australia's manufacturing future here is utterly dependent on the Falcon and Territory. It's not called Falcon Motor Company...

The Falcon is dead - that's an undisputed fact. The problem is that Ford have not said a word about manufacturing ANYTHING in Australia after 2016.

It all adds up:

1. Ford have not committed to Australian manufacturing beyond the current Falcon while both Holden and Toyota have (and their current models end AFTER Falcon).

2. Ford change the subject whenever they're asked about post-2016.

3. Ford have stopped advertising its Australian-made cars (why would they do that?)

4. Ford does not/will not engage in an export program.

5. And most tellingly, Ford have only committed to sponsoring the Geelong Cats until 2016!

[Geez Louise]

You know, today 30th July, is the anniversary of the birth of the great man himself...Mr Henry Ford. To have his name and brand live on for this long is an achievement that many can only dream to achieve.

I personally hope that the future will bring a change of events and that the brand and great cars live on...

Cheers
Col

[Cúl-Báire]

Originally Posted by big_landau

quote
"I recently viewed a CNBC report on Thailand car production. Skilled workers there the earning the equilivent of $U.S2.00 hour"

thats where the problem is.

Personally I think it's all relative; and I believe real problem is the high cost of wages / cost of living in this country and the subsequent effects on material and manufacturing prices.

[Road_Warrior]

Originally Posted by Polyal

People are also assuming that Fords Engineer sector is safe too.

Perhaps there is a reason why they only hire 6/12 month contract basis now.

Its really sad and I give kudos to GM for atleast giving the Commodore a fighting chance by attempting to integrate it with there global plans. For x,y and z reasons Ford NA from the outside seem to have not made much effort.

Id be interested to hear what Mullaly has to say, they have all been very quite on the topic and when they do spit something out its very cliche.

This is a bitter pill for Ford fans...there is nothing really slated for work past 2016 with anything really.

Originally Posted by KIWI-1

Many in the industry have called it that for years.

Biggest problem with imports is the stuff that gets stripped out of the Australian version... like $5 metal beams behind the bumper.

At the risk of sounding like a smartass, Ford (as a global concern) has bigger issues to worry about at the moment than a ****ant little car making operation at the bottom of the Pacific. Like sorting out Ford Europe's mess for starters - the Australian motoring press think Ford Australia is in dire straits - they need to look outside our little goldfish bowl and take a look at what is going on in Europe - there is some painful restructuring ahead for Ford Europe, and it has to happen if the operation is to remain a going concern. Kinda like what is happening here at the moment.

I don't think we are too far off from hearing about Ford's global large car strategy. Now that they've got all their ducks in a row insofar as global small cars, Fiesta, Focus etc and now Fusion/Mondeo, the large car is next. Whilst it is true that the large car segment has shrunk to a shadow of its former self, Ford has identified that it is still an important sector in the APA region as well as globally, and they have determined it is a sector they want to be involved in. Ford Australia is involved in this...to what extent, remains to be seen. There is also the other matter of some testing and production processes of FoA being aligned with Ford of Europe for some strange reason...

[Rodge]

Originally Posted by csv8

Thats sad to hear..but Holden's VF will be the last also..Aussie car manufacturers have treated us like sheep.While imports have offered us vehicles with higher specifications for the same or lesser money..the new 300C is much better specified than the G6E for same price. Fiesta/Focus/Mondeo are well specced..Shame Ford never upped the specification level of the Falcon, over the years. Giving us token equipment up grades. Look at what the Taurus has to the Falcon is a case in point..bye bye Falcon, thanks for the miles over the years..

This is one of the key reasons its not selling and you're absolutly correct the 300 Chrysler equipment level's make a mokery of what's in the Falcon and FPV product. The time for excuses is over and the time for serious amounts of new equipment and technology in the Falcon and FPV product is NOW.

[Polyal]

Road Warrior I dont disagree, and the only thing that keeps my hope alive is the fact we have the proving ground and other associated bits that received some $$. How could you bail on that and who the heck would buy it?

A GWRD platform makes sense on so many levels but even if that goes ahead what role will be play? Im tipping a pretty small one...the dollar is already effecting the viability of FoA to do work here compared to other regions.

Ive also heard some disturbing news regarding China and the role perhaps they can play in the region. Imagine if Ford NA decided to do everything there?

[Road_Warrior]

Originally Posted by XWGT

Interesting part of the article is where it says current supliers are not engaged in any activities to design the new model.

I'm not sure if that would be a tad premature in the design phase but if its correct and nothing is happening then thats an ominous sign.

A lot of parts supply has gone to global suppliers so they can tap into the economies of scale of huge production volumes.

But, with virtual design and build they can turn an entirely new car around in under 4 years, especially when you have 2 design bureaus in different time zones effectively working on it around the clock (ie Dearborn and Broadmeadows). So design and development of parts doesnt necessarily have to be occuring yet.

[Road_Warrior]

Originally Posted by Polyal

Road Warrior I dont disagree, and the only thing that keeps my hope alive is the fact we have the proving ground and other associated bits that received some $$. How could you bail on that and who the heck would buy it?

A GWRD platform makes sense on so many levels but even if that goes ahead what role will be play? Im tipping a pretty small one...the dollar is already effecting the viability of FoA to do work here compared to other regions.

Ive also heard some disturbing news regarding China and the role perhaps they can play in the region. Imagine if Ford NA decided to do everything there?

Mate, forget China.

But yes, product development and the proving ground has had millions spent on it in recent years, and are crucial to ongoing product development. T6/Ranger being a classic example. However it doesnt necessarily mean that it needs manufacturing to go along with it (like peas in a pod so to speak) as one can exist in isolation from the other. I'm not saying that is how it is going to be, but it's important to realise that they are separate business units.

[Polyal]

Hmm we have very different information sources then. I certainly understand that they are different, and heck even if GWRD goes ahead I still doubt they will be bolted together here...why would you?

They developed T6 without the plants help AFAIK.

We will review the China thing soon enough I guess.

[Road_Warrior]

Originally Posted by Polyal

Hmm we have very different information sources then. I certainly understand that they are different, and heck even if GWRD goes ahead I still doubt they will be bolted together here...why would you?

They developed T6 without the plants help AFAIK.

We will review the China thing soon enough I guess.

PM sent

[blackf6]

[QUOTE=Yellow_Festiva]And if business were to make a profit, how can you compete with that?? Pay workers here $XX per hour with all government BS, unions and the benefits to the worker, or pay a person 1/10 that wage... The person who earns less knows that if they don't perform they don't eat...

Would the workers in Thailand be in a union?? Do they have anywhere near the entitlements we have?? Probably not? Don't know. Wonder who has more 'sick' days???

I hate the fact that local workers will be getting the boot. The problem is, with so much easy to access cheap labour if it isn't done now it will be done when times are worse..

Will the red team follow?? How many tens of thousands of people all the way up the line will be out of a job??
Will the red team follow. It is my understanding that holden has many of it's vehicles built in Korea by Daewoo and has for years, good old Aussie Holdens (not).

[Maka]

My heart goes out to the existing Ford Oz workers whose jobs are under threat, i pray it all works out for you, you worked your backside off so Australia can have a world class big car. The powers to be let you down because they couldnt find a solution to the problems all manufacturers in Australia face today.

Since the issue with building cars/manufacturing in Australia is wages, unions, carbon tax and a high Australian dollar my vision would be to get some of those new boat arrivals and train them up, pay them $20 a day and put them on a 3 year contract with limited workers rights and when the contract is up they can become a Aussie citizen with full rights!

Win win i reckon! Dont worry about exploitation, Dont worry about human rights- well thats how they do it in Asia aint it? Fair trade practise? If Asia is allowed to do it why not us? Its about competing on a level playing field-somehow!




cheers,Maka

[johnydep]

Originally Posted by big_landau

quote
"I recently viewed a CNBC report on Thailand car production. Skilled workers there the earning the equilivent of $U.S2.00 hour"

thats where the problem is.

No, it's not.

There is no way that we can compete against cheep labour, nor should we. Our competitiveness is being killed by high material costs; electricity, fuel, metals, etc. All attributable to a greedy and inefficient taxation system, with multiple layers - Council, State and Federal.

Productivity is low, infrastructure is poor. Our wages are linked to productivity; how do workers travel to work? How long does it take? What is the cost of housing? What is the cost of health, etc.

Australia can compete with countries that have cheap labour, we just need to change things so that our production materials are cheaper, our land and buildings are cheaper, transport is faster, etc.