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Ford Closing Two Plants in Australia

Ford Motor Co., the popular automobile manufacturing firm announced Thursday, May 23, that it will be closing down two plants in Australia and will be shutting down all production in the country by Oct. 2016 due to constant accumulated losses.

According to Reuters, the company said that it will be pulling the shutters on its manufacturing plant in Geelong and assembly plant in Broadmeadows as costs have multiplied over the past five years. In the financial year 2012-13, the company accounted a loss of $141 million. Sales of the domestically made cars have also remained low. Moreover, the high export rates have crippled the manufacturing sector.

"Our costs are double that of Europe and nearly four times Ford in Asia. The business case simply did not stack up, leading us to the conclusion [that] manufacturing is not viable for Ford in Australia in the long-term," Bob Graziano, President of Ford, said in a statement.

He added that they had tried to restructure the business by sketching out sustainable and profitable alternatives, but in vain. The company tried out various improvising measures like introducing environment friendly engines, upgrading car efficiency and also poured in a lot of investment to remain afloat. However, the steps didn't work.

"Despite these efforts, our locally-made products continue to be unprofitable while our imported products are profitable. In the search to improve scale and competitiveness, we explored what export opportunities might be available to us. But we are still faced with the fact our cost structure in Australia remained uncompetitive," he said.

With the closure of its production plants, Ford's Falcon Brand will also retire. The XA Falcon was the first all-Australian designed Ford car, which was introduced in 1972. The Falcon brand has been the baby of the Australian manufacturing units since then.

Australian car sales have plummeted in the recent past. Holden Commodore, which topped sales charts for the past 15 years, has also reported record low sales. The low demand has been attributed to the strong Australian Dollar, which has bogged down the manufacturing sector.

Experts believe that the closure of Ford will not only affect the automobile industry but will also trigger ripples in the operation of ancillaries like parts suppliers and manufacturers.

Around 1200 employees, of which almost 800 work at the Geelong plant, will lose their jobs. The employees are devastated and in a state of shock. The government has announced a $39 million rescue package for the dismissed workers.

However, Ford said that it will continue to hire people for its research and development unit and its dealership outlets as well.


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