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Ford to end Australia auto production
Source: The Wall Street Journal
5/22/13
Ford Motor Co. F -0.61%said it would stop producing cars in Australia in 2016, foreshadowing hefty job losses in a setback for a government that has invested heavily in propping up the country's automobile industry.
The U.S. company said it would end more than 90 years of car production in Australia in October 2016, resulting in 1,200 job losses. It cited unsustainably high business costs, with wages singled out as a particular concern.
."The business case simply didn't stack up," Ford Australia's Chief Executive Bob Graziano told reporters. "Our costs are double that of Europe and nearly four times Ford in Asia."
The auto maker said losses over the past five years totaled 600 million Australian dollars (US$581.1 million).
The move comes as Ford's Australian plants face intensifying competition for customers with cheaper and more fuel-efficient imports from Japan and elsewhere. General Motors Co.'s GM -0.89%Australian unit last month said it would cut 500 jobs—about 12% of its work force—citing pressure from the nation's strong currency.
The difficulties facing car makers are reflected across the nation's manufacturing industry, which is battling numerous pressures, not least a stubbornly strong Australian dollar that in recent years has made exports less competitive and driven up labor costs for overseas-based companies.
The decline in manufacturing is presenting a challenge for the government, which has been trying to shift the economy away from its reliance on the resources sector that has powered growth for the past decade.
Australia's auto industry employs close to 1 million people, some 50,000 of whom are involved in manufacturing, government figures show. About a million new vehicles are sold annually in the country, where some 65 brands and 365 models compete.
Ford said Thursday it would stop producing cars at Geelong and a facility in Broadmeadows, also in Victoria state, where it makes the Falcon, a sedan, and the Territory, a sport-utility vehicle, in October 2016.
Geelong is an hour's drive from Melbourne, a heartland for auto manufacturing and home to other big car plants run by Toyota Motor Corp. 7203.TO -5.13%and GM. It is also the kind of town Prime Minister Julia Gillard is relying on for support as her government prepares for a bruising defeat at an election only four months away.
Henry Fuller, a 50-year-old worker who assembles cars at the plant, said morale among Ford Australia's manufacturing work force had been dwindling for some years as the U.S. company underwent restructuring. A deal brokered by Ms. Gillard last year to extend manufacturing at Ford's plants through 2016 with the help of A$34 million in government funding wasn't enough to allay the company's fears.
In Geelong, home to around 200,000 residents, Ford has evolved into something more than a large local employer. For decades it has sponsored Geelong Football Club, among the most successful teams in Australian Rules Football, a popular sport.
"The mood around town is very flat," said Geelong's mayor, Keith Fagg.
Ford's exit isn't the area's only concern. Royal Dutch Shell PLC plans to sell its remaining Australian oil refinery, RDSB.LN -1.11%located in Geelong. It may convert it to a fuel terminal if it can't find a buyer, placing up to 450 jobs at risk.
Ford's problems aren't entirely reflected across Australia's car industry. Auto sales overall last year hit a record, fueled by rising sales of SUVs, according to the Federal Chamber of Automotive Industries, an industry group. Toyota, which topped sales in 2012, has said it's seeing growing demand for its Australia-built models in the Middle East and Southeast Asia.
Ford Australia will remain, maintaining about 1,500 staff in research and design, the company said. That's small comfort for Mr. Fuller and colleagues, who worry the market for their skills is shrinking.
"Ford isn't the only one laying people off," he said.
Source: The Wall Street Journal
5/22/13
Ford Motor Co. F -0.61%said it would stop producing cars in Australia in 2016, foreshadowing hefty job losses in a setback for a government that has invested heavily in propping up the country's automobile industry.
The U.S. company said it would end more than 90 years of car production in Australia in October 2016, resulting in 1,200 job losses. It cited unsustainably high business costs, with wages singled out as a particular concern.
."The business case simply didn't stack up," Ford Australia's Chief Executive Bob Graziano told reporters. "Our costs are double that of Europe and nearly four times Ford in Asia."
The auto maker said losses over the past five years totaled 600 million Australian dollars (US$581.1 million).
The move comes as Ford's Australian plants face intensifying competition for customers with cheaper and more fuel-efficient imports from Japan and elsewhere. General Motors Co.'s GM -0.89%Australian unit last month said it would cut 500 jobs—about 12% of its work force—citing pressure from the nation's strong currency.
The difficulties facing car makers are reflected across the nation's manufacturing industry, which is battling numerous pressures, not least a stubbornly strong Australian dollar that in recent years has made exports less competitive and driven up labor costs for overseas-based companies.
The decline in manufacturing is presenting a challenge for the government, which has been trying to shift the economy away from its reliance on the resources sector that has powered growth for the past decade.
Australia's auto industry employs close to 1 million people, some 50,000 of whom are involved in manufacturing, government figures show. About a million new vehicles are sold annually in the country, where some 65 brands and 365 models compete.
Ford said Thursday it would stop producing cars at Geelong and a facility in Broadmeadows, also in Victoria state, where it makes the Falcon, a sedan, and the Territory, a sport-utility vehicle, in October 2016.
Geelong is an hour's drive from Melbourne, a heartland for auto manufacturing and home to other big car plants run by Toyota Motor Corp. 7203.TO -5.13%and GM. It is also the kind of town Prime Minister Julia Gillard is relying on for support as her government prepares for a bruising defeat at an election only four months away.
Henry Fuller, a 50-year-old worker who assembles cars at the plant, said morale among Ford Australia's manufacturing work force had been dwindling for some years as the U.S. company underwent restructuring. A deal brokered by Ms. Gillard last year to extend manufacturing at Ford's plants through 2016 with the help of A$34 million in government funding wasn't enough to allay the company's fears.
In Geelong, home to around 200,000 residents, Ford has evolved into something more than a large local employer. For decades it has sponsored Geelong Football Club, among the most successful teams in Australian Rules Football, a popular sport.
"The mood around town is very flat," said Geelong's mayor, Keith Fagg.
Ford's exit isn't the area's only concern. Royal Dutch Shell PLC plans to sell its remaining Australian oil refinery, RDSB.LN -1.11%located in Geelong. It may convert it to a fuel terminal if it can't find a buyer, placing up to 450 jobs at risk.
Ford's problems aren't entirely reflected across Australia's car industry. Auto sales overall last year hit a record, fueled by rising sales of SUVs, according to the Federal Chamber of Automotive Industries, an industry group. Toyota, which topped sales in 2012, has said it's seeing growing demand for its Australia-built models in the Middle East and Southeast Asia.
Ford Australia will remain, maintaining about 1,500 staff in research and design, the company said. That's small comfort for Mr. Fuller and colleagues, who worry the market for their skills is shrinking.
"Ford isn't the only one laying people off," he said.