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.........

[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.

[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..

[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.

[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.

[Buntz]

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.........

You've hit the nail right on the head. Firstly, our governments have let the competition of car sales run wild, and hurt our local product. Then you have idiots like Joe Hockey saying that no one wants the current cars Australia builds. When in actual fact there are so many cars to choose from, every niche can be explored. And price-wise, Aussie built can't match prices from low cost countries.

But you've also nailed it GT on Ford's future here. We've seen them bring their great products from abroad, some which are consistently the best in class, yet fail to sell in the same volume of lesser cars. Ford is failing here as importer as well. And ending local manufacturing, cutting jobs, and the iconic Falcon... will only add speed to their current downward spiral.

I could care less about the Ford brand any more. I wish all the best to Holden and Toyota.

[imugli]

Originally Posted by Buntz

You've hit the nail right on the head. Firstly, our governments have let the competition of car sales run wild, and hurt our local product. Then you have idiots like Joe Hockey saying that no one wants the current cars Australia builds. When in actual fact there are so many cars to choose from, every niche can be explored. And price-wise, Aussie built can't match prices from low cost countries.

But you've also nailed it GT on Ford's future here. We've seen them bring their great products from abroad, some which are consistently the best in class, yet fail to sell in the same volume of lesser cars. Ford is failing here as importer as well. And ending local manufacturing, cutting jobs, and the iconic Falcon... will only add speed to their current downward spiral.

I could care less about the Ford brand any more. I wish all the best to Holden and Toyota.

They have already said (as have both Holden AND Toyota) that their import operation is profitable.

Focus sales this year are up 13% - Small cars in terms of market share are up by 1.78%.
Ranger is up close to 80%, while the segment is up 22%.
Modeo is down due to supply (the factory was on strike) and Fiesta is down but has just been updated.
Ford overall is UP 1.4% in a market where Toyota are DOWN 1.1% and Holden are DOWN 9.8%.
Falcon is down 28%, while Terry is up, but only by .7%.
New Kuga has just been launched, EcoSport is on the way, as are new Mondeo (eventually), Mustang, 7 seat Ranger SUV and another vehicle with Territory badging.

Profitable on an import only basis, Import sales increasing and new or updated models just launched or coming over next couple of years that will fill most if not all of the gaps in FoA's lineup.

Explain to me again why FoA are failing as an importer?

If you ask me, FoAs problem WAS the Falcon. It was seen as old hat and I think this carried through to peoples' perception of the Ford brand here. The Falcon WAS Ford to many people and this was costing FoA sales in other segments. Now it will have a lineup of vehicles that are cost competitive, with all the mod-cons expected in a vehicle (which Falcon has not) and for the most part, designed and engineered in Australia or Europe.

IMO the Falcon was a noose around FoAs neck for far too long and getting rid of it will propel them forward to far better sales in segments that are actually relevant these days.

[Buntz]

Originally Posted by imugli

They have already said (as have both Holden AND Toyota) that their import operation is profitable.

Focus sales this year are up 13% - Small cars in terms of market share are up by 1.78%.
Ranger is up close to 80%, while the segment is up 22%.
Modeo is down due to supply (the factory was on strike) and Fiesta is down but has just been updated.
Ford overall is UP 1.4% in a market where Toyota are DOWN 1.1% and Holden are DOWN 9.8%.
Falcon is down 28%, while Terry is up, but only by .7%.
New Kuga has just been launched, EcoSport is on the way, as are new Mondeo (eventually), Mustang, 7 seat Ranger SUV and another vehicle with Territory badging.

Profitable on an import only basis, Import sales increasing and new or updated models just launched or coming over next couple of years that will fill most if not all of the gaps in FoA's lineup.

Explain to me again why FoA are failing as an importer?

If you ask me, FoAs problem WAS the Falcon. It was seen as old hat and I think this carried through to peoples' perception of the Ford brand here. The Falcon WAS Ford to many people and this was costing FoA sales in other segments. Now it will have a lineup of vehicles that are cost competitive, with all the mod-cons expected in a vehicle (which Falcon has not) and for the most part, designed and engineered in Australia or Europe.

IMO the Falcon was a noose around FoAs neck for far too long and getting rid of it will propel them forward to far better sales in segments that are actually relevant these days.

Whoopty doo, 1.4%. A market fluctuation, and suddenly it's a revelation. And now the Falcon was the thing holding back Ford of Australia all this time. Well I've heard everything. Ford of Australia has always and only been the problem of Ford of Australia. That and the rubbish from Dearborn.

The reason why The Falcon never had all the mod cons of the other models is because Ford continually knocked back the car for global integration... at a time when it was competitive.

Pull your head out of your ****.

[imugli]

Originally Posted by Buntz

Whoopty doo, 1.4%. A market fluctuation, and suddenly it's a revelation. And now the Falcon was the thing holding back Ford of Australia all this time. Well I've heard everything. Ford of Australia has always and only been the problem of Ford of Australia. That and the rubbish from Dearborn.

The reason why The Falcon never had all the mod cons of the other models is because Ford continually knocked back the car for global integration... at a time when it was competitive.

Pull your head out of your ****.

The 1.4% was to demonstrate that Ford as a brand in the entire marketplace is doing better than Holden and Toyota, and that given Falcon is down and Territory is flat, that rise is in fact due to the rise in sales of its imported vehicles (as without them rising, FoA sales would be down as well), making the statement that FoA is failing as an importer hard to back up.

You have said in other threads that you are a Falcon man more than a ford man, so I can see why you would want to defend the Falcon, why you'd be upset about the end of the Falcon, why you've been pretty negative about the whole thing in other threads and why you're now telling me to get my head out of my **** after telling at least one other person who disagrees with you to get theirs out of the sand.

We have differing opinions, that's fine. It seems some of us can express those without resorting to personal insults, while you are obviously unable to.

[UberKnee]

Originally Posted by Buntz

Whoopty doo, 1.4%. A market fluctuation, and suddenly it's a revelation. And now the Falcon was the thing holding back Ford of Australia all this time. Well I've heard everything. Ford of Australia has always and only been the problem of Ford of Australia. That and the rubbish from Dearborn.

The reason why The Falcon never had all the mod cons of the other models is because Ford continually knocked back the car for global integration... at a time when it was competitive.

Pull your head out of your ****.

Its still good for Ford to have had growth while Toyota and Hoden sold less than previous. It costs a ****ton of money invested as well to go with all the fancy tech. Imports have it because they're in cars sold globally and built in huge numbers. An Aussie only car sold in a country where the journalists have shunned Ford is a tough prospect to pour billions in investment into. With all of Holdens spin and export they're still crying poor because of the money they've had to invest in the VE and VF.

[I6DOHC]

Originally Posted by imugli

If you ask me, FoAs problem WAS the Falcon. It was seen as old hat and I think this carried through to peoples' perception of the Ford brand here.

Probably some truth to this, and the fact with humans there is a tendency to think the grass is greener elsewhere so many who were used to getting falcons sampled other brands. All's the pity, as the falcon is still a killer all-round package but there hasn't been too much effort of late to sell/promote that aspect of it. Sure you can argue it's a dying segment, but without the v8's and wagons in the range the target markets have shrunk. The mid-sizers aren't exactly volume sellers either (ie mondeo sells less than falcon) so there lies the conundrum.

In any case the market segmentation that has been caused due to destructive policies of successive governments has killed off any hope for a viable local car manufacturing industry, as no one single model line is selling in numbers to sustain the factories. Perhaps if the Aussie factories could have put out the Ranger platform alongside falcon/territory/mustang coupled with the US allowing exports there would have been hope, but Ford NA's first priority is always going to be to ensure viability of their local factories.

It's just sad to see this company, that was incorporated in 1925 (in Australia) pull out of manufacturing in this way, because they do a bloody good job of it. They have been building something (in FG & territory) that all Australians should be proud of (although there doesn't seem to be too many left) and it's something that not that many other nations can do. Be the greatest shame of a generation when the other local car makers inevitably shut up shop.

[Buntz]

Originally Posted by I6DOHC

Probably some truth to this, and the fact with humans there is a tendency to think the grass is greener elsewhere so many who were used to getting falcons sampled other brands. All's the pity, as the falcon is still a killer all-round package but there hasn't been too much effort of late to sell/promote that aspect of it. Sure you can argue it's a dying segment, but without the v8's and wagons in the range the target markets have shrunk. The mid-sizers aren't exactly volume sellers either (ie mondeo sells less than falcon) so there lies the conundrum.

In any case the market segmentation that has been caused due to destructive policies of successive governments has killed off any hope for a viable local car manufacturing industry, as no one single model line is selling in numbers to sustain the factories. Perhaps if the Aussie factories could have put out the Ranger platform alongside falcon/territory/mustang coupled with the US allowing exports there would have been hope, but Ford NA's first priority is always going to be to ensure viability of their local factories.

It's just sad to see this company, that was incorporated in 1925 (in Australia) pull out of manufacturing in this way, because they do a bloody good job of it. They have been building something (in FG & territory) that all Australians should be proud of (although there doesn't seem to be too many left) and it's something that not that many other nations can do. Be the greatest shame of a generation when the other local car makers inevitably shut up shop.

Very well put old bean.

[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.

[landau460]

Originally Posted by 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.

Better let toyota know about the low volume sales here in australia, the large shipping costs over seas there building massive plant down in Vic to manufacture aurion camry plus hybrid engine! ...........
O yeah they have already done that they must have made a mistake. A company that big wouldn't make mistakes!

[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.

[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.

[MAD]

Originally Posted by KIWI-1

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

I put that one down to them not wanting to advertise an AU-Gli (Ugly)

[4.0i OHC]

Originally Posted by KIWI-1

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

And then they changed the name to XT because Forte became a taxi, and stopped building taxis a few months later.

[jpd80]

And then they found fleets wouldn't by XT so they started selling discounted XR6s and destroyed the status of that model.

[KIWI-1]

Originally Posted by jpd80

And then they found fleets wouldn't by XT so they started selling discounted XR6s and destroyed the status of that model.

+1
Wife was a regular renter through interstate work and always "upgraded" to an XR6. They probably made more $$$ charging renters for scraping the front spoiler than did for renting the car.

[4.0i OHC]

Originally Posted by jpd80

And then they found fleets wouldn't by XT so they started selling discounted XR6s and destroyed the status of that model.

That happened when BA came out and the XR6 was an XT with a body kit, suspension mods, and different colours. What happened to the old AU days when fleets would all buy Futuras?

[T-Pak Addict]

Originally Posted by 4.0i OHC

And then they changed the name to XT because Forte became a taxi, and stopped building taxis a few months later.

then a some XT's became X Taxi's,,,,