Ford Australia manufacturing not dead

Contrary to widespread speculation from parts suppliers and industry analysts, Ford has not made a decision to close the Broadmeadows and Geelong factories after 2016.

This is the first time a senior Ford executive has indicated there is still a chance for the struggling Australian manufacturing operations.

But the future remains unclear as Ford keeps its plans secret. Ford’s newly appointed chief operating officer Mark Field told News Limited at the Los Angeles Motor Show overnight that a decision to close the factories has not been made.

“We’ve made the investments in Broadmeadows that take us to 2016, and we’re in the process of looking at our plans and understanding what we can do going forward,” Fields said.

“That’s all we can share at this point. Beyond 2016, in the next couple of years we’ve got to make those decisions because of the [manufacturing] lead times.”

When asked specifically if Ford had made a decision to shutter or retain the local factories, Fields answered “no”. Some suppliers believe there is no future for Ford Australia’s manufacturing operations beyond 2016 because they are yet to be asked to pitch for contract work.

But Ford says vehicle development times are getting shorter, which means it has until 2014 before it needs to lock-in suppliers. Raj Nair, Ford’s group vice president in charge of global product development, told News Limited: “There’s nothing firm, as in ‘this is the year we’re out or this is the year we need to make a decision’. It’s a constant evolution of a discussion.

“Clearly [Australia] is a tough environment and the actions we need to take to maintain competitiveness will always be a focus for us. But right now it’s full steam ahead with the work we’ve got going for Ford Australia, including the product line-up we want to offer.”

Ford has had seven straight years of sales decline in Australia, demand for the Falcon is at record lows and Broadmeadows is on track to produce its lowest annual output ever, just 33,000 cars.

All this as Australia is about to post all-time-high new-car sales of close to 1.1 million. But Nair says there are other factories in the Ford world that produce fewer than 33,000 cars a year.

“I don’t have a specific number, but we do have factories that are lower than that,” Nair told News Limited, adding that low output alone was not a reason to close a factory.

“It’s a matter of matching capacity to demand and running it as efficiently as you can,” he said. “We don’t get into specific details of viability of any specific factories. [But] we always balance the advantage of local production with importing on every product.”

It has been widely speculated that, eventually, the Falcon sedan and Territory SUV will be replaced by their North American cousins – the Taurus and Explorer – because it would be cheaper to import these models than produce similar cars locally.

But Ford has not confirmed that -- or what else it might build at Broadmeadows beyond 2016. In 2007, Ford announced it would build the Focus small car in Australia alongside the Falcon and Territory.

But it axed those plans two years later, almost to the day, and shifted production to Thailand, a low-wage country that has a free trade agreement with Australia. The only other vehicle markets in Australia that could support the volumes required for local manufacturing are pick-ups and SUVs.

Ford had also considered building the Ranger ute and its seven-seater SUV sibling in Australia. But after thorough analysis Nair said building the Ranger in Thailand instead of Australia “absolutely made sense, just as it made sense to put the [four-cylinder] Ecoboost engine in the Falcon”.

When asked what other cars Ford Australia could build in lieu of the Falcon and Territory, Nair said: “We’re not going to give any hints about connecting the dots on our [product] cycle plan [but] Australia is an important engineering centre and manufacturing centre”.

In January this year Ford Australia announced it would invest $103 million to update the Falcon and Territory in 2014, after receiving $34 million from the Federal Government and an undisclosed amount from the Victorian Government (believed to be $19 million) to keep its Broadmeadows and Geelong operations running until the end of 2016.

But the taxpayer assistance didn't extend to job guarantees. Ford has had two redundancy programs over the past two years, axing 330 factory-worker jobs earlier this month and 240 in April 2011.