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Ford will shut factory doors in 2016


Ford will close its manufacturing operations in Australia and nearly 1200 workers will lose their jobs in October 2016 despite receiving $1.1 billion in taxpayer funding over the past decade.

The company says it will remain in Australia selling imported cars, just as Mitsubishi did when it shut its Adelaide car factory in 2008. The announcement will leave Toyota and Holden as the two remaining car manufacturers in Australia.

The president and CEO of Ford Australia Bob Graziano told media this morning that the company would shut the Geelong engine factory and Broadmeadows car assembly line in October 2016.

“We don’t take these decisions lightly. We looked for every opportunity but … manufacturing in Australia is not viable for Ford in the long term,” he said, adding that manufacturing costs in Australia are double what they are in Europe and three times higher than in Asia.

“We came to this conclusion only after exhausting all other alternatives. We did not leave any stone unturned. The business case did not add up.”

The three-year warning is unusually long given that car makers typically keep such announcements secret so as to not adversely affect sales in the interim. Mitsubishi gave just seven weeks notice before it shut its Adelaide factory in 2008.

“We are making this commitment now … to allow for an orderly transition for our employees, the supply base and the broader automotive industry,” Graziano said.

Ford says updated versions of the Falcon sedan and Territory SUV scheduled to arrive next year will go ahead as planned.

The car maker said it intends to retain its design and engineering centre in Broadmeadows, which has about 1100 employees working on global Ford cars.

Ford will also increase its imported model line-up in Australia by 30 per cent over the next three years.

Ford Falcon sales have fallen to their lowest since the Broadmeadows factory opened in 1960, and Ford’s overall sales in Australia last year were lower than they were 20 years ago.

The impact on suppliers is expected to initially be limited given that Ford’s local production had fallen to record lows in recent years and Toyota and Holden are expecting production increases in the next six months.

Holden has planned to increase production in anticipation of renewed interest in the new Commodore on sale next month, and Toyota has hired 140 factory extra workers on a six-month contract in response to increased demand for the locally-made Camry sedan in the Middle East.

The Ford factory closure announcement was made as Holden held the media launch for the new Commodore in Canberra and most of the nation’s motoring press were out of mobile phone range. But Ford said the timing was a coincidence.

“First and foremost I made a commitment to tell the employees as soon as the decision was taken. The decision was taken last night,” Graziano said.

The writing had been on the wall for the Falcon for at least four years. In 2007 the company announced it would build the Ford Focus small car alongside the Falcon in 2011. But it axed those local production plans for Focus in 2009.

The Focus small car might have given Broadmeadows the throughput it needed to remain viable -- just as the Cruze small car has done for the Commodore -- but the Ford Focus instead comes to Australia from Thailand under a Free Trade Agreement.

Last year Australia imported 171,000 vehicles from Thailand (the second biggest source of new vehicles after Japan). In return, Australia exported just 100 Ford Territory SUVs.