Manufacturing costs have dramatically increased for the production of Ford vehicles in Australia and this coupled with falling sales is not good news. As a result of this Ford are closing two of their auto plants in 2016.
Loss of Jobs
This will mean that there will be a loss of 1,200 jobs that are directly associated with the plant but it is sure to have a knock on effect with others in the industry including those who supply parts and support. Ford’s will now only be available on an import only basis into the country which isn’t good news as they have been making vehicles there since 1925. It is actually the third biggest car manufacturer in Australia.
Bob Graziano is the president of Ford Australia and he has said, “We understand the very real impact this will have on our team. We came to this conclusion only after thoroughly reviewing our business and exhausting all other alternatives.”
Australia has a high dollar at the moment which is putting pressure on those manufacturing in the country. There are cheaper places to now make the vehicles which mean if production is kept in Australia then the retail price will have to increase. This will potentially put people off purchasing the vehicle which is usually viewed as affordable. Customers are now taking into the additional costs of the vehicle a lot more seriously considering the economic climate. These include maintenance, motor insurance and fuel.
Julia Gillard is the prime minister in Australia and this is what she said in response to Ford’s announcement , “The strength of the Australian dollar bears down on Australian manufacturing and it does make it a difficult environment for manufacturing to prosper.”
Ford released their financial report which is produced annually and it shows they made a loss of A$141 million. This is the equivalent of £90 million after tax for the 2012 financial year. This is following a loss of A$290 million during the previous year of 2011 and in the last five years a huge A$600 million loss has occurred.
Graziano has suggested that a reduction in demand for larger vehicles and the increasing costs of production are the reasons for this and has left it uncompetitive in Australia. He said that the production costs in Australia were actually twice as much as they were in Europe and four times higher than in Asia. “Manufacturing is not viable for Ford in Australia in the long term,” he concluded.