Ford Closing Australian Factories In 2016

Falling sales lead to Australian closings.

Ford announced today that it will close all of its manufacturing facilities in Australia by 2016, cutting about 1200 jobs. The automaker, which has built cars in Australia since 1925, said the closings were necessary because its factories there were losing money.

Ford will close two plants in October 2016. The Broadmeadows Assembly Plant currently builds the Falcon, Falcon Ute, Territory, and Ford Performance Vehicles models. The Geelong Stamping factory creates body parts for the Falcon, Falcon Ute, and Territory.

The Australian market reportedly features 65 different car manufacturers, even though annual car sales there total just 1.1 million. That, coupled with the fact that a strong Australian dollar makes importing cars from Asia very affordable, made it difficult for Ford to thrive in “one of the most competitive and crowded automotive markets in the world.”

Over the past five years, Ford Australia lost the equivalent of $583 million. In 2012, Ford Australia reported a loss equivalent to $137 million, following a loss of $282 million the year before. In fall 2012, the company responded to falling sales by slowing domestic production from 209 vehicles per day to just 148 per day.

“Given the fragmented marketplace and the low model volumes that result, we decided that manufacturing locally is no longer viable,” Ford Australia CEO Bob Graziano said today in a statement.

Despite plans to cease manufacturing, Ford will hasten the launch of updated Australia-specific products. Revised versions of the Falcon, Falcon Ute, and Territory will arrive in 2014, although they will be built for just two years. After that, the company will continue to import Ford models from elsewhere in the world, including the Kuga (Escape), Ranger, Mondeo (Fusion), and Focus.

Ford Motor Company CEO Alan Mulally previously hinted that production of the Falcon would end by 2016 because “one-off cars for one-off countries” were no longer in Ford’s business plan.

Ford Australia will continue research and development operations; it is one of four R&D hubs for Ford globally. The Australian team was instrumental in engineering recent cars such as the global Ranger pickup and Figo low-cost car. The group was also responsible for several rear-wheel-drive platforms (underpinning the Falcon, for instance), and losing those cars could mean Ford will build fewer rear-wheel-drive cars going forward, and instead switch to the front- or all-wheel-drive layouts that already dominate many of the company’s new products. The Ford Mustang, however, is on a bespoke platform that is not shared with any other Ford product, so it should be safe.

After the closures, Ford Australia will still employ about 1500 people and sell imported cars through about 200 dealerships.

Sources: Ford, Automotive News