Ironically, Car Showroom was in Palm Cove, Far North Queensland for the national media launch of the Audi A3 Sportback, Audi's lightweight hatchback powered by fuel-efficient, four-cylinder petrol and diesel and engines and boasts top-shelf German engineering, when we dialled through to Ford’s press conference in Melbourne.
Ford Australia has three similar German origin vehicles in its local lineup – the Fiesta compact hatchback, Focus small car in sedan or hatchback and the mid-size Mondeo. Car Showroom reckons the Fiesta and Focus both have legitimate claims to being the best cars in their segments and the already excellent Mondeo scores an all-new model early 2014 which, according to European reports, should give the Mazda6 a real battle in the mid-size segment.
Increasingly, these are the sorts of cars Australian buyers want. Small cars and SUVs (the latter a market where Ford’s excellent locally-made Territory has actually been increasing its sales).
But the fact is, industry analysts have been smashing their foreheads into the palms of their hands for some years when staring at Ford Australia’s numbers on their computer screens – they just didn’t make sense. Today’s news of a $141-million dollar loss, bringing combined losses for the last five years to $600-million confirmed what Ford Australia CEO Bob Graziano reluctantly told his staff this morning: local production is unsustainable and the prospect of more Government dollars is unpalatable to Australian taxpayers.
In saying that, the record should note that taxpayers in Germany and North America contribute more per capita from their tax dollars to support vehicle manufacturing in those countries. And also for every $1 given to Ford by Australian Governments, the company itself invested $6 in its Australian operations.
Amongst car company CEOs in Australia, Ford’s Bob Graziano strikes us as a decent bloke. He’s Ford through-and-through, has a large family and very strong beliefs.
We believe Bob when he says the Ford team has worked tirelessly for a long time to save local manufacturing, but in the end not even Warren Buffett, Bill Gates and every Supercomputer on the planet could have created a sustainable business model.
The bottom line is there’s 365 vehicle models competing for just over 1.1-million annual sales in Australia and while the Falcon and Territory both rank in the top-10 most popular models, the actual production volume is minute by global standards – only 14,026 Falcons were sold last year. And as industry analysts confirm, many of those Falcons were sold to Government and private fleets and to taxi operators - a business which requires substantial discounts thus profit margins are skinny or zero (Holden Commodore and Toyota Camry/Aurion likewise sell more to fleets than private buyers but they have large export sales programs).
Fact is too, there has been a cloud over Ford’s local manufacturing for more than 12 months with leaks from within the Broadmeadows factory and Geelong engine plant indicating the absence of the Falcon nameplate on long-term production plans and component suppliers alerting to a lack of dialogue from Ford about future local plans (which in normal scheduling should have been advanced by now).
So where to from here?
Ford has guaranteed the entitlements of the 1200 employees who will be made redundant and the Federal Government has allocated $50-million for affected communities and to help the supplier industry through the transition. We hear the planned 2014 Falcon facelift (largely cosmetic) will go ahead and production of Falcon, Falcon ute and Territory will continue until 31 October 2016.
Ongoing, Ford’s 1500 employees (including those working in the R & D division responsible for international cars like the Ranger and Figo) will be preparing for and then running a full-import vehicle company (like Nissan and Mitsubishi).
Bob Graziano says while the Falcon nameplate will be retired we can look forward to a 30 per-cent increase in Ford model lines sold in Australia.
Switching existing left-hand-drive cars to right-hand-drive for Australia is relatively straight-forward – even more so if Ford waits until a new model is being developed rather than jump-in mid-cycle.
The most obvious replacement for the Falcon is the Ford Taurus. Not to be confused with the Taurus sold here some years ago, the current Ford Taurus has attracted great reviews from the North American media, looks the part, is spacious inside and has a range of available drivetrains to suit ‘Downunder’ new car buyers.
If Ford goes this route, expect Australian models to come from North America.
Replacing the Territory is not so clear-cut. A seven-seat SUV based on the Ranger ute platform could come from Ford’s Thailand plant but may be a tad ‘squeezy’ for traditional Territory buyers.
Alternatively the latest Ford Explorer sold in North America is a cracker, attracting rave reviews from the media and – importantly – offering Aussie-friendly interior space.
As to the rest of those 30-per-cent extra new models heading to Ford’s Australian dealerships? That’s an interesting question.
In our travels around the automotive world in recent years we’ve sampled Ford MPVs in Europe and North America and a host of pickups and SUVs (in addition to the Explorer) and we’re in love with quite a few of the current luxury Lincoln range.
We know from tough personal experience there will be sad times for Ford and its teams between now and October 2016, but the future for the ‘Blue Oval’ as a full-line importer is bright and highlighted by great products from all corners of the globe.
