Ford’s made-in-Australia Falcon sedan. Photo credit: Ford Motor Company (NYSE:F)
Ford Motor Company (NYSE:F) said this week that it will cease making vehicles in Australia.
Ford has been making cars and trucks Down Under since 1925, but fading demand for its locally produced products – and competition from cheaper imports – has made local manufacturing untenable, executives say.
Ford’s two Australian factories will close in 2016, leaving about 1,200 workers unemployed. It’s a tough pill to swallow for Australia, but it’s a necessary move for the increasingly globalized Blue Oval.
Almost 90 years Down Under, but not for much longer
Ford Motor Company (NYSE:F) sells a full line of vehicles in Australia, but nowadays most of them are imported from places like Thailand. That won’t change. But Ford has lost about 600 million Australian dollars (about $580 million) in the country over the last five years, and major changes are needed. Those changes include an end to Ford’s commitment to the vehicles it makes in and specifically for Australia.
One of those is the handsome sedan pictured above, the Ford Falcon. The Australian Falcon started life as right-hand-drive sibling of the compact U.S.-market Ford of the same name over 50 years ago, but has evolved into something much different over time.
Today’s Falcon is a big rear-wheel-drive sedan, a family car comparable in size to Ford Motor Company (NYSE:F)’s U.S.-market Taurus. At times over the years, Ford has offered powerful high-performance variants of the Falcon that have had a major presence in Australia’s car culture, not unlike the Mustang’s presence here.
The current Falcon is a unique-to-Australia product that shares its underpinnings with no other Ford anywhere, aside from the other Australia-only vehicles: a car-pickup hybrid called the Falcon Ute and an SUV called the Territory. That’s a no-no under CEO Alan Mulally’s One Ford approach, which allows for regional product variations – but only if they’re based on one of Ford’s global “platforms”, or vehicle architectures.
Ford Motor Company (NYSE:F) had recently hinted that the Falcon could have a future under One Ford, raising the possibility of a new-generation model that might share a platform with the upcoming new Mustang. But declining sales, rising gas prices, and unfavorable exchange-rate conditions have apparently added up to make that an unworkable option.
Australia’s domestic car industry is now at risk
Most of the global automakers sell in Australia, but Ford is just one of three companies that actually manufactures locally. The others are Toyota Motor Corporation (ADR) (NYSE:TM) and local brand Holden, which is owned by General Motors Company (NYSE:GM).
Both GM and Toyota have recently said that they will keep their Australian factories open, at least for the time being, despite the fact that both are facing the same pressures as Ford Motor Company (NYSE:F). Simply put, the increase in value of the Australian dollar has made imported vehicles much more competitive – just as rising gas prices have diminished demand for the big rear-wheel-drive cars that were Ford’s (and Holden’s) local bread and butter.
