Ford Motor Co. will close two sites in Australia in October 2016, no thanks to a strong currency and high costs. Ford Australia will shut down its Geelong engine plant and its Broadmeadows vehicle assembly plant, both located in Victoria state. According to Ford Australia chief executive Bob Graziano, the closure will result to the unemployment of around 1,200 people.
Ford has been operating in Australia since 1925. Employing over 3,000 workers, the carmaker produced 37,000 vehicles in the country in 2012. Ford Australia has been struggling against slumping demand, increasing costs and a strong Australian dollar. Graziano remarked that Ford Australia’s costs are double that of Europe and nearly four times Ford in Asia.
He quipped that the “business case simply did not stack up,” making manufacturing not viable for Ford in Australia. Ford’s decision to shut down its Australian vehicle and engine production underscores the challenges the country is facing as a mining boom starts to end.
Policymakers are currently looking for other sectors like manufacturing, construction and retail to cushion the effect of fading mining boom. Likewise, the Australian dollar has been trading above the US dollar for most of the past two years, making it more difficult for local companies to compete globally.
According to Graziano, Ford posted a combined A$600 million ($581 million) in losses in the last five years in Australia, including A$141 million in the previous fiscal year. He attributed the dismal results to growing consumer preference for smaller imported vehicles produced by Mazda and Hyundai. [source: ford]