According to a report in the Wall Street Journal, Ford Motor Company intends to halt production in Australia in 2016. The move will close multiple manufacturing plants and account for about 1,200 jobs.
The move is significant, as manufacturing in Australia wasn’t exactly a new venture for the Dearborn, Michigan-based automaker. Ford had been making cars in Australia for the past 90 years, according to the report.
According to the Ford Motor Company’s corporate website, the automaker has three plants based in Australia – a 2 million square foot, 44-acre assembly plant opened in Broadmeadows in 1959, a 1.5 million square foot stamping plant in Geelong, which was opened in 1926, and a 250,000 square foot engine plant in Geelong, which was also opened in 1926.
As of right now, the automaker plans to close the Broadmeadows facility and one of the Geelong plants, according to the Wall Street Journal.
So what’s the reason for the scheduled halt of production operations? The Wall Street Journal states that it’s for the same reason that many other automakers are reducing operations in the nation – labor is too expensive and there’s more demand for eco-friendly vehicles from elsewhere, like Asia.
In fact, the publication estimates that Ford has lost over $580 million (U.S. currency) in manufacturing in Australia over the past six years alone.
A Sign of the Times Down Under
While Ford is making headlines with its intended cease in manufacturing down under, it’s hardly the only automaker that is having trouble with its bottom line in the country. For instance, the Wall Street Journal states that General Motors – another one of the domestic “Big Three” – intends to cut about 500 jobs, or about 12 percent of its total workforce in the nation, within the coming months.
The reason? The nation’s strong currency, which is making production difficult due to the high overseas manufacturing costs and lesser competition for exports.
In total, the WSJ estimates that the auto industry in Australia accounts for about 1 million total jobs, about half of which are involved in the production element of vehicle development.
The news publication predicts that about 1 million vehicles are moved annually in the country and that there’s roughly 65 brands and 365 models that are competing for the Australian public’s business.
Australia Losing More Than Just Auto Jobs
Ford’s elimination of production in Australia – specifically in the 200,000 population city of Geelong, a suburb of Melbourne – may not just mean job cuts and plant shutdowns.
The WSJ implies that the impact on the city could run deeper. For instance, aside from having established itself as a significant local employer since 1926, Ford has also been involved in the community.
The news publication states that the automaker has long sponsored the Geelong Football Club, which is regularly among the best teams in Australian rules sports. With the announcement of the plant shutdown – and likely end to the sponsorship of the popular sports team by Ford – the mood in Geelong right now is probably understandably pretty bleak.
But, in spite of this unfortunate news, there may be some good news on the horizon from one of the automakers that has a strong presence in Australia – Toyota. The WSJ states that the Japanese automaker is seeing increasing demand for its Australian-made vehicles, specifically in the Middle East and in Southern Asia, which could mean investing more in Australian operations.
Despite the production shut down that’s coming in just a few years, Ford insists that it will continue to have a presence in Australia – just not one that involves putting together vehicles, the WSJ states. According to the news publication, about 1,500 will remain employed in the country, but mainly in research and development roles.