Quoth the Falcon, Nevermore: Why Ford’s Closing Its Australian Production Facilities
In the end, the timing came as a surprise, even if the outcome was long considered a foregone conclusion. Dearborn’s final decision to pull the plug on Ford’s 88-year-old Australian manufacturing operations was announced at a press conference in Melbourne Thursday morning—absent of the usual drip of leaks that tend to accompany an announcement of this significance.
It isn’t quite the end for Ford’s local operations just yet, with production set to continue until October of 2016. But after that, the Falcon will be no more, bringing down the curtain on the longest-running model nameplate in Australian automotive history. The Territory, a locally developed and built SUV spun off the Falcon’s platform, also will die in its current form, but its name may be retained as a badge on an imported SUV sourced from elsewhere in Ford’s global empire.
Along with the death of the Falcon, the Falcon Ute, and the Territory, the decision means the closure of Ford’s two remaining manufacturing plants at Broadmeadows and Geelong in Victoria. A limited product-development capacity will remain, but around 1200 jobs are expected to disappear when the factory doors shut in three years’ time.
As is the way with such decisions, today’s announcement was not the result of any single factor. A strong Australian dollar, which has resulted in cheaper imported cars; shifting market preferences; and relatively high production costs all played their part in eroding Ford’s business case for manufacturing in Australia. But undoubtedly, a large part of the blame must be attributed to the company’s failure—whether through lack of capacity or intent—to develop a meaningful export program, unlike fellow local manufacturers Toyota and Holden. Both rivals recognized the importance of exports—notably to the Middle East—to their long-term viability, and actively sought out prospective markets from the mid-1990s onward.
By contrast, Ford Australia’s focus remained almost entirely on the domestic market. Faced with the market failure of the “New Edge” 1998 AU Falcon, the company was forced to concentrate its resources on repairing its reputation and stabilizing sales locally. As the years rolled on, Ford was left further and further behind. Plans to leverage the Falcon’s rear-drive platform for the U.S. market were frequently mooted but ultimately came to nothing. Likewise, the company’s decision in 2007 to build the Focus locally was reversed only two years later, in favor of importing the model from Thailand, where, according to CEO Bob Graziano, costs are a quarter of those in Australia.
Yet while the lack of an export program represented a continued shadow threat to the operation’s viability, it need not have mattered unduly if Australians were still “buying local.” In its best-ever year, 1995, Ford Australia shifted more than 81,000 Falcons, claiming the title of the country’s bestselling car in the process. Put another way, a Falcon accounted for one in every eight cars sold in Australia that year. If its market share had kept pace with the growth of the market, Ford would have been on course to sell around 140,000 Falcons in 2013. Just 14,036 Falcons were sold last year.
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With numbers like that, and despite generous government assistance, it’s no surprise the company is bleeding red ink—some $600 million Australian (roughly $584 million) over the past five years, and $141 million Australian (roughly $137 million) in the last year alone. With the Falcon’s market segment now making up just four percent of the marketplace as a whole, it’s clear to see where the money has gone: smaller cars, imported nameplates with more prestige, and SUVs.
Despite Ford’s diminished production numbers, concerns have already been raised about the impact it will have on the Australian auto industry as a whole. Perhaps the knock-on effects have already begun. It did not pass unnoticed that Ford’s press conference neatly torpedoed the other significant piece of motoring news in Australia today—the media launch of the Falcon’s great rival, the VF Commodore.