Ford boss confident in local car market
 

Ford boss confident in local car market
November 16, 2006 - 5:29PM

Ford Australia president Tom Gorman says he's optimistic about the future of local car manufacturing despite job cuts, falling sales, high petrol prices and rising interest rates.

And Mr Gorman has hit back at critics of the financial support vehicle producers get from the government, set to reach $7 billion over the next 10 years, saying Australia gets a big bang for its buck.

"If you look at the automotive industry anywhere in the world, the industry is in partnership with the local government," the Ford boss told reporters in Adelaide.

"The reason is that we're such major contributors to society.

"Not only are we huge contributors to the economic vitality of the countries that we build our products in but we're also a big part of the cultural vitality.

"The Ford Motor Company has been in Australia for over 80 years so we are much more than just an employer - we are part of the fabric of society and the government has recognised that.

"The government has recognised how important we are and I think they get a very, very good return for their investment."

Mr Gorman said while he couldn't comment specifically on Ford's rivals, he believed there was room for four car manufacturers in Australia and he remained upbeat about the long-term future.

"Each one of us has a slightly different business model," he said.

"If you look at the four manufacturers today, each one of us has our own strengths and weaknesses.

"So I wouldn't be in the industry if I wasn't optimistic about it.

"Although I speak with a funny accent, my heart and soul is here at Ford Australia," said Mr Gorman, an American.

"If you think back to what we announced in May, we announced that over the next decade Ford was going to invest $1.8 billion in this country.

"We wouldn't have announced that if we weren't optimistic about the future."

Mr Gorman's positive attitude comes in contrast to some recent movements in the vehicle sector.

While sales remain strong overall, car producers and component makers have been forced to cut staff with the shift in demand to smaller, imported vehicles because of higher petrol prices.

In response both Ford and Holden recently cut assembly line jobs, Ford losing 600 workers at its Falcon production facility in Victoria and Holden 200 at its Melbourne engine plant.

Last year Holden also axed its third shift in Adelaide at its Elizabeth assembly operations and Mitsubishi closed its engine production plant and reduced staff at its Tonsley Park assembly facility.

A number of component producers have slashed jobs, with some going to the wall as car companies look to cut costs by sourcing some parts from overseas.

Mr Gorman said for suppliers to be successful in Australia they had to find ways to be more efficient.

"I don't see the end of the supply base here in Australia," he said.

"I see it having to be smarter, having to drive inefficiency out of its system and in some ways they have to bulk up, and you're seeing that with some mergers in the industry.

"So I believe there are multiple paths to success. It isn't just roll over and play dead."

His a very good talker, or someone writes very good notes.

Either way his not going to sit there and talk Fords hopes down, what the industry needs is more people being positive.

Your right, but what this country needs is more australians buying australian products cause the imports are just getting bigger and more popular

By the same token Australian manufacturers need to lift there game. You can harp all day long about buying Australian made, but if the customer is wary then your stuffed.

All this crap with the VE isn't helping either!

what we need is an australian workforce that takes pride in the work they do and are willing to get paid less...

think that'll happen?

Apparently he also had a chat with the Mitsubishi CEO when they were both in Adelaide yesterday. Offered him some advice, the nature of which is not being disclosed.

True. People often lose sight of the value for money that you get with the australian designed/built cars. The quality of what we are producing has improved dramatically over the last 10 years and the evidence is in more and more r&d being moved to australia by Ford and GM.

Thats another factor. There is a whole story I could go into but wont, lets just say that there are alot of people working there who dont believe in their management. From the factory floor all the way up. Although the same can probably be said for lots of companies.

Tom excluded though, his a top bloke and seems very focused.

Agreed! I love the fact that my Fords are made right up the road from where I live!

GK

Right!

Wrong!

I bet you wouldn't want to be paid less for each hour you work.

GK

100% agree!

That's not the point of my post. It's obvious that nobody would want to be paid less.

My post was merely stating the requirement, and difference between being competetive or not in this industry.

What Australia needs to overcome buying import models is offering the cars that are stealing their business.

To be honest, the quality of smaller hatches coming in from the likes of Europe is obviously alot better than what isn't made in Australia. What small cars does Australia produce? Finding it hard pressed to think of one, and perhaps that should be worked on. None of Ford's small cars are produced here, same with Toyota and Holden?

The second point is the luxury type/higher grade sedans, which I'm afraid that again the market still wont grow to where we want it because of the stupid things that a few sides of the industries do. Firstly, HSV/Holden releasing a new model with new features and bigger power outputs for sometimes a cheaper price doesn't help the resale values at all - and I couldn't give two shits what some of you people say about people being able to afford it.

Not all people who drive FPV/HSV earn 500+k a year and can get away with a 50% loss in value when they are ready for a new vehicle.

I know in the experience of my old man, who earns a tidy sum and is in the position to buy the cars he has bought in the past few years. The first a Nissan 350Z which he lost $18,000 on in 18 months. The second was a BF Typhoon which he now currently owns. Just because he can afford to purchase the vehicles, doesn't mean you can afford to lose $1000 a month on it's value. He was wary of buying the Typhoon due to the resale values, but wanted a performance 5 seater as the 350z was very impractical. The Typhoon will stay in his garage for I'd say a lot longer than previous vehicles. That said, he feels he wouldn't get tired of the Typhoon for a long time to come.

My other concern with the market is how resale values work.

Resale values are a major reason why people will go for the European marques. Just because you can afford to wear the loss in resale, doesn't mean you want to. You will do what you can to make sure you have made the right financial decision if you're smart with cash, no matter how much of it you have.

The second problem I find in the industry is the wholesale market. A car is released to the public and say after 6 months to a year they start becoming trade-ins to new releases. Wholesalers at dealerships are obviously going to offer you the lowest amount possible in order for them to make money off the vehicle - which is business but does affect values. The more of these cars that are traded into dealerships, the more wholesalers are deciding the values of the cars, and if they need to pay the lowest prices possible, they will be in competition to make the car worthless.

So after 3 years of a car being out, you can thank wholesalers for trying to pay as little as possible to trade vehicles in to make their own coin.

Too many people are happy just to take what a dealership will give them, when if they had bothered to sell it privately, they'd have more than likely made a significant amount more on the vehicle.

I'm glad someone had the time to say this!!!!

It's not about paycuts, cost cutting or restructuring management. It's about selling cars.

"But australians like big, thirsty, powerful cars"

"Oh, my 2 kids wont fit in a small car"

There's a lot of sand in this country. More than enough for a few million to bury their heads in.