Ford may have survived with Focus: Carr

[Road_Warrior]

http://www.goauto.com.au/mellor/mell...257B7900193EFF

Former industry minister Carr lays shutdown blame squarely with Ford

28 May 2013

By BARRY PARK

FORD Australia may have survived beyond 2016 if it had committed to building the Focus small car, according to the man who helped bring Holden Cruze production to Australia.

Former industry minister Kim Carr, who helped to provide the framework that is expected to keep Holden and Toyota making cars here into the next decade, told GoAuto that it was entirely Ford’s decision to walk away from plans to shore up its Australian car-making operations by building a small car.

“The company chose to withdraw from it (building the Focus here) – and remember they said publicly that they could not see how General Motors could make money on the (Holden-made) Cruze,” Senator Carr said. “Well, they did make money on the Cruze.”

“We took capacity out of Korea to build the Cruze. This demonstrates the success of that program.”

Ford announced in 2007 that it would build the Focus small car in Australia from 2010, alongside the Falcon family car and ute and Territory SUV, as well as fit the Falcon with an imported V6 rather than the traditional in-line six-cylinder engine.

However, it reversed that decision in 2009 with Focus production instead shifting to Thailand and a federal government handout giving more life to the locally built engine.

The decision is in stark contrast to Holden, which about the same time announced it would start building the Cruze sedan and hatch on its South Australian assembly line, launching production in 2011.

Holden’s scheme went ahead, and the Cruze now outsells the traditionally strong-selling Holden Commodore large car.

Mr Carr said Ford’s decision to pull out of Australia was a “national tragedy” even though it had been a “matter of public conversation” for some time.

“The truth of the matter is that Ford's decision rests upon low (production) volumes, and then the consequence of not having an export market is those problems are going to be exacerbated,” he said.

“The high dollar makes it difficult to maintain export markets even if you pursue them. Toyota and General Motors have pursued export markets with much more vigour, and I believe their long-term prospects are good – very good.”

He said the boom in the mining industry had pushed the value of the Australian dollar up against other world currencies, creating a market that was extremely difficult for manufacturers.

Mr Carr also singled out the free trade agreement with Thailand, set up in 2005 to take advantage of South-East Asia’s second-largest economy, as one that had harmed Australia’s car-makers.

“There's the Thai free trade agreement that was adopted under the previous government that is profoundly disadvantageous to Australia,” he said.

“It's (the Thai free trade agreement) allowed the free market to apply, and we do not live in a level playing field.

“It's fantasy to believe that we operate in a level playing field on the international trading system.”

He said once a free trade agreement was signed, it was difficult for a government to reverse a decision.

“I don't know how you do wind them back once you sign these deals, but I've always been highly critical of the sort of naive approach that has been taken on those free trade questions.”

Also coming under fire was the opposition’s call for a Productivity Commission review into car-industry funding, with Senator Carr labelling the outcome of the review a “foregone conclusion”.

Instead, he said, the government should launch an independent inquiry into automotive industry assistance.

“The Productivity Commission is not interested in the future of the automotive industry – it is interested in its destruction,” he said.

“They had an ideological predisposition to the destruction of the industry – that is why we have to have an independent review.”

And you know what? I reckon he's right. It's also nice to finally hear some comment from higher up the tree about the so-called "free trade" agreements and the Productivity Commission.

[Lotte]

This is what I've been thinking for awhile now (besides the lack of marketing and what not), but as a longer term option, this was it. And when the cruze became so obviously successful being built here, Ford should have followed suit.

[mik]

its easy to say the focus made here might have survived ok, but hes not gambling his bank account on it, is the cruze really a success, or are the handouts for holden for the commy only????

[TMC]

Focus wouldn't have been exported to Thailand as they have a no import policy on cars. Ford chose to build them there for access to the Thai market, very cheap production costs and easy access to SE Asian markets including Australia.

[Samurai_Chris]

Why pay an Aussie $25p/h, when you can pay a Thai $5?

If you want to blame someone, blame the unions.....

They milk industry until it bursts, but where are they now?

[GQ_Smooth]

Originally Posted by Samurai_Chris

Why pay an Aussie $25p/h, when you can pay a Thai $5?

If you want to blame someone, blame the unions.....

They milk industry until it bursts, but where are they now?

This was previously true, while there is still a level of truth to your statement today, the leadership is slowly changing. I don't suspect it will be fast enough to save the industry unfortunately. There needs to be a generational shift in Union leadership, which I doubt will happen or happen to late and it's not all about wages either.

On another point, I don't see Focus saving Ford manufacturing in Australia, local volumes wouldn't be able to sustain production and to expensive to export.

[Brazen]

Focus and high-profit Kuga would have saved Ford Australia and ultimately Falcon, no doubt about it whatsoever.

[mike_nofx]

Originally Posted by Samurai_Chris

Why pay an Aussie $25p/h, when you can pay a Thai $5?

If you want to blame someone, blame the unions.....

They milk industry until it bursts, but where are they now?

So Australians should work for $5 then?

Seriously, I doubt you could even raise a family, pay a mortgage and buy a new car on $25 an hour.

By the way, do you make more, or less than $25 per hour?

[burnz]

Originally Posted by mike_nofx

So Australians should work for $5 then?

Seriously, I doubt you could even raise a family, pay a mortgage and buy a new car on $25 an hour.

By the way, do you make more, or less than $25 per hour?

agree, you cant get out of bed for anything less than 20p/h.

the cost of living is around 18p/h.

[prydey]

Originally Posted by mike_nofx

So Australians should work for $5 then?

Seriously, I doubt you could even raise a family, pay a mortgage and buy a new car on $25 an hour.

By the way, do you make more, or less than $25 per hour?

no, australians shouldn't work for $5/hr, but they shouldn't expect $25/hr for unskilled labour, but too many industries (with push from unions working 'for the people') have a high percentage of people who are largely unskilled, and earning a very large pay packet.

people take this for granted. they think its their right to be able to afford a big house, 5 tv's, a new car or 2, have annual holidays etc etc, and anything less is considered unfair or discriminatory.

[Smoke Pursuit]

Originally Posted by prydey

no, australians shouldn't work for $5/hr, but they shouldn't expect $25/hr for unskilled labour, but too many industries (with push from unions working 'for the people') have a high percentage of people who are largely unskilled, and earning a very large pay packet.

people take this for granted. they think its their right to be able to afford a big house, 5 tv's, a new car or 2, have annual holidays etc etc, and anything less is considered unfair or discriminatory.

I agree to some extent but the problem is there's a shortage of unskilled labour. At one end of the spectrum you have people who don't and won't work because we have a reasonable social security system and they don't see the value in working for $10 an hour and at the other end you have low skilled people getting jobs in the mines earning way more then they are worth. So with this you have to pay unskilled workers $25 an hour or you won't get them motivated to come to work.

[Samurai_Chris]

Originally Posted by mike_nofx

So Australians should work for $5 then?

Seriously, I doubt you could even raise a family, pay a mortgage and buy a new car on $25 an hour.

By the way, do you make more, or less than $25 per hour?

Eh, way to misquote a quote!

I actually make $24.40 an hour. Am raising 2 kids, house, two cars, wife is studying. Things are tight, but we are living. Go back two years when we were living in Japan (10 years, my wife is Japanese) and the cost of living was much lower, almost half of what we pay here for better amenities, and services. Fuel was expensive at about $1.50p/l but I had 5 attendants jumping all over my car to clean windscreen, inflate tires, check oil.. Why did we come back to Australia you ask? It was were I was born, and I wanted my kids to experience it..

The problem with this country is that more is never enough. People want more just because, and governments and companies charge likewise.

So in a business sense, why build a car for less, and pay someone less when their standard of living is less, than pay someone more, when they feel they are entitled to more?

It just means we pay more in the end when we purchase it!

[XR6TCraig]

Originally Posted by Samurai_Chris

Why pay an Aussie $25p/h, when you can pay a Thai $5?

If you want to blame someone, blame the unions.....

They milk industry until it bursts, but where are they now?

I cant see how this is relevant or accurate. Its easy to say but that doesn't make it right!

Generally, big business here in recent years has made record profits. You only need to look at the banks to see this. Yet you are saying the unions are bleeding them dry? Something doesn't add up clearly!

Workers work longer and harder than they ever have in Australia for no more money in relative terms, housing and the cost of living is dearer than its ever been relative to what we get paid, yet you say its the unions that are stuffing things up?

Do you only make $5 an hour or have those pesky unions made sure you get more than that? Would you be happy trying to pay off the average Australian mortgage earning that kind of coin?

We live in a country where making $5 an hour would mean you would have to sleep under a bridge at night. You certainly couldn't afford to feed yourself, cloth yourself and provide shelter for yourself and your family.

Our cost of living in this country warrants higher wages to survive. Blame the unions all you want but its nowhere near as simplistic as that. Government and big business all have there greedy little fingers in this pie.

Now we could live on $5 an hour if houses only cost $35K to buy, rates were $250 a year and the average weekly household food bill was $50, but its not and you cant just blame unions solely for all of those things being the price that they are!

But lets say we have a big adjustment going forward. Assuming you own or are paying off a house would you be comfortable having it devalued to $35K so that aussies earning only $5 an hour could afford to purchase one like it, or is house ownership only to be enjoyed by shareholders, business owners and government officials?

[Lotte]

Originally Posted by XR6TCraig

Workers work longer and harder than they ever have in Australia for no more money in relative terms, housing and the cost of living is dearer than its ever been relative to what we get paid, yet you say its the unions that are stuffing things up?

Do you only make $5 an hour or have those pesky unions made sure you get more than that? Would you be happy trying to pay off the average Australian mortgage earning that kind of coin?

Don't forget fighting for annual leave, penalty rates (including casual penalty rates) and public holiday pay.

[Samurai_Chris]

Originally Posted by XR6TCraig

I cant see how this is relevant or accurate. Its easy to say but that doesn't make it right!

Generally, big business here in recent years has made record profits. You only need to look at the banks to see this. Yet you are saying the unions are bleeding them dry? Something doesn't add up clearly!

Workers work longer and harder than they ever have in Australia for no more money in relative terms, housing and the cost of living is dearer than its ever been relative to what we get paid, yet you say its the unions that are stuffing things up?

Do you only make $5 an hour or have those pesky unions made sure you get more than that? Would you be happy trying to pay off the average Australian mortgage earning that kind of coin?

We live in a country where making $5 an hour would mean you would have to sleep under a bridge at night. You certainly couldn't afford to feed yourself, cloth yourself and provide shelter for yourself and your family.

Our cost of living in this country warrants higher wages to survive. Blame the unions all you want but its nowhere near as simplistic as that. Government and big business all have there greedy little fingers in this pie.

Now we could live on $5 an hour if houses only cost $35K to buy, rates were $250 a year and the average weekly household food bill was $50, but its not and you cant just blame unions solely for all of those things being the price that they are!

But lets say we have a big adjustment going forward. Assuming you own or are paying off a house would you be comfortable having it devalued to $35K so that aussies earning only $5 an hour could afford to purchase one like it, or is house ownership only to be enjoyed by shareholders, business owners and government officials?

As of today, QLD electricity prices have been allowed to increase 22.5% (not 2.5%)but 22.5% for the next financial year.. So before anyone talks about anything being "right". Then maybe you need to just think about that for a minute?

As for owning a house. then maybe people that have $500,000 mortgages when they cant afford them need to look at their own lifestyle. Not ask for more money because they want a bigger house? Just sayin...

I would like a million dollar house, but have to settle for something a little more modest. I live within my means. And maybe I will get one, one day. However, am I to say that that is not "right" because it is not given to me because "I" feel that I deserve it?

I spent 15 year living in the US and Japan, and I say what I say, because I can compare the difference. I have people asking me all the time how I could afford to live in Japan. And I have to laugh, because the so called experts who tell you how expensive it is are the ones that have never been there. Seen something on TV, or had a stop over, stayed in the heart of Tokyo, and experienced the pleasure of paying exorbitant prices by business's that rely on the tourist trade.. The honest truth is that the average Japanese family make a meager income and live according to it.. The smart ones like me don'y buy a house in the middle of a crowded city, but live in the country where they have open fields, mountains, large and spacious housing for a lower price. I used to have a 40 minute commute, but I always had a Television / Navigation system that kept me entertained! Try getting that in a base model vehicle made in Australia?

[prydey]

Originally Posted by Samurai_Chris

As for owning a house. then maybe people that have $500,000 mortgages when they cant afford them need to look at their own lifestyle. Not ask for more money because they want a bigger house? Just sayin...

I would like a million dollar house, but have to settle for something a little more modest. I live within my means. And maybe I will get one, one day. However, am I to say that that is not "right" because it is not given to me because "I" feel that I deserve it?

you make some good points and i agree. people want to have it all and live the dream and then think think its unfair they can't afford it. many young people move out of their parents home, and look to start out where their parents are at, forgetting that its taken their parents many years to get to that point.

Originally Posted by Samurai_Chris

So "Niche" they are about 21st on the sales list...

Lets prop up an industry and keep car prices high, because we have about 7 people who will buy one and then spend the next 5 years on message boards complaining about them...

you lost me on this one. the falcon and territory are both in the top 20, which might not seem great, but if you consider there are over 350 models on offer in australia, top 20 isn't as bad as it sounds.

also, have a look around the world at all the other car making nations, and you will notice every one of them gets supported by their respective govt's.

once manufacturing dies in australia, watch the price of cars rise, not fall.

[Samurai_Chris]

Originally Posted by prydey

you lost me on this one. the falcon and territory are both in the top 20, which might not seem great, but if you consider there are over 350 models on offer in australia, top 20 isn't as bad as it sounds.

Hey its all cool.. It was more of a tongue in cheek throw away line.. I just read, or heard somewhere that Falcon was 21st.. Always happy to be set strait if that is the case though, so all good..

Originally Posted by prydey

also, have a look around the world at all the other car making nations, and you will notice every one of them gets supported by their respective govt's.

once manufacturing dies in australia, watch the price of cars rise, not fall.

Actually compared to Australia, I can only comment on the US and Japan. And I have heard the argument that we don't have the population/ hence market. But the fact is, that simply because we are a smaller country. Should we pay any more for the very same product as anyone else? And the answer is no.. I look at Japan. You can buy a Merc, Lexus, BMW ect.. and many people there do. But do they pay a luxury tax, simply because that vehicle is over a certain price, and the Japanese Govt feel's it needs to protect the likes of Toyota, Mazda, Mitsubishi ?..... ..........Nup!!

Now don't get me started about the government..........

[turbodewd]

Local volumes COULD keep production HERE if all the damn levels of government bought 90% Australian!

[GQ_Smooth]

Originally Posted by turbodewd

Local volumes COULD keep production HERE if all the damn levels of government bought 90% Australian!

1) What kind of annual volume do you think make local production viable?
2) How much profit do you believe Ford/Holden/Toyota make selling a locally made car to a government department?

While some won't agree with me, I believe it will only be viable if we make imported competition cheaper, this policy has it's own long term issues.

[Brazen]

Originally Posted by GQ_Smooth

1) What kind of annual volume do you think make local production viable?
2) How much profit do you believe Ford/Holden/Toyota make selling a locally made car to a government department?

While some won't agree with me, I believe it will only be viable if we make imported competition cheaper, this policy has it's own long term issues.

I think Ford has talked about 60,000 to 80,000 a year as a volume benchmark.

[GQ_Smooth]

Originally Posted by Brazen

I think Ford has talked about 60,000 to 80,000 a year as a volume benchmark.

That sounds 100% correct, now the top selling Mazda 3 has around 40,000 units a year.

So are we to expect that the Focus will not only beat the Mazda 3 but take sales away from Cruze, Corolla, Golf, Elantra, Rio, Pulsar the list goes on and on and on.

Holden would rightly argue for government sales for the Cruze as well. As I said I can't see it working without a 30-50% volume going to exports and with our high dollar, who's going to pay a premium price for what should be a budget product?

It's sad but it makes much more economic sense to make it in Thailand

[Brazen]

Originally Posted by GQ_Smooth

That sounds 100% correct, now the top selling Mazda 3 has around 40,000 units a year.

So are we to expect that the Focus will not only beat the Mazda 3 but take sales away from Cruze, Corolla, Golf, Elantra, Rio, Pulsar the list goes on and on and on.

Holden would rightly argue for government sales for the Cruze as well. As I said I can't see it working without a 30-50% volume going to exports and with our high dollar, who's going to pay a premium price for what should be a budget product?

It's sad but it makes much more economic sense to make it in Thailand

Local Focus production was estimated at about 40,000 a year which was made up of 25,000 sales a year domestically (only 2000 a month) - Australia is the biggest market for Focus in the region, with 15,000 exported a year to other ASEAN countries. I actually think local Focus would have sold over 30,000 a year (2500 a month) domestically easy.

It was also widely tipped that Kuga would be built here on the Focus line - they share platform and parts and that would have been another 30,000 a year or so. Australia is tipped to be the biggest market for Kuga in the region.

With Falcon, ute and Territory you could be looking at 100,000 units a year from the plant - three times better economies of scale of current plant.

[mik]

Originally Posted by GQ_Smooth

1) What kind of annual volume do you think make local production viable?
2) How much profit do you believe Ford/Holden/Toyota make selling a locally made car to a government department?

While some won't agree with me, I believe it will only be viable if we make imported competition cheaper, this policy has it's own long term issues.

Someone might be able to answer this, but I think it varies with manufacturer and the amount of driveline manufactured here, I'm thinking a car with more cheaper made imported parts that arrives on our shores in knocked down arrangement might be cheaper to build a car up than locals that have the majority of stuff made here for a small fortune.
Not forgeting a conventional layout car has more moving parts , ie falcon/commodore vs aurion front wheel drive.

[DJM83]

Originally Posted by turbodewd

Local volumes COULD keep production HERE if all the damn levels of government bought 90% Australian!

So i take it you know the costs involved with buying OZ vs buying Import for govco?

[turbo4me]

Well Holden might survive seeing they will be getting Fords handout as well.

[Ducati888]

If it were made here, the Focus would need to also be exported as LHD. That's the only way it could be viable, just as the Camry is.

Is the Aussie made Cruze exported as well?

Here's somthing I don't understand. The three Aussie based manufacturers have taken billions over the years to remain in business here. Why has the Federal government not mandated to all other levels of government that the local industry has been funded, and therefore must supply all fleet cars at half price, or a price viable to ensure value to the taxpayer for the billions that the Feds and state governments have tipped in?

Why would they give away so much money and then not ensure that fleets consist of those very same cars? They must have used the same lawyers to draft the contracts as those who did the Myki contract or the Victorian Desalination plant. Give everything away and get nothing in return. I wish those lawyers would lose their jobs, houses and families.

There should also be extra tax breaks to private fleets operating locally made products.

Finally, a mirroring of the import duties to the countries that we import from seems fair to me. If Thailand has a 15% import duty, then we should impose 15% on anything we get from that country. If Japan is 10% then we should impose a 10% import duty on them. If Europe is 5% then 5% for them. I think you get the picture.

That, to me, is a level playing field. You can't get any more level than that. Some argue against protectionism. I ask why it's bad to look after your own.

I'd rather foreign families starve than those here.

Why don't we look after our own?

Yes I have two Aussie made cars. My next one will probably be the last Territory off the production line.

[Brazen]

Originally Posted by Ducati888

If it were made here, the Focus would need to also be exported as LHD. That's the only way it could be viable, just as the Camry is.

Is the Aussie made Cruze exported as well?

Here's somthing I don't understand. The three Aussie based manufacturers have taken billions over the years to remain in business here. Why has the Federal government not mandated to all other levels of government that the local industry has been funded, and therefore must supply all fleet cars at half price, or a price viable to ensure value to the taxpayer for the billions that the Feds and state governments have tipped in?

Finally, a mirroring of the import duties to the countries that we import from seems fair to me. If Thailand has a 15% import duty, then we should impose 15% on anything we get from that country. If Japan is 10% then we should impose a 10% import duty on them. If Europe is 5% then 5% for them. I think you get the picture.

The Focus made in Thailand is only made in RHD, the region does not buy a lot of Focii, Australia is by far the biggest market for Focus. Ford could manufacture Focus here and still export Focus to Thailand under the FTA. Thailand only imposes punitive measures on imports with engine sizes larger than 2 litre, Aussie Focus would have been fine.

It doesnt make much sense making Focus in Thailand as the market for that kind of car there isnt that big, but Ford was left with little choice when Burela overturned Dearborn's plan to make Focus at Broadmeadows.

[mik]

Originally Posted by Ducati888

If it were made here, the Focus would need to also be exported as LHD. That's the only way it could be viable, just as the Camry is.

Is the Aussie made Cruze exported as well?

Here's somthing I don't understand. The three Aussie based manufacturers have taken billions over the years to remain in business here. Why has the Federal government not mandated to all other levels of government that the local industry has been funded, and therefore must supply all fleet cars at half price, or a price viable to ensure value to the taxpayer for the billions that the Feds and state governments have tipped in?

Why would they give away so much money and then not ensure that fleets consist of those very same cars? They must have used the same lawyers to draft the contracts as those who did the Myki contract or the Victorian Desalination plant. Give everything away and get nothing in return. I wish those lawyers would lose their jobs, houses and families.

There should also be extra tax breaks to private fleets operating locally made products.

Finally, a mirroring of the import duties to the countries that we import from seems fair to me. If Thailand has a 15% import duty, then we should impose 15% on anything we get from that country. If Japan is 10% then we should impose a 10% import duty on them. If Europe is 5% then 5% for them. I think you get the picture.

That, to me, is a level playing field. You can't get any more level than that. Some argue against protectionism. I ask why it's bad to look after your own.

I'd rather foreign families starve than those here.

Why don't we look after our own?

Yes I have two Aussie made cars. My next one will probably be the last Territory off the production line.

as far as the funds go , maybe i`m dead wrong , but i think the government knows the motor industry puts way more back into the economy than what it takes out , i read somewhere for every dollar the car companies receive as a "handout" they put six into the economy, and i think manufacturing already gets a good reaming via taxes etc by govco.
Ducati888 i absolutely agree on the mirroring of the subsidies , it is after all only fair, the problem is you need people in government that have some Kaaahoneys to fight for our rights, all we have is a bunch of pussies.

[Joe5619]

I still think Falcon & Territory would have been gone, but it still would have been nice if Ford AUST was building something here. Focus/ Kuga would have been good.

I still hold a very very very very small hope that something might change & Ford Aust will still build some O/S model here. I think the dollar needs to drop quickly, significantly & stay there for something to happen. But Falcon & Territory is 100% gone!!

[Vormund]

If they did make a Focus Ute, I could see that particular variant popular in ASEAN regions.

Also I have to agree I think Falcon's days were numbered after this generation. If things had gone well we may have seen local production consist of Focus, Kuga and Mondeo.