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.

[turbodewd]

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

[Brazen]

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

[turbo4me]

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

[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.

[Vormund]

I'm going to have to agree with him. As much as I like the idea of the Ecoboost Falcon, it was going to have an uphill battle perception wise.

[GQ_Smooth]

Originally Posted by Brazen

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.

Focus and Kuga yes, Falcon and Territory no, not part of "One Ford" and was doomed, Ford AUS has, contrary to what many may think, have done a remarkable job in keeping the model going in the global scheme of Ford. If Focus and Kuga could make 70K anual units combined, we may have had a chance.

[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 GQ_Smooth

Focus and Kuga yes, Falcon and Territory no, not part of "One Ford" and was doomed, Ford AUS has, contrary to what many may think, have done a remarkable job in keeping the model going in the global scheme of Ford. If Focus and Kuga could make 70K anual units combined, we may have had a chance.

Ford Australia was even thinking of developing a Focus Ute - it could have been a real niche hit.

There would have been a benefit of local production for the Focus range - specs and trims could be tailored to Australian tastes, not like at the moment where the base Ambiente has the crap 1.6 litre and that the Focus range comes in colours only a 90s Camry would be proud of.

[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!!

[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.

[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.

[Brazen]

Originally Posted by Vormund

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

Also could have been a big hit for males under 25, spending 20 grand on a new car. Or rural buyers who want a modern-day Brumby. The Focus diesel engine would have been a good fit for it too. It may have just been one of those pie in the sky ideas though.

[GT-spec15]

Good article - I do agree that Focus could have greatly improved the future prospects of Ford's local manufacturing operation.

It's overly simplistic to blame the demise of Ford solely on this one poor decision though.

Yes - Holden kicked a goal with the Cruze program, but there are several other reasons why Commodore will survive longer than Falcon.

[Brazen]

Originally Posted by GT-spec15

Good article - I do agree that Focus could have greatly improved the future prospects of Ford's local manufacturing operation.

It's overly simplistic to blame the demise of Ford solely on this one poor decision though.

But this isnt some poor decision like using the wrong font in a TV advert, this is about an extra 70,000-80,000 cars pumping through Broadmeadows a year and exposing local manufacturing to the two largest and fastest growing segments in the market.

[GT-spec15]

Yeah no doubt.

I was really excited when Focus was earmarked for Aust, and rather annoyed when it fell over.

[Kieron]

The Focus to Thailand decision would have been fairly simple and based on cost. It's more than likely cheaper to build them for the whole Australasian market there and ship them to us than build them here, never mind shipping back into SE Asia.

Thailand is also a huge growth market for Ford and it's entirely possible the Focus will be sold in greater number in Thailand than Aust, 782 in Dec 2012 isn't too bad, then there's the other SE Asian countries -

http://media.ford.com/article_displa...ticle_id=37572

Carr and others can blame Ford if necessary, but many were happy Ford as a whole managed to avoid failing in the same manner as GM and part of that is no doubt due to simply looking at where to invest $$'s for the greatest return.

[GT-spec15]

There's two interests here, and quite obviously they were competing.

1. That building the Focus here would be good for Australia
2. That building the Focus in Thailand would be better for FORD

[turbodewd]

Here's how it could work:

All governments put out a join tender to build a small, a medium/large car AND a ute/pickup in Australia. The tender specifies the price we are willing to pay. Requirement, it be largely built here. This massive joint purchasing power would secure a good deal.

This would generate X amount of Australian jobs and be a viable concern for the auto-maker that wins the contract.

This would generate the economies of scale needed.

[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?

[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?

[Smoke Pursuit]

I dont think Focus would have made any difference. Theres considerable questioning on whether Holden has done any good building Cruze here. Theres less margin in smaller cars compared to big ones like Falcon and Commodore (especially premium models). The costs of building Focus here would have been considerable.