Ford to shed 240 local jobs, cut production as demand slumps

[Brazen]

Originally Posted by Joe5619

Kuga was NEVER on the cards to be built in Australia (even iuf it is on same plant form), this is just wisefull thinking on your behalf!!

Ha, from day dot Kuga was being PUBLICLY being discussed being built here, it needs an Asian Pacific facility for the region.. A locally developed Focus ute and other derivatives were also on the cards.

Imagine they could of charged Falcon prices for a vehicle which doesnt cost much more than a Focus to make, in one of the booming segments of the market.

[Gobes32]

Originally Posted by vztrt

This is why getting rid of more workers has got me confused.

Get rid of full timers and replace them with temps?

[Road_Warrior]

Originally Posted by Brazen

Ha, from day dot Kuga was being PUBLICLY being discussed being built here, it needs an Asian Pacific facility for the region.. A locally developed Focus ute and other derivatives were also on the cards.

Imagine they could of charged Falcon prices for a vehicle which doesnt cost much more than a Focus to make, in one of the booming segments of the market.

No it wasn't, it was wishful thinking on the part of motoring media and us on here. The principal consideration for Focus III production in Australia was hatch and sedan. Other derivatives of the platform such as Kuga and the Transit Connect I think you mean could have been done, but it wasn't in the deal from the beginning.

Personally I think the production of the CD4 platform cars here is starting to gather steam...

[JPFS1]

The ROT seems to be setting in... when public perception can't see a viable outcome for Ford Australia's manufacturing, you can almost be certain that this will be the outcome.

They were talking about the job cuts on ABC radio this morning, don't usually listen to that station, but while flicking, heard the subject and left it on, ALL feedback from jo blogs ringing in and their txt messages into the station were ALL negative about Ford Australia's future, even though they don't know the first thing about what's really going on and what can make it work.

This mindset though will not help sales along that's for sure.

[Jesmol]

Wow, this is going to hurt the supply base badly. I wouldn't be surprised if a number fall over and go into administration from the combined effect of Toyota and Ford.

We've just had the note of 18 down days injected in May / Jun / July as well as a general line slow down to 209 cars, that approx $2.5M off our bottom line in 3 months, just for Ford.

The impact is similar for Toyota on us, $5m reduction in sales over 3 months is *very* painful.

[SEZ213]

Originally Posted by Gobes32

Get rid of full timers and replace them with temps?

Unlikely - the overheads for temps are just as high, instead of paying an employee $20 an hour, they end up paying a recruitment agency $20 plus super, plus insurance, plus payroll tax, plus about 10% (so the agency makes a profit). On the flip side, they don't have to pay holiday or sick pay, can get rid of staff that aren't required, those that aren't performing, or just those that they don't like...but I somehow doubt it - it takes the hassle out of hiring and firing, but doesn't exactly streamline your business. There's also a higher risk of higher staff turnover, and whilst that doesn't cost Ford financially, it becomes quite tedious having to train someone all over again - and that's where you find a financial loss.

I'm not so sure the loss of all the experience that is going via voluntary redundancies, would really be worth it for Ford.

[BroadyFord]

Good piece from Malcolm Maiden in The Age:

More than 1500 jobs may be at risk if Ford fails to get its act together

http://www.theage.com.au/business/mo...414-1dfwx.html



The local arms of General Motors and Ford chose different strategic paths during the global crisis, and Ford's future here as a vehicle manufacturer is less secure as a result.

THE local arms of General Motors and Ford chose different strategic paths during the global crisis, and Ford's future here as a vehicle manufacturer is less secure as a result.

Ford's announcement yesterday that it would cut local vehicle production by 20 per cent from 260 to 209 vehicles a day and shed 240 jobs keeps the wolf from the door, and the fact that Ford's unions sat on the news after being told last week shows they believe this is a necessary investment in Ford's future.

But Ford makes only large cars here - the Falcon, Falcon Ute and the Territory sports utility vehicle - and it sold fewer than 30,000 Falcons and only 50,000 locally made vehicles last year, half as many as six years ago.
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Just over 1 million new cars were sold in Australia last year, more than 95,000 by Ford and almost 133,000 by Holden. But only 146,314 were built here, 3.1 per cent fewer than in 2009, and large-car sales have slumped further in 2011 as buyers continue to shift to smaller vehicles.

Ford has been hit particularly hard. It has sold 4448 Falcons so far this year. Holden has sold 10,664 Commodores, and its large-vehicle market share is 57 per cent, more than double Falcon's 24 per cent share.

Ford stole a march with the launch of the Territory SUV in 2004, and is looking to

re-energise the marque from next month on, with new models that include an overdue diesel variant.

A four-cylinder Falcon is also in the pipeline, as part of a $232 million upgrade that included a $42 million contribution from the federal government's green car fund before it was shut down this year as part of a budget cost-cutting drive.

But Australia's love affair with large locally made vehicles is fading in the face of high fuel costs and a relentlessly rising Australian dollar that is pulling down the cost of imported vehicles.

Ford's plant on the Hume Highway at Broadmeadows in Melbourne's north is capable of producing 120,000 vehicles a year, more than twice as many as Ford sold last year.

Ford has been implementing production stoppages to take up the slack, but it has not been enough: Ford's inventory of unsold vehicles is believed to have blown out this year to about 120 days, three times as high as Holden's.

Decisions the two groups took in the middle of the global crisis leave Ford in a more precarious position.

The crisis undermined the economics of Holden's Australian business model, because exports collapsed. Sales to the Middle East plunged, and as it struggled for its own survival in the US, Holden's parent, General Motors, also walked away from a contract for Holden to supply Pontiac-badged cars to the US market. Holden exported just over 56,000 vehicles in 2008 before its exports collapsed. In 2009, it exported fewer than 7000, and in 2010, 7817.

However, Holden's response was to lift its commitment to the local market and reduce its reliance on large vehicles by starting to make here its successful Cruze small car, which had been imported from Korea.

Holden persuaded its parent company to support the restructure financially - even though GM was sliding into bankruptcy (and a US government bailout that culminated late last year in a $US23 billion sharemarket refloat), and even though Holden was in the middle of five years of losses totalling $379 million, including a $211 million loss in 2009 after the Pontiac supply deal was torn up.

The winning argument was that Holden was a crucial piece of GM's global design and production network, and that rebasing production of the Cruze here would give it sustainable economies of scale, by pushing local production to 100,000 vehicles.

Holden's pre-Cruze manufacturing base was about 66,000 vehicles, and it also sold 28,334 imported Cruzes last year. That demand will now be fed from Holden's South Australian assembly lines. The plan is to drive Cruze sales higher by launching a hatchback, a design that is unusually popular in Australia, and Holden made the first repayment for GM's decision to support it in Australia this week by announcing a $112 million profit for calendar 2010.

Ford Australia was less heavily connected to its US parent company's supply chain when the global crisis hit, and less exposed to an export slump. New Zealand is its only major export market.

But like Holden it recognised that the

big-car market was in structural decline, and in 2008 it also decided it needed to diversify, by taking on local manufacturing of its popular small-car import, the Ford Focus.

But the plan was dropped a year later and replaced with the $232 million plan to

re-engineer the Territory, and introduce a four-cylinder Falcon.

It is a different means to the same end, but more risky - with the Cruze, Holden is taking over production of a vehicle that is already established in the market. The four-cylinder Falcon will have lineage, but is an untested concept.

One of the ironies is that Holden pushed through structural reform as its parent company was on its knees. Ford stayed afloat, but trimmed its sails, and the axing of the Focus project was a byproduct.

It means that even after yesterday's cuts, Ford Australia needs to post big sales for its new Territory and four-cylinder Falcon to assure its future as a manufacturer,

and avoid its conversion to an import-only operation.

More than 1500 manufacturing jobs at Ford and multiples more in component factories that supply the Falcon and Territory are riding on Ford succeeding.

[Ford17]

Some of these articles seem to have a red slant to them.

So Holden have made their once-in 5 year profit. They made $112 million profit for 2010, but only after $579 million of accumulated losses over the preceding five years. So their net position is 'only' a loss of some $467 million over the years 2005 to 2010.

Yet we are told they (Holden) are seemingly doing everything right.

To the contrary it would seem. They have been losing money by cranking up the volume on production to achieve record sales figures. It surely must be obvious, based on Holden's inability to make a profit over the last 6 years as a whole, that their supply is not being met by demand at the correct price point (being the price which to make a profit). i.e. they are discounting the Commodore to below cost.

What needs to be realised is large family RWD sedans are now essentially a boutique market product.

The bread and butter models for cheap motoring in this country are now sourced from Korea and elsewhere. The Falcon 500 or GL, as the most basic model car available on the market, is something long gone. You want basic, you've now got Kia, or Hyundai or something else.

The standard Falcon these days is as good as any other vehicle of its size and price range, offered anywhere else in the world. Perhaps it’s a cultural cringe thing here that prevents many people from actually realising this.

Ford seem to be the only one of the two local manufacturers who understand the boutique nature of the large car market they're dealing with. Their latest strategy is to match costs to production, and to match supply and demand, whilst generating a profit.

Sometimes businesses don't understand their core product, deviate too far from it; and it’s often to their detriment. To me at least, it looks like Ford understand this exactly.

[apstar]

So now we know why Ford decide to bring forward the Ecoboost engine into the Mondeo.... no it wasn't out of kindness they were in denial and yes someone at FoA will get a bonus for all of this, my next car may not be a Ford if they keep stuffing up the Mondeo give us what Ford Europe gives their customers CHOICE

[jpd80]

Originally Posted by JPFS1

The ROT seems to be setting in... when public perception can't see a viable outcome for Ford Australia's manufacturing, you can almost be certain that this will be the outcome.

They were talking about the job cuts on ABC radio this morning, don't usually listen to that station, but while flicking, heard the subject and left it on, ALL feedback from jo blogs ringing in and their txt messages into the station were ALL negative about Ford Australia's future, even though they don't know the first thing about what's really going on and what can make it work.

This mindset though will not help sales along that's for sure.

Everything is perception driven, look at Mitsubishi and the campaign waged against it,
saying a car is going to be killed is bad enough but say it enough times and it becomes a reality.

I'm not sure that Ford now deserves the flywheel of anti press it's now getting but
who outside of a few fans really cares about the soon to be released Territory?
Holden have successfully relegated that to page 55 with their profit announcement
and Ford announcing workforce custs at this instance have shot themselves in the foot.


This is like watching a greek tragedy unfold in front of you,
the best car is not selling and in fact facing the axe.

If this company cannot or will not engage in self promotion then they risk becoming extinct
as a local manufacturer and that will be their fault becuaethe market is still there but Ford
has chosen the minimalist/eficiency path.......

[Polyal]

Originally Posted by JPFS1

The ROT seems to be setting in... when public perception can't see a viable outcome for Ford Australia's manufacturing, you can almost be certain that this will be the outcome.

They were talking about the job cuts on ABC radio this morning, don't usually listen to that station, but while flicking, heard the subject and left it on, ALL feedback from jo blogs ringing in and their txt messages into the station were ALL negative about Ford Australia's future, even though they don't know the first thing about what's really going on and what can make it work.

This mindset though will not help sales along that's for sure.

Agreed, Foa and Marketing need to pull their finger out now, not in 3 months time.

They need a lovey dovey add talking about the future and all the tech that is coming in one add. It can be done, Holden has done it in the past. They talked about sidi and how Holden means alot to Australia blah blah blah and it seemed to work well enough.

Ford US need to also work out whats going on with the platform and Brand. Im sure regardless of sales over the next few years the decision is made and its either going to be really good, or really bad. I cant see any middle ground.

No doubt Fords response will be another fluffy message about the T6 program and hope the blind masses think that is somehow related to manufacturing here.

[Ford17]

I'm not sure some flash-in-the-pan marketing program is going to change the situation here.

The large RWD Family car segment is now a small, boutique, market.

Holden aren't doing anything right by flooding the market with cars at below cost. That's a sure-fire way to put yourself out of business altogether.

[SEZ213]

Originally Posted by apstar

So now we know why Ford decide to bring forward the Ecoboost engine into the Mondeo.... no it wasn't out of kindness they were in denial and yes someone at FoA will get a bonus for all of this, my next car may not be a Ford if they keep stuffing up the Mondeo give us what Ford Europe gives their customers CHOICE

That kind of attitude doesn't help.

Did Ford meet the market? No

Does that mean they don't give a toss? Who knows.

What I do know is that those who have purchased new cars - are helping - those who are just bitching about them canning jobs...which I'll say again...is VOLUNTARY...are not.

We have this perception that Ford should bend over backwards and they should keep the Falcon. Yeah, they probably should, but anyone in business with half a brain, knows that if your EBIT is crap...it's not viable. If they're only making 50c for every dollar they spend, they begin operating at a loss - which isn't viable for any business.

R&D for these kinds of projects isn't cheap - they need to make the money back somehow...and if people aren't buying their vehicles...they have to make ends meet somewhere.

Ford Europe are NOT Ford Australia - they may be under the one banner, but run two very different businesses strategically. The market in Europe is a lot higher, and for anyone to suggest that Ford Australia should do exactly what Ford Europe does - should never go into business for themselves...

[Buntz]

Originally Posted by jpd80

Everything is perception driven, look at Mitsubishi and the campaign waged against it,
saying a car is going to be killed is bad enough but say it enough times and it becomes a reality.

I'm not sure that Ford now deserves the flywheel of anti press it's now getting but
who outside of a few fans really cares about the soon to be released Territory?
Holden have successfully relegated that to page 55 with their profit announcement
and Ford announcing workforce custs at this instance have shot themselves in the foot.


This is like watching a greek tragedy unfold in front of you,
the best car is not selling and in fact facing the axe.

If this company cannot or will not engage in self promotion then they risk becoming extinct
as a local manufacturer and that will be their fault becuaethe market is still there but Ford
has chosen the minimalist/eficiency path.......

It just seems like Dearborn are smiling as they tie FoA's hands... and slowly watch what they do here... die.

[Polyal]

Originally Posted by Forda

I'm not sure some flash-in-the-pan marketing program is going to change the situation here.

The large RWD Family car segment is now a small, boutique, market.

Holden aren't doing anything right by flooding the market with cars at below cost. That's a sure-fire way to put yourself out of business altogether.

Its not going to fix it but doing nothing and slowly dying is not an option I would utilize.

[Ford17]

Originally Posted by Polyal

Its not going to fix it but doing nothing and slowly dying is not an option I would utilize.

Dying is what happens when you sell at below cost continuously.
Making a profit does not involve selling the most cars.
Understanding your market and adapting to it keeps you in the game.

[Polyal]

Ah yes but you know that being number one has a snowball effect yes? Why would someone buy from a company that is perceived to be struggling?

The sheep that buy the commodores are giving into popular belief that Holden is more successful or better because they sell more.

[Ford17]

Originally Posted by Polyal

Ah yes but you know that being number one has a snowball effect yes? Why would someone buy from a company that is perceived to be struggling?

The sheep that buy the commodores are giving into popular belief that Holden is more successful or better because they sell more.

Ford are not, have never been, and are unlikely to ever be, for sale.

Holden's strategy of being number one at any cost is yesterday's tactic.
The US Parent is now majority owned by the US Obama Government, who won't be rushing in at any request to bail them out of financial strife.

[jpd80]

Originally Posted by Buntz93ED

It just seems like Dearborn are smiling as they tie FoA's hands... and slowly watch what they do here... die.

No, Ford has shot the FG and Updated Territory models out in the market just assuming that they will sell,
it is Ford head office asking what is going on, you told us that Falcon and Territory will sell better than our
corporate platform vehicles, explain your selves and why we should bankroll you for another $700 million
when our corporate vehicles would probably sell just as good or better.......

FoA are hopeless at self promotion, this is their biggest downfall and thinking they have more time than they do...

[Buntz]

Originally Posted by jpd80

No, Ford has shot the FG and Updated Territory models out in the market just assuming that they will sell,
it is Ford head office asking what is going on, you told us that Falcon and Territory will sell better than our
corporate platform vehicles, explain your selves and why we should bankroll you for another $700 million
when our corporate vehicles would probably sell just as good or better.......

FoA are hopeless at self promotion, this is their biggest downfall and thinking they have more time than they do...

It costs money to advertise.

[Polyal]

Originally Posted by Forda

Ford are not, have never been, and are unlikely to ever be, for sale.

Holden's strategy of being number one at any cost is yesterday's tactic.
The US Parent is now majority owned by the US Obama Government, who won't be rushing in at any request to bail them out of financial strife.

I agree Fords strategy gives for a better financial record, but we will see I guess who is manufacturing here long term. After all we are talking about Australian jobs, that should be priority, just at the moment Holden look better with that regard.

Its like GM vs Fords small/meduim strategy aswell. Fords give consumers better cars, GM's give consumers a better price. Hard call to say which one is better...IIRC GM small cars are outselling Fords even though Fords increased last month. But again, perhaps Fords margins are better. Both strategy's can work and its not simple to say which one is better.

[Gobes32]

Originally Posted by Sezzy

Unlikely - the overheads for temps are just as high, instead of paying an employee $20 an hour, they end up paying a recruitment agency $20 plus super, plus insurance, plus payroll tax, plus about 10% (so the agency makes a profit).

Ford do all their hiring in-house, when I say temps, it just means full time employees who are never actually signed up as full time, which gives Ford the oppurtunity to hire and fire as they wish.

[WOTDAH]

Originally Posted by Road_Warrior

It works out to 200-220 cars. So one day's production. Big whoop, it's probably left over that they can't find a use for.

Sorry I have to correct you there. A BIW (sheetmetal only) weighs no more than 300kg. So it'm more like 1300 odd cars.

[Polyal]

Originally Posted by Gobes32

Ford do all their hiring in-house, when I say temps, it just means full time employees who are never actually signed up as full time, which gives Ford the oppurtunity to hire and fire as they wish.

Yeap AFAIK PD is the same. This is not just a Ford thing though.

[b0son]

Originally Posted by Buntz93ED

It costs money to advertise.

It clearly cost more not to.

Holden advertise prolifically. They post a profit.

[jpd80]

Perception is everything and once the sharks smell blood, they won't let go....
How many potential sales are screwed because people believe every other report that
Ford Australia are buckling at the knees and considering dropping the Falcon?

That has to be taking its toll and Ford sitting there like stale bottles of pi$$
not doing anything either is quite remarkable, it's like they have a death wish...

[whiteelfalcon]

Globally ford know what they have planned.
The CEO of the fmc says rwd blah blah blah global one ford blah blah blah..... Australia?, Where's that? Scamper, scamper, along you little reporter.

It is clear what is going to happen to the falcon and sometime off in the future territory. It is easy enough to see. Look at the current global ("american") vehicles. fusion/lincon line, bit larger taurus, and the edge line.

Right where a smaller falcon, (read current dunnydore size) and territory sit in the market. The next US sedan models due out ~2013, and the hint of taurus maybe a year or so later seems to sit right when the falcon will die off.

http://www.roadandtrack.com/future-c...nd-lincoln-mkz

http://www.autotropolis.com/auto-new...fficiency.html


I'm sure the Aussie team would have had a very small hand in helping the design of these vehicles along the way, over the past couple of years, but they have spent the past few years working on the ranger, giving the parent company a reason to keeping ford Australia operating.
Thanks Ladies and Gents for doing that.

I hope ford Australia hangs around long enough that we get to see these new vehicles. Ford Australia has been technology back water for the past few decades.

It is only now with one ford blah blah over the past couple of years that anything interesting has occurred.

Originally Posted by Polyal

Ford US need to also work out whats going on with the platform and Brand. Im sure regardless of sales over the next few years the decision is made and its either going to be really good, or really bad. I cant see any middle ground.

[Road_Warrior]

Originally Posted by jpd80

No, Ford has shot the FG and Updated Territory models out in the market just assuming that they will sell, it is Ford head office asking what is going on, you told us that Falcon and Territory will sell better than our corporate platform vehicles, explain your selves and why we should bankroll you for another $700 million when our corporate vehicles would probably sell just as good or better.......

FoA are hopeless at self promotion, this is their biggest downfall and thinking they have more time than they do...

Spot on there.

Originally Posted by WOTDAH

Sorry I have to correct you there. A BIW (sheetmetal only) weighs no more than 300kg. So it'm more like 1300 odd cars.

No need to apologise, you're dead right. Even still, 1300 cars is just over a week's production. Nothing really in the scheme of things.

[jpd80]

Originally Posted by Road_Warrior

Spot on there.



No need to apologise, you're dead right. Even still, 1300 cars is just over a week's production.

Well....... at the moment it close to a month's worth of sedans....

[Road_Warrior]

Originally Posted by jpd80

Well....... at the moment it close to a month's worth of sedans....

But if you include Territory and ute its not a lot.