Australia lacked scale, was too expensive: Ford exec

Joe Hinrichs, executive vice president and president of The Americas at Ford, has given an explanation of why the company decided to end its Australian operations, citing isolation and high costs.

Hinrichs was discussing Ford’s operations in Canada with the country’s Globe and Mail. He cited Canada’s skilled work force and its strong dollar, which has created difficulties for Ford in that country as well as in Australia.

“That’s a challenge that we all face for the future,” he said. “Having said that, we’re committed to having a Canadian manufacturing footprint.” 

However, Canada, unlike Australia, benefited from scale, which made up for the high-cost environment the company faced in its operations there.

“Logistically it is not a good location,” Hinrichs said of Australia.

“The combination of the high Australian dollar and isolated location doesn’t make it a good export base and not a big enough total [sales] volume industry to support manufacturing.

“The Canadian situation is a little different than Australia because there is enough volume in the total North American industry to support high-volume plants, which makes up for some of those other issues.”

Ford announced in May that it would cease manufacturing in Australia in October 2016, at a cost of 1,500 jobs at its Geelong and Broadmeadows factories, and ending its nine decades of car making in Australia. Ford Australia will continue R&D in Australia.

The Ford executive also affirmed the need for continued subsidies to car makers.

“We need government support – that by the way, happens everywhere in the world,” he said.

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