Ford may leave Australia

The automotive component industry expects Ford to exit Australia, with many writing the company out of plans from 2016 onwards.

It comes only months after the company received a $34 million bailout in January to continue production in Australia to 2016, according to the ABC, and only days after the Government announced that it would not offer any further financial assistance to Ford.

Last week's announcement of 400 layoffs at its plants in Melbourne and Geelong have been viewed as the tipping point for the company in Australia.

Bob Graziano, president and chief executive of Ford Australia, said the cuts were being made because of slowing sales of large cars, which have continued to decline over the last decade and haven’t rebounded as expected

PPB Advisory's Stephen Longley explained that component makers are taking the first step.

"It's going to be a slow death, or nearly a death by 1,000 cuts for some of the suppliers," he told ABC local radio.

"There's been no announcements. The expectation though is that this will happen, and without any announcements, all the people I deal with in the supply chain are assuming this is going to be the case.

"So decisions are being made on the basis that Ford will definitely not be around from 2016."

There has also been the longer term view that this will definitely harm automotive component makers, as Australia will become a two car maker market.

"There will be, in my view, a reduction in the number of component suppliers in Australia as they need to compete competitively with global suppliers for that business with Toyota and Holden and obviously the flow-on effects from the reduced demand has resulted in an exit of Ford from the industry," he said.

The minister for employment and workplace relations said that the manufacturing industry is changing and that even "without conceding Ford's going… we'll wake up one morning and find Ford is no longer there, change is an inevitable part of the Australian economy," he told the ABC.

"I think manufacturing will continue in Australia," he added.

However the fact remains that unless the automotive industry continues to be supported by the Government the sector will most likely fail soon.