Global integration is on the right track

Editorial comment piece from the September issue of Manufacturers' Monthly.The closure of Ford’s Geelong engine plant will bring short term pain for sure, but it could also mean the blue oval’s long term gain in Australia. Alan Johnson writes.

WHILE Ford’s decision to close its Geelong engine plant is bad news for Australia’s manufacturing industry, and for the workers affected, it’s not the end of car making in Australia, despite what the doomsayers say in the main­stream media.

In fact, the move to use an imported engine means the company’s long term survival in Australia is significantly stronger.

The key is global integration and is further evi­dence that Australia’s car industry, and manufacturing in general, cannot be isolated from globalisation.

Ford’s plan to use a US-made V6 engine rather than spend a reported $40m engi­neering its ageing straight six to comply with ‘new’ Euro IV emissions standards was always on the drawing board.

Already delayed a couple of years following strong lobby­ing by Ford, and the other car makers, the Euro standards will be compulsory in Australia for all new cars by 2010 and for all new models by 2008.

The delay of the emission laws until July 2008, means the upcoming new Falcon can be launched early next year, allowing the company to use its present engine for a further two years, and extend the Geelong plant until 2010. (The laws came into effect in Europe in 2005 for new mod­els and 2006 for all cars.)

However, it is clear, the sur­vival of Ford, or Mitsubishi for that matter, is not neces­sarily linked to whether their engines are produced here, but rather whether their models can find a global export niche.

The closure of Ford’s engine plant is just a part of the big picture. Following Toyota and GM’s lead, Ford is now embarking on the global engi­neering path.

Part of the strategy is to produce a large rear-wheel drive car that will adopt the new V6 engine. Much of the development of this model, to be launched in about five years, is expected to be done in Australia.

This is mainly due to Australia’s globally recognised engineering expertise in rear wheel drive cars and the incentives offered by the gov­ernment’s Automotive Competitiveness Investment Scheme (ACIS).

The move is very similar to Holden’s very successful role in GM’s vehicle stable, as Rod Kean, GM Holden’s executive director of manufacturing, explained last month at MM’s Endeavour Award presenta­tion in Sydney.

The news that Ford will assemble the European-designed four cylinder Focus range, starting in 2011, is fur­ther evidence that Ford is on the global engineering path.

Though the cynics suggest this move is more to do with the spare production capacity on the Falcon/Territory line than anything else.

While the Focus decision is positive news for local indus­try, Ford suppliers should also remember globalisation works both ways. At present around 70% of components for Falcons and Territories are locally made, but that could change.

Ford Australia’s president, Tom Gorman, has warned smaller suppliers they may need to diversify their opera­tions because as the company integrates more, Ford will be expecting more from them.

To survive in today’s com­petitive car industry today hard decisions have to be made, as many manufacturers know first hand.

But as Holden’s Rod Kean explained in his Endeavour Awards keynote address, it’s not just about machinery and technology, “anyone can buy that”.

“It’s more about people and how you use the technology.”

Kean’s uplifting presenta­tion highlighted all that is pos­itive in Australia’s manufac­turing industry, the innovative ideas, the can-do attitude, the smart thinking impressing all at the event.

He used the present Commodore’s production line as just one example of people power, where a 33 year-old Aussie engineer, came up with a design which allows a Commodore cockpit assembly to be installed in just 45 sec­onds.

Unlike other car makers who need to juggle the cock­pit through left or right front door openings depending on export market, the Holden system can do both left and right hand drive vehicles with just one robot, through the windscreen aperture.

Despite being written off by the mainstream media many times in the past decade, the Endeavour awards showed that manufacturing in Australia continues to survive, and in fact prosper.

The Endeavour awards were established in 2004 to recognise the essential role manufacturing plays in Australia’s economy. They acknowledge and reward excellence in our manufactur­ing industry.

This year the Awards attracted a record 55 finalists for the eight categories. Reading the companies’ achievements is clear proof that manufacturing in Australia does have a long-term future.

Following the success of the Endeavours over the past four years, we have now decided to align the awards program with National Manufacturing Week (NMW), and will be holding the presentation cere­mony at a gala dinner, to be held May 28th 2008.

To align the awards with NMW 2008, we have moved all the deadlines forward two months, meaning the program will open for nominations next month, October 1. For more information visit www.manmonthly.com.au.