FORD will cease producing vehicles in Australia from October 2016, in a move that will cost 1200 jobs.
Ford Australia boss Bob Graziano announced the closure of the car-maker’s Broadmeadows and Geelong plants in Victoria while unveiling a $141 million after-tax loss for the year, making losses of $600 million over the last five years.
He said the company had come to the conclusion that it was no longer viable to produce vehicles in Australia.
But he said the company would maintain a significant presence in Australia with a staff of 1500 in product development roles.
Mr Graziano said the decision was the result of market fragmentation, the small scale of the Australian market, and relative production costs.
He said the taxpayer-subsidised redevelopment of the Falcon and Territory models would go ahead for release in 2014.
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The company had modelled a number of different scenarios in an attempt to keep the company’s Broadmeadows and Geelong plants open, but it could not make the numbers work, Mr Graziano said.
He said the workers had been informed of the decision this morning.
Ford currently employs 3500 people at Geelong and at Broadmeadows in Melbourne.
The two plants manufacture the Falcon and the Territory SUV.
Over the past decade, Ford and its rival GM Holden have shared in more than $12 billion in taxpayer-funded industry assistance.
Sales of the Ford’s iconic Falcon model have fallen to about 20,000, from 80,000 two decades ago.
The decision will be a blow to jobs not only at Ford but also for the car parts industry. The auto industry underpins Victoria’s manufacturing sector.
In January, Ford announced its Territory and Falcon models would continue to be made in Victoria until 2016.
The company said at the time a $103 million production upgrade had secured its immediate future.
Today’s decision will put the spotlight once again on the future of the Australian car industry, and taxpayer assistance for the sector.
The federal government gave the carmaker an extra $34 million in January 2012, with a claim from Julia Gillard that the cash would “see the number of jobs grow” at Ford.
“There will be an additional 300 jobs as a result,” the Prime Minister said at the time.
The Coalition has vowed to put more constraints on car industry grants if it wins office.
Former Ford boss Jac Nasser, who ran the firm’s global operations from 1998-2001, warned earlier this year that the end of car manufacturing in Australia seemed inevitable.
The now-BHP Billiton chairman said it was disappointing Australians weren’t more patriotic in supporting the local industry.
The federal and Victorian governments are expected to announce an assistance package following the decision.
The governments have been working on a joint range of measures to ease the burden on the workers and local communities.
Acting Industry Minister Craig Emerson said earlier the government would do what it could for Ford workers and affected local communities.
“In these situations our top priority is ensuring workers and their families in regional communities are looked after,” he said.
“Workers need to be given every opportunity to find new jobs and regional economies and communities need to be assisted in securing new investment and employment opportunities.”