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Ford locks in next Falcon, Territory - but not LTD

Long odds: The next generation of Ford's Fairlane (above) could hinge on an export deal to replace the aged US-market Crown Victoria (below).

Ford Oz recognised as centre of product development excellence in $1.8b 10-year plan

9 May 2006

THE future of the Blue Oval’s Australian-built long-wheelbase sedans remains unclear, despite a $1.8 billion investment announced by the Ford Australia on Friday (May 5).

The investment in new products including large car (Falcon) and four-wheel drive wagon (Territory) models will also ramp up Ford Australia’s global influence as a "centre of excellence" for product development for the Asia-Pacific and Africa regions.

After years of downplaying the need for exports, Ford Australia can now actively factor in a viable export program for future left-hand drive Falcon and Territory models.

As part of the 10-year, billion-dollar investment, and in conjunction with the work on future Falcon and Territory models (codenamed E8), the company will also engineer a new global small truck platform, codenamed T6.

However, the Australian operation’s new level of responsibility in the Ford world does not automatically mean salvation for the struggling Fairlane and LTD long-wheelbase models, which were once flagships for the Blue Oval brand Down Under.

Ford Australia president, Tom Gorman, refused to discuss future long-wheelbase derivatives off the E8 platform last week. He admitted that building these vehicles was challenging in the current market but said the new deal was potentially good news.

"What today’s announcement does is make our business model here in Australia more robust so from that standpoint the simple answer is yes, but don’t construe that to mean that there is a market for it," he said.

"At the end of the day we have to start everything with the customer first and if there isn’t enough demand for it and no market for it it’s very hard for us to make a business equation out of it.

"We’re still wrestling with it."Mr Gorman said it was a well-known fact that the Fairlane and LTD were struggling but pointed out that the entire segment was struggling.

"We’re trying to make the right decision and all of our decisions are just selecting the right priority," he said. "We can’t do everything at the same time, so we’re going to continue to struggle with this."Mr Gorman said Ford Australia was not in a position yet, nor did it need to be, to declare its intention with Fairlane/LTD because there was still some "flexibility" in its future.

On the subject of long-wheelbase model exports he said they "wouldn’t hurt".

"It all comes down to volume," he said. "Clearly, when you rely on a domestic volume of about 100 a month it makes hard to make that equation to work.

"If there was an export component to it and that was more incremental volume for us it would help."

27 center imageOn the subject of whether a long-wheelbase Ford Australia vehicle could viably be a contender to replace Ford’s ageing rear-drive Crown Victoria, Mr Gorman said an impediment to that was that "somebody else is supplying that market today.

"So as a company we’re not going to compete with each other – that doesn’t make any sense," he said. "We’re not going to launch a product and try to take out another part of our company.

"What we have to do corporately is come up with the right strategy that mixes and marries with the opportunities that we have."He admitted that "technically" an E8-based vehicle could replace the Crown Victoria, however, his immediate focus was on growing Ford business in Australia.

Production of the Crown Victoria at St Thomas, Canada, has slowed because of poor sales and speculation mounting that the plant may be closed beyond 2012.

However, Ford headquarters in Dearborn, Michigan, has made a $US200 million commitment to the plant and the big sedan, which is a popular police vehicle in North America.

Buoyant Ford Australia executives credit the success of its work on the India Fiesta sedan for helping secure the T6 deal against heavy competition from Ford divisions around the world.

T6 is a likely successor to the Ford Courier/Mazda B Series, which currently rack up more than 400,000 sales globally annually off several variants, including 4x2 and 4x4.

Although the resulting T6 vehicles will not be built in Australia, it is expected to generate more than $700 million in research and development revenues for Ford Australia.

To cope with the extra workload, Ford Australia will add 273 mostly engineering jobs to its product development team, bringing to about 880 the number of engineering staff at Ford’s Broadmeadows and Geelong facilities.

Of the government money, $12.5 million will be used to revamp the design and engineering centre at Broadmeadows.

The Federal Government also kicked in $52.5 million financial assistance package for the company’s Australian operations to help ensure ongoing manufacturing. Of that money, $12.5 million will be used to develop a new research and development facility for the T6 project.

The Ford grants are in addition of any additional money the company may get under the $4.2 billion Automotive Competitiveness and Investment Scheme, which is expected to announce a new round of packages next week.

Ford’s vice-president and president of Asia Pacific and Africa, Peter Daniels, said the announcement "positioned Ford Australia to expand its sphere of influence and importantly its integration into the global Ford world.

"It will significantly improve the robustness of its on-going business operations here," he said. "As a recognised partner in Ford’s product development team, it will be incumbent on the team here to develop new best practices and methods of operating that will improve both quality and reduce the time to market."The Ford deal is also a shot in the arm for the Victorian car industry, which turns over about $10 billion a year, employs more than 28,000 people and exports about $2.7 billion in engines, vehicles and components and value-added design.

Ford Australia's future: key points

* 10-year, $1.8 billion investment for product development and new facilities
* Howard Government kicks in $52.5 million in financial assistance for E8 (future Falcon and Territory) and T6 (new light truck) programs
* E8 models expected to be exported to left-hand drive markets
* T6 platform design and architecture will be sold to at least 80 countries
* Ford Australia now a recognised "centre of excellence" in product development
* Additional 273 engineering jobs for Ford Broadmeadows plant, Geelong engine plant and You Yangs proving ground

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