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Ford boss reveals thinking behind Australian exit

Out of reach: Ford’s Joe Heinrichs says while Canada’s high-cost car-making industry can survive, Australia’s could not.

Ford’s Joe Hinrichs says Australia was too far away to make things viable

2 Jul 2013

FORD’S North American president, Joe Hinrichs, has revealed a rare insight to the US-based company’s decision to close its Australian car-making business.

Mr Hinrichs has used the decision to shutter Ford’s Australian operations from 2016 to explain why Canada’s car-making industry – also one of Ford’s highest-cost markets worldwide – will survive.

“Australia is isolated with an industry of about one million units. Logistically it is not a good location,” Mr Hinrichs told Canada’s The Globe and Mail yesterday.

“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,” he said.

“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 Australia announced last month that it would stem years of losses and close down its Broadmeadows-based assembly line and Geelong engine-making plant by late 2016, ending local production of the Falcon large car and Territory soft-roader..

Early last month, Mr Hinrichs said Canada, like Australia, was a high-cost country in which to build cars, but because Canada shared a border with the US, it could continue to survive.

He said the fact that Australia was an isolated, high-cost market that had almost eliminated tariffs and allowed cars made in South Korea, China and Thailand to flood in had contributed to Ford’s decision.

Mr Hinrichs told The Globe and Mail that governments had to work with car-makers to support the industry.

“I think we need to look at what’s been going on around the world including in the United States ... look at what the costs are for the next generation of workers coming into the auto industry,” he said “We need government support – that by the way, happens everywhere in the world.

“We need to look for unique Canadian solutions, but at the same time move us forward to an overall more competitive manufacturing cost.” Holden announced last month that it wanted to sit down with its Australian workers and unions to work out ways to help it cut production costs at its Adelaide-based production line and its Port Melbourne engine foundry.

The car-maker said it needed to thrash out wage cuts for its workers to help it become more competitive against cheaply priced imports.

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