Big four sing FTA praises

UPBEAT Ford Australia president Geoff Polites has led a gaggle of local car company chiefs in welcoming the US free trade agreement, signalling a major shift in the Blue Oval’s export thinking.

Responding to Monday’s FTA announcement, which is yet to ratified by the US Congress and Australian Parliament, Mr Polites was more positive than ever about vehicle export potential for Ford Australia, pledging his company was ready to meet opportunities presented by the opening of the US auto industry.

“It is too early to determine any future plans, but the FTA will allow Ford to examine new market possibilities that were previously not available due to prohibitive import duties to the US,” he said.

“Ford Australia has a proven track record of developing award-winning vehicles within a flexible and cost-effective manufacturing environment.

“We believe that Ford Australia is well placed to meet these new challenges while also looking for the opportunities that come from the opening of the US market.” In his capacity as Federal Chamber of Automotive Industries president, Mr Polites said the FCAI hopes the new deal, which ends a 25 per cent tariff on utility vehicle exports to the US, will further underpin the establishment of a foothold in the world’s largest automotive market for local car-makers and component suppliers.

“The agreement also opens up the possibility that Australian manufacturers will be able to take advantage of new opportunities for exports of utility vehicles to the United States,” he said.

Holden was the first of the big four Aussie vehicle manufacturers to praise the FTA, issuing a press release on Monday.

Holden chairman and managing director Denny Mooney said the agreement would provide increased opportunities for both countries to import and export vehicles and components, as well as drive competition in local new vehicle and components markets.

“From the Australian perspective, we believe it will provide the best possible opportunities for Australian car-makers and component manufacturers seeking to export to the United States.

“It is also a positive outcome from an import perspective because Holden is the industry’s largest importer of engine components and transmissions from the United States.

“It is a great boost for any manufacturer or supplier sourcing components from the US because it will make their products more competitive for Australian buyers,” he said.

Both Holden and Ford have utility vehicles based on the Commodore and Falcon respectively that shape up as potential US exports if the FTA gets green lighted and the 25 per cent 'chicken tax' on commercial vehicles is scrapped.

GM product czar Bob Lutz has already talked of the V8 SS Commodore ute as a new-generation Chev El Camino.

But Mr Mooney is also keen to bolster Holden's SUV stocks in Australia with a large off-roader to take on the likes of the Toyota LandCruiser. The Chevy Trailblazer - based on the GMT360 platform - has been mooted as a candidate for import to Australia by Mr Mooney.

Mitsubishi Motors Australia spokesman Charles Isles said the FTA would impact positively on the increasing number of components MMAL sources from the US, though cutting the current 2.5 per cent duty on passenger vehicle exports to the US would have only a minor effect on the profitability of MMAL’s US-market Diamante.

Toyota Australia is the least affected of the local car manufacturers as it does not export to the US and has a local sourcing policy to minimise offshore component sourcing.

Toyota Australia spokesman Peter Griffin said increased economies of scale among local suppliers would be of greatest interest to Toyota, but was wary the FTA had not yet been finalised. It’s believed a working FTA with the US is as much as 12 months away.

“Our position at the moment is that we’re going to continue talking to the federal government just to determine what the full implications of this are going to be,” he said.

“Given that it’s yet to go through Congress and the houses of Parliament here, there’s some way to travel. So from a short-term perspective it doesn’t really make much difference to us.

“The tariff on passenger cars (imported to Australia) doesn’t go to zero until 2010, so that’s still some time off. We’ve made a big investment in Camry and will continue down that path and we also want to continue down the path of being the largest exporter.

“We look at local suppliers as an integral part of that too, so if there’s benefits from a supplier point of view via economies of scale that would be positive.” Department of Foreign Affairs and Trade figures showed the US was the second largest automotive product importer to Australia (behind Japan) in 2002-03, totalling $2.5 billion.

However, given the US was the second largest export destination for Australian automotive products in the 2002-03 financial year (behind Saudi Arabia), at about $900 million, it appears the big FTA winners will be Australia’s automotive component suppliers.