Ford shuts down, cuts jobs, but keeps our cash

Jessica Irvine on the economic and political fall-out of the Ford shut-down

GOVERNMENT intervention would not have saved Ford Australia's manufacturing jobs, Victorian Premier Denis Napthine says.

Ford Australia president and CEO Bob Graziano today announced that the company would shut the Geelong engine factory, costing 510 jobs, and the Broadmeadows car assembly line, shedding another 650 positions.

Sacked workers have been offered a $39 million rescue package from the Federal and Victorian governments to help them find a new job.

Dr Napthine met with Ford representatives today and was told there was nothing either the Victorian or Federal governments could do to change their decision, he said.

"I made it very clear to them: 'Is there anything we can do to change the mind of your company', and they said: 'there's nothing you can do, nothing the commonwealth can do'," Dr Napthine told 3AW.

"They said it's simply a matter of the cost of production here versus the declining market for their products."

Dr Napthine also blamed the carbon tax for making manufacturing more expensive in Victoria.

VIDEO: FORD ADS YOU KNOW AND LOVE

"The carbon tax is making our electricity much more expensive. The cost of energy is a significant component of our manufacturing industry," he said.

Ford has announced its plants at Broadmeadows, in Melbourne's north, and Geelong, will close their doors in October 2016, resulting in the loss of 650 and 510 jobs respectively.

The Gillard Government will contribute $30 million with only $9 million coming from the Victorian Government.

Prime Minister Julia Gillard called on Ford to contribute money to the fund.

Ford explains why it is shutting its manufacturing plants in Melbourne and Geelong with 1200 jobs to go

The PM said Ford would keep a $34 million taxpayer grant to make new models in 2014 and secure jobs until 2016. She said Industry Minister Greg Combet was told about the closure on Sunday.

Ms Gillard said Australia would continue to be a country that manufactures goods.

Victorian Deputy Premier Peter Ryan said the end of manufacturing at Ford was a black day, but it strengthened the case for the DisabilityCare headquarters to be based in Geelong.

"For those people who bear the brunt of this, this is indeed a black day," he told reporters in Melbourne.

"Our thoughts go out to those who are directly affected."

Acting Industry Minister Craig Emerson said Holden had promised to stay in Australia until at least 2022.

Opposition Leader Tony Abbott said it was a "black day for Australian manufacturing".

Ford Australia President and CEO Bob Graziano making the dismal announcement. Picture: Glenn Daniels

There are concerns the grant will be nowhere near enough to help re-skill the workers at Broadmeadows and Geelong who have been told they will no longer have a job when Ford ceases production in October 2016.

Ms Gillard said there would also be $12 million in assistance for automotive supply chain - $10 million from Canberra and $2 million from Victoria ? to support the thousands of other workers in industries that rely on Ford such as component makers to help them diversify and win new markets.

Union representative Leigh Diehm spoke at the Broadmeadows plant and said workers were "shocked and devastated"? by the news.

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"We also have great concern about the flow on affect through the automotive industry," he said.

"Unemployment in this state is high and they (the workers) are quite concerned about the future."

"This will gut Geelong and gut Broadmeadows the people living in these communities will be gutted."

Workers at Ford's Broadmeadows plant contemplate their future Picture: Glenn Daniels

He said it was too early to tell if the announcement was an indication for the future for other manufacturing companies such as Holden.

Ford worker Stewart Harris, 42, said people were in tears when told the plants would close.

"I still can't believe it," he said.

"It's a sad day for people that work here and it's a sad day for this country."

The father of two children under five told his partner of the cuts this morning.

"I've got two small kids and a partner," he said.

"I'm like everybody else here with families. I'm in shock."

The company says it will remain in Australia selling imported cars, just as Mitsubishi did when it shut its Adelaide car factory in 2008.

A worker at the Ford Broadmeadows plant after today's announcement. Picture: Glenn Daniels

The announcement will leave Toyota and Holden as the two remaining car manufacturers in Australia.

"We don?t take these decisions lightly. We looked for every opportunity but ? manufacturing in Australia is not viable for Ford in the long term," Mr Graziano said, adding that manufacturing costs in Australia are double what they are in Europe and three times higher than in Asia.?

"We came to this conclusion only after exhausting all other alternatives. We did not leave any stone unturned. The business case did not add up."

Mr Graziano said today's announcement would not impact the recent sponsorship announcement for the Geelong Football Club.

Toyota spokesman Glenn Campbell said the company would continue making cars in Australia despite Ford's closure.

"The operating environment is extremely tough at this time but Toyota believes that car manufacturing is still an important contributor to the Australian economy," he said.

"Toyota intends to maintain its operations in Australia."

The three-year warning is unusually long given that car makers typically keep such announcements secret so as to not adversely affect sales in the interim. Mitsubishi gave just seven weeks notice before it shut its Adelaide factory in 2008.

The closure wil result in the loss of 1200 jobs at Ford's Geelong and Broadmeaodws (pictured) plants. Picture: Glenn Daniels

"We are making this commitment now ? to allow for an orderly transition for our employees, the supply base and the broader automotive industry," Mr Graziano said.

Ford says updated versions of the Falcon sedan and Territory SUV scheduled to arrive next year will go ahead as planned.?

The car maker said it intends to retain its design and engineering centre in Broadmeadows, which has about 1100 employees working on global Ford cars.

Ford will also increase its imported model line-up in Australia by 30 per cent over the next three years.

GALLERY: Ford Falcons over the years

Ford Falcon sales have fallen to their lowest since the Broadmeadows factory opened in 1960, and Ford?s overall sales in Australia last year were lower than they were 20 years ago.

The impact on suppliers is expected to initially be limited given that Ford?s local production had fallen to record lows in recent years and Toyota and Holden are expecting production increases in the next six months.

Holden has planned to increase production in anticipation of renewed interest in the new Commodore on sale next month, and Toyota has hired 140 factory extra workers on a six-month contract in response to increased demand for the locally made Camry sedan in the Middle East.

The Ford factory closure announcement was made as Holden held the media launch for the new Commodore in Canberra and most of the nation?s motoring press were out of mobile phone range. But Ford said the timing was a coincidence.

"First and foremost I made a commitment to tell the employees as soon as the decision was taken. The decision was taken last night," Mr Graziano said.

The writing had been on the wall for the Falcon for at least four years. In 2007 the company announced it would build the Ford Focus small car alongside the Falcon in 2011. But it axed those local production plans for Focus in 2009.

The Focus small car might have given Broadmeadows the throughput it needed to remain viable - just as the Cruze small car has done for the Commodore - but the Ford Focus instead comes to Australia from Thailand under a Free Trade Agreement.

Last year Australia imported 171,000 vehicles from Thailand (the second biggest source of new vehicles after Japan). In return, Australia exported just 100 Ford Territory SUVs.

Mr Graziano said the effect on the supply chain could not yet be quantified in a dollar figure but highlighted a "significant" amount of vehicle parts were resources in Australia and would be impacted in the future.

Ford said it will go ahead with the updated versions of the new Falcon Sedan and Territory SUV in 2014 as planned.

Ford Australia has been given $1.1 billion in state and Federal Government assistance since 2000.

Over the same period, Ford says it has invested $3.3 billion in design and engineering of future models.

Journalists at the launch of the new Holden Commodore in Canberra were sent secret text messages by Ford Australia staff in the early hours of this morning, before they were about to drive the new model on public roads for the first time. Ford claims the timing is a coincidence.

Ford Falcon sales have fallen to their lowest since the Broadmeadows factory opened in 1960, and Ford?s overall sales in Australia last year were lower than they were 20 years ago.

The big three car companies employ 17,000 people directly in Australia, while they have 55,000 employees when suppliers are included.

In Victoria, the car industry employs about 25,000 people.

Holden, Ford and Toyota have claimed they spend $2.25 billion in Victoria every year buying parts from local suppliers.

Ford is the third largest auto-manufacturer in Australia and employs 3000 people.

The Broadmeadows plant in Melbourne?s north manufactures the Falcon sedan and utility as well as the Ford Territory SUV.

Victorian Opposition Leader Daniel Andrews said that the news would be bad for workers and their families.

"The news that Ford is closing at Geelong and Broadmeadows is absolutely devastating for those communities and the Victorian economy," he said.

"Thousands of workers at those plants and workers in related industries will not only lose their jobs but face ongoing unemployment - unless the Napthine Government produces a jobs plan."

- with Stephen Drill, Alex White and Matthew Johnston

This reporter is on Twitter: @JoshuaDowling
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