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Ford Oz fails, Falcon grounded

2013-05-24 10:23

LAST FLIGHT OF THE FALCON: Ford is set to end production in Australia which will result in plant closures, job losses and the end of its Falcon series of vehicles.

MELBOURNE, Australia - Ford Australia has announced the end of production at its unprofitable plants at a cost of 1200 jobs - and the awesome Falcons.

Ford Australia chief executive Bob Graziano made the announcement as he revealed losses of R1.2-billion after tax in the last financial year and R5.5-billion over the last five years.


Graziano said: "Unfortunately we will cease our manufacturing operations in October 2016. As a result, 1200 jobs will become redundant when those sites close. Given the fragmented market and the low model volumes that result, we decided that manufacturing locally was no longer viable. Our costs are double those of Europe and nearly four times those of Ford Asia."

Graziano - a former boss of Ford SA - said the decision was the result of local manufacturing being "driven by increasingly challenging market conditions - including market fragmentation and the high cost of manufacturing".

Australia has annual sales of only 1.1-million new vehicles but buyers have access to more than 65 brands and 365 models which, Graziano said, made Australia one of the most competitive and crowded automotive markets in the world.

"The business case simply did not stack up, leading us to the conclusion (that) manufacturing is not viable for Ford in Australia in the long-term."

Ford's factories in Victoria state will close but Ford Australia will now import product and employ 1500 people.


Australian prime minister Julia Gillard said the government would contribute the equivalent of  R276-million to support communities affected by the closures and R92-million to help automotive suppliers diversify. Gillard said:

"I understand many people will hear today's news and it will worry them. I understand that and I want to say to Australians that here in our nation we show time after time how good we are when we work together."

According to The Australian.com, Dave Oliver, Australian Council of Trade Unions secretary asked Gillard to call for a "crisis summit" on the future of the nation's automotive sector. Oliver said: "Car manufacturers are struggling with the high (Ausralian) dollar and trade barriers imposed by other countries. We need to ensure that our car industry remains viable so it can be part of the diverse economy we will need after the mining boom.

"The car industry provides 200 000 direct and indirect jobs and supports hundreds of smaller manufacturing businesses."


According to the Detroit News, the automaker plans to retire its Falcon, a vehicle that for decades has been exclusively produced in Australia and was for some years sold in South Africa.

Graziano told the DetNews: “The Falcon name is inextricably linked to Australia and being produced here. We will retire that name when we retire that vehicle (in 2016).”

The Falcon was sold in the US until the 1970's. For the past two decades the car, also available as a bakkie variant called the Falcon Ute, has been built exclusively in the Australia. Sales in Australia have fallen dramatically since 2000 and Ford has sold fewer than 20 000 Falcons annually in Australia since 2011.

Ford plans to update the Falcon a final time in 2014. The automaker has not decided the fate of its Territory SUV, which is based on the Falcon platform and sold in Australia.


Australian Manufacturing Workers' Union president Paul Bastian said the news was "a disaster" for workers and "a tragedy" for the local and national economies. "We want the government to call a meeting of all the auto players. We want to take the positives out of this. We want bipartisan support to see what we can do to ensure that we have an auto industry, that we have an industry that is sustainable."

The DetNews said Australia's auto industry was struggling with the effects of its expensive dollar, which has traded near or above parity with the US dollar for almost two years, squeezing exports and compounding rising production costs. Though Australia did not go into recession during the global financial crisis, domestic confidence has failed to return to pre-crisis levels, hitting car sales.

Canberra extended a R30-billion bailout to the ailing sector at the height of the global downturn and stepped in with additional lifelines to Ford and General Motors' subsidiary Holden in 2012.

Ford first began making vehicles in Australia in 1925 when Model T cars rolled off the production line in Geelong.
Read more on:    ford  |  julia gillard

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