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Falcon decision delayed

Cloudy future: Ford APA boss Joe Hinrichs admits Falcon sales slide, segment shrinkage, an unfavourable currency and other complexities are holding back a decision on future local production.

Regional boss insists that Ford Australia’s manufacturing future is not yet decided

9 Jan 2012


A SENIOR Ford executive has admitted that the future of the company’s manufacturing operations in Australia is not confirmed beyond the current model Falcon and Territory.

Ford Asia Pacific and Africa president Joe Hinrichs, whose region includes Ford Australia, revealed to GoAuto at the Delhi Auto Expo in India last week that a clear direction has yet to be fully determined.

It appears that Ford has delayed deciding what the Falcon replacement will be, as well as the future of manufacturing at Broadmeadows, amid a tumultuous 12 months of a skyrocketing currency, freefalling large-car sales, shifting consumer tastes, fragmenting vehicle segments and environmental catastrophes.

Mr Hinrichs told us that Ford is far from being alone in such decision-making processes.

He said the rapidly changing landscape over such a relatively short period of time means no firm anywhere in the world is now able to plan too far into the future without massive risk.

However, he expects recent and upcoming new model releases such as the Fiesta, Focus, Territory diesel, Ranger, Kuga and EcoSport will turn Ford Australia around, and also reiterated the vital role that Australia plays in the ‘One Ford’ strategy from a design and development point of view.

 center imageFrom top: Falcon, Territory, Taurus, Mondeo, Ranger.

Ford is thought to be investigating at least three likely Falcon replacement scenarios – manufacturing the next Taurus (due in about 2016) in Australia for local and export consumption, importing the next Taurus and switching the Broadmeadows vehicle line to another model, or ceasing local production completely (but not local engineering).

“We haven’t said anything about D/E vehicle platforms globally,” said Mr Hinrichs.

“We’ve got Mustang, we’ve got Falcon and we’ve got Taurus, but we have time for it to evolve and see we’re we are going to go with that.

“We are moving to global platforms and global scales, but part of our challenge is that we have a business plan in cycle. And we don’t really ever have good/bad/indifferent talks about the business plan. We don’t go in and say ‘Plant X is going to stay open for the next 15 years’ because we don’t know what will be 15 years from now.

“Trust me, I understand the interest in the future of Falcon and Broadmeadows. Believe me, I do.

“At the same time, we don’t talk about any of our manufacturing plans beyond a certain timeframe, so you guys might draw certain conclusions right or wrong.

“That’s why we get so anxious sometimes because we’re saying ‘we’re putting EcoBoost in Falcon, we’re putting LPI into Falcon, we’re putting diesel into Territory’, and we’re in that phase, but people are saying things (regarding Ford Australia’s) longer term (future) and drawing up conclusions.

“We’ve already said that if we do another platform, it won’t be unique to Australia – and we’ve said that repeatedly – but we’re not there yet.

“In the meantime, Broadmeadows production has dropped, which concerns us … but that doesn’t mean we come to a conclusion that is pre-determined to an outcome to the future of manufacturing. I don’t think we have made that decision yet.

“We plan for alternatives – we’re a business – but we’re still investing in the (current) Falcon and Territory.

“Do you go to a global rear-wheel-drive platform for large cars? That’s a decision that needs to be made.

“The Falcon name, large car segment, rear-wheel drive versus other alternatives, global platform, manufacturing – all these things are related, but they’re also part of the decision-making process.

“The choice we’ve made in the near-term is to continue to invest in Falcon and Territory and continue to make that business equation work – and it does today.

“Tomorrow we start planning for the future. We have started studying plans and alternatives for the future, as we’re expected to be, and there are different scenarios and different options.

“We’re also seeing the large-car market in the US decline … so there’s a lot to this.

“We’re not going to tell you now, but there will be the right time to say it whenever that is, and at the same time it is a lot more complicated.

“We’ve said we’re doing global platforms on B, C and D, but that implies we’re not going to do global platforms on D/E. I won’t give you the answer to that, but there are two alternatives.

“(Ford CEO Alan Mulally said) ‘if or when we do another large car it will be on a global platform’, but we have Mustang that today is on its own platform and it’s a very important car in our portfolio. That’s why it’s complicated.

“We have a strategy we’re trying to adhere to, but at the same time we’re trying to make business decisions.

“I’m sensitive to the issues and all the interest in it. There’s a lot of passion around Falcon in Australia – believe me, I get emails. I appreciate it. We love that.

“We’ll tell people of our plans when we’re ready to tell them … but it is fascinating to me that the people draw the conclusions that all these decisions have been made, when we’re sitting here asking the same thing.

“We’re playing it year by year, but at the same time we’re looking to where the business is going.

“One thing that’s changed lately is that the (large-car) segment has shrunk faster than we expected this time last year, and that’s a new dynamic we have to deal with. We weren’t expecting just 20,000 Falcons in 2011.

“Of course, the Australian market itself is a very important market for Ford and has been for a very long time. Especially now with the product portfolio we are putting in the Australian business, we have high expectations for our performance in the market there.

“There are three important components (to Ford Australia) – it’s a very important market, it’s a very important product development centre (one of the largest ones we have in the world) and of course very important is the manufacture of the Falcon and Territory.

“But the Australian (market) is changing … It’s expanding to include more smaller vehicles, as well as more fuel-efficient vehicles. Consumer needs and desires are converging around the world and that’s true for Australia as well.”

Mr Hinrichs championed the design and engineering facilities in Broadmeadows and Geelong, stating that the considerable investment Ford has undertaken over the last few years has created a world-class team in Australia.

“Part of the value (to Ford) are the facilities and test tracks in Geelong that already exist because land and facility investment is significant, so that experience base in Australia – though it is getting more expensive because of the appreciation of the Australian dollar – is very valuable to us.

“Our product development is growing full-bore globally because we have so much new product coming that we’re leveraging that experience that is critical to us … in Melbourne and Geelong.

“However, we’re also seeing significant growth in our engineering facilities in China. China is an 18 million unit market so it can obviously support a development centre on its own in conjunction with the rest of the world. Don’t underestimate how important all those facilities are to the Ford product portfolio.”

In reaction to rumours that Ford Australia is leading development of a large-car program for China, Mr Hinrichs said: “Within the region, Ford Australia’s development centre is very important … and is working on other products in conjunction with our engineering centre in Nanjing.”

Asked if the Australian government’s decision almost a year ago to phase out the Green Car Innovation Fund was a major setback affecting the decision on the future of the Broadmeadows and Geelong facilities, Mr Hinrichs said Ford has “a very good relationship” with the government.

“I can tell you in all sincerity that when we’ve brought Ford projects to discuss with the Australian government, we’ve had a receptive relationship and a good response.

“I value manufacturing, and so does Alan (Mulally). It is an important part of the economy. But at the same time we have to deal with the individual government policies and the competitiveness of markets.”

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