Ford may have survived with Focus: Carr

FORD Australia may have survived beyond 2016 if it had committed to building the Focus small car, according to the man who helped bring Holden Cruze production to Australia.

Former industry minister Kim Carr, who helped to provide the framework that is expected to keep Holden and Toyota making cars here into the next decade, told GoAuto that it was entirely Ford’s decision to walk away from plans to shore up its Australian car-making operations by building a small car.

“The company chose to withdraw from it (building the Focus here) – and remember they said publicly that they could not see how General Motors could make money on the (Holden-made) Cruze,” Senator Carr said. “Well, they did make money on the Cruze.” “We took capacity out of Korea to build the Cruze. This demonstrates the success of that program.” Ford announced in 2007 that it would build the Focus small car in Australia from 2010, alongside the Falcon family car and ute and Territory SUV, as well as fit the Falcon with an imported V6 rather than the traditional in-line six-cylinder engine.

However, it reversed that decision in 2009 with Focus production instead shifting to Thailand and a federal government handout giving more life to the locally built engine.

Left: Senator Kim Carr.

The decision is in stark contrast to Holden, which about the same time announced it would start building the Cruze sedan and hatch on its South Australian assembly line, launching production in 2011.

Holden’s scheme went ahead, and the Cruze now outsells the traditionally strong-selling Holden Commodore large car.

Mr Carr said Ford’s decision to pull out of Australia was a “national tragedy” even though it had been a “matter of public conversation” for some time.

“The truth of the matter is that Ford's decision rests upon low (production) volumes, and then the consequence of not having an export market is those problems are going to be exacerbated,” he said.

“The high dollar makes it difficult to maintain export markets even if you pursue them. Toyota and General Motors have pursued export markets with much more vigour, and I believe their long-term prospects are good – very good.” He said the boom in the mining industry had pushed the value of the Australian dollar up against other world currencies, creating a market that was extremely difficult for manufacturers.

Mr Carr also singled out the free trade agreement with Thailand, set up in 2005 to take advantage of South-East Asia’s second-largest economy, as one that had harmed Australia’s car-makers.

“There's the Thai free trade agreement that was adopted under the previous government that is profoundly disadvantageous to Australia,” he said.

“It's (the Thai free trade agreement) allowed the free market to apply, and we do not live in a level playing field.

“It's fantasy to believe that we operate in a level playing field on the international trading system.” He said once a free trade agreement was signed, it was difficult for a government to reverse a decision.

“I don't know how you do wind them back once you sign these deals, but I've always been highly critical of the sort of naive approach that has been taken on those free trade questions.” Also coming under fire was the opposition’s call for a Productivity Commission review into car-industry funding, with Senator Carr labelling the outcome of the review a “foregone conclusion”.

Instead, he said, the government should launch an independent inquiry into automotive industry assistance.

“The Productivity Commission is not interested in the future of the automotive industry – it is interested in its destruction,” he said.

“They had an ideological predisposition to the destruction of the industry – that is why we have to have an independent review.”