Ford receives $31.8 million boost to local operations

FORD Australia’s manufacturing operations have received a $31.8 million boost with the announcement this morning that it will invest $20 million expanding its Geelong casting plant to build brake components for Bosch and that it had received $11.8 million in federal funding for its facelifted 2011 Territory SUV.

Ford Australia has confirmed to GoAuto that the casting plant, which was up for sale 12 months ago, had received significant (but undisclosed) funding from the Victorian government that would enable it to manufacture up to one million brake rotor components for Bosch Chassis Systems Australia.

The casting plant upgrade will create 50 new jobs, increasing the workforce at the Geelong site to 150, and will see production at the plant increase “in the foreseeable future” from its current level of 30 per cent to almost full capacity – that is, to about 19.5 hours a day.

Ford Australia has also revealed that it has received $11.8 million from the federal government for the 2011 Territory, with funding drawn not from the $1.3 billion Green Car Innovation Fund (GCIF) but from the former Automotive Competitiveness and Investment Scheme (ACIS).

A similar situation occurred 18 months ago when Ford received $13 million through the reactivation of ACIS funds to keep open its Geelong engine plant, part of a $21 million upgrade undertaken to build inline-six petrol engines that meet the Euro 4 emissions standard – for Territory (since last year) and for Falcon (from June 2010).

The Geelong casting plant builds the inline-six engine blocks, but will not be involved in the forthcoming turbo-diesel engine that will be launched with the upgraded Territory in 2011.

Ford Australia president Marin Burela (left) and federal industry minister Kim Carr inspect brake rotor castings at the Geelong plant.

The diesel will be fully imported, despite careful wording of press material issued today that describe the federal government’s funding for the “Euro IV Territory, available in petrol and diesel from 2011”.

Ford is still to commit to a long-term future for its Geelong casting and engine operations, conceding that a move to the Euro 5 standard in 2012 – a timeframe now under consideration by the federal government – would be “difficult”.

The Australian manufacturer is also still to reveal whether it will continue to build the Falcon and Territory, which have the same underpinnings, into a new generation later this decade.

Ford Australia spokesperson Sinead McAlary would not disclose the terms of the contract with Bosch - which GoAuto understands is initially for three years - but said that it would not have made the investment in the casting plant unless there was a profit to be made.

“It is a significant deal, but I am not prepared to discuss the specifics,” Ms McAlary said. “The specifics of our contract with Bosch are obviously commercially confidential, but we wouldn’t be investing $20 million in the casting plant if it wasn’t worth it.”

Ms McAlary said Bosch had not contributed cash to the casting plant upgrade, but the contract – which is a novel arrangement for Australia, with the big car manufacturer becoming a major supplier – was lucrative enough to warrant a large investment.

“There’s a lot of discussion in the industry that the manufacturing industry needs to think differently, needs to be more innovative, and when we were looking at what we would do to ensure the viability or otherwise of the casting plant, one of the options we looked at was the potential to sell it,” she said.

“(But under this arrangement) we will be producing one million brake components annually for Bosch – they will be our customer ... and we will actually be a supplier to the industry as well as a customer of the supply chain.”

The latest funding announcements at Ford follow the $230 million investment in “sustainability initiatives” revealed in July last year, when Ford walked away from its plan to produce the next-generation Focus small car in Australia from 2011 and said it would instead release a four-cylinder petrol Falcon and a diesel Territory that same year.

At a press conference in Geelong this morning, Ford Australia president Marin Burela said the casting plant upgrade “keeps in Australia work that could otherwise have gone to Chinese manufacturers, which is a fantastic testament to the skills and productivity of our workforce”.

“It is vital that automotive manufacturing skills remain in Australia for the viability and strength of the entire sector, and we’re very pleased the Australian and Victorian governments have recognised this through their support,” he said.

Federal industry minister Kim Carr said taxpayer funding for the 2011 Territory would lead to increased volume at the Geelong casting plant.

“Certainty makes announcements like this upgrade possible,” Senator Carr said. “The (federal) government will continue to work with Ford and the wider automotive industry to develop a modern, innovative sector supporting high-skill, high-wage jobs.

“Government funding for the Territory engine technology will lead to increased volume at the plant. As a result, the plant will become a leading national facility using new technologies to increase energy efficiency and minimise waste.”

Victorian premier John Brumby added: “Victoria is the engine room of Australia’s automotive industry – our sector is worth $15 billion and employs 35,000 – and the Victorian government is committed to its long-term future.”

The casting plant upgrade will take place of the next three years.

Among its environmental benefits are: an electricity efficiency gain of more than 5100 kW hours a day, obtained by reducing furnace idle times increased use of recycled stormwater to 77,000 litres a week, or 3.7 million litres a year increased use of recycled shredded metal, up from 32 to 70 per cent (equivalent to 67 tonnes of metal a day) increased sand reclamation of almost 100 per cent by selling around 138 tonnes of surplus sand each week for cement production (reducing sand landfill requirements to zero).