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Ford workers wait for job cut confirmation

‘Urgent action’ foreshadowed in China as Ford fights to reverse fortunes

General News logo19 Oct 2018

FORD’S 2600-strong workforce in Australia is bracing for potential job cuts under a global restructuring that has become more urgent after a savage 43 per cent drop in vehicle sales in China last month and mounting financial losses in the Asia Pacific region.
 
The company’s sales in China are now running 30 per cent behind last year’s levels – a concern for Australian-based Asia Pacific product development centre designers and engineers who rely for a slice of their work on Chinese products.
 
Ford executives say a raft of new models, including the latest Focus, facelifted Escort and new Territory SUV, should help to pull Ford sales out of the nose dive in the world’s largest motor market that this year appears destined to record its first annual sales decline in memory after catching a bad case of the economic jitters.
 
Ford Australia communications and public affairs director Martin Gunsberg told GoAuto that it was too soon to confirm any specifics for Australia of the recently announced global restructuring.
 
“We are in the early stages of reorganising our global salaried workforce to support the company’s strategic objectives, create a more dynamic and empowering work environment, and become more fit as a business,” he said.
 
“The reorganisation will result in headcount reduction over time, and this will vary based on team and location. We will announce more specifics at the appropriate time.”
 
Ford has not said how many white-collar jobs will go under the global restructuring, but American analysts predict up to 24,000 or 12 per cent of Ford’s 202,000 workers will be lost one way or another.
 
One of the biggest concerns for Ford is the Asia Pacific region that includes China and Australia.
 
In Australia, Ford sales last month fell 25.7 per cent to bring the year-to-date sales deficit compared with last year to 12.4 per cent at the end of September.
 
Ford has been one of the hardest hit motor companies is China, with sales last month falling four times faster than the overall new-vehicle sales decline of 11.6 per cent, precipitated by negative buyer sentiment amid a weakening economy and the trade war with the United States.
 
While 2018 year-to-date Chinese vehicle sales are still up on 2017 levels at the three-quarter mark of the year – by just 0.6 per cent – the market decline has accelerated in recent months and appears to be on target for the first full-year sales decline in memory.
 
Ford Asia Pacific president and chairman and CEO of Ford China Peter Fleet said in a statement that the company was intensely focused on the sales turnaround plan in China.
 
“We believe the new products, which have been custom-designed and developed with Chinese customers in mind, will help us to regain momentum in the world's largest auto market,” he said.
 
Mr Fleet made the comments at the Chinese launch of the new China-only Territory SUV developed in conjunction with one of its Chinese joint venture partners, Jiangling Motor Corporation (JMC).
 
The new mid-sized Territory is unrelated to the Falcon-based large SUV made in Australia until 2016. The new model is based on JMC’s existing Yusheng S330, and aimed at budget buyers in China’s many mid-sized cities.
 
The new-look Territory was put through durability testing in Australia at the Ford Asia Pacific product development centre in Victoria ahead of its Chinese showroom roll out.
 
The same Australian team played a key role in the development of the Focus-based Escort – another China-only product at the budget end of the small-car scale.
 
A facelift for the Escort was shown at the Beijing motor show in April, but has taken until now to go into distribution in China.
 
Launched at the end of 2014, the Chinese-market Escort has notched up more than 900,000 sales, including almost 300,000 in 2016 alone, making it the Blue Oval’s outstanding model in China.
 
This year, however, Escort sales to the end of August fell 30 per cent, in line with Ford’s overall decline in China in 2018.
 
In its first-half financial report, Ford described its Asia Pacific operation as “particularly challenging”, saying it was taking “urgent action” in China to address underperformance.
 
The Asia Pacific region continues to haemorrhage money, losing another $US394 million ($A555m) in the second quarter.
 
Ford said the full 2018 financial year should result in “a significant loss” in Asia Pacific.
 
Since that report was released, Ford has announced that because of raised tariffs, it will cancel plans to export the Focus Active crossover from China to the US.
 
Exports of US-built Lincoln models and the Ford Mustang to China have also been hit by the trade war, although the revised Mustang and two new Lincoln models, the Navigator and MKC, are still scheduled to be launched by the end 2018.
 
Ford’s Australian design and engineering product development centre is split between Campbellfield, on Melbourne’s northern fringe, and the Geelong region – including the You Yangs proving ground.
 
At last count, the team numbered 1750 engineers and designers, making it the biggest such R&D operation in Australia, with a budget of about $470 million a year.
 
Apart from China, Ford Motor Company also has some issues on its US domestic market where sales are down 11.3 per cent in September – double the overall market fall of 5.5 per cent. 
 
Also, President Donald Trump’s steel and aluminium tariffs are expected to cost the company an extra $US1 billion ($A1.4b) a year. 

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