In January this year we wrote – The Cost of Keeping Auto Makers Local – as sales of Australian made large cars – GM Holden Commodore and Ford Falcon – dramatically dropped the auto makers stood in line for serious government financial assistance. GM’s Commodore 15-year run as Australia’s best-selling vehicle was ended abruptly in 2011 by the Japanese manufactured Mazda3, while Ford Falcon sales plummeted to fewer than 19,000 units in 2011.
In May we questioned the validety of Australian Government subsidies granted to the nations 2 big auto makers – General Motors & Ford – The Cost of Keeping General Motors ‘Holden’ Local, And asking the question: So Exactly How Much Does it Cost to Keep Auto Makers in Australia? At the time, the Australian Government answered the question by handing General Motors Holden more than $AU275 Million to help keep auto manufacturing in Australia.
Ford Australia in the last few days has shockingly announced the loss of 440 jobs in it’s Victorian plants.
In the case of Ford, the Australian Government granted the company $AU103 million in subsidies with the promise of plant – Geelong – upgrades and the longevity of Fords large sedan the Ford Falcon. Right about now the Federal Government, and Prime Minister Julia Gillard must be wondering if they’d simply thrown good money after bad, with Ford announcing that it will shed 440 jobs? ::::
The Australian Financial Review reported: Prime Minister Julia Gillard declared in January that the grant to Ford, (labelled a co-investment) would create 300 more jobs. That hasn’t happened. The federal government grant made earlier this year was part of a $103 million investment package that included an undisclosed grant from the Victorian government specifically aimed at making locally produced Fords more fuel efficient.
But the problems of the domestic car industry are likely to become worse, with local car plants already operating at below optimal scale. Heavily subsidised local manufacturers produced just 12.4 per cent of the more than 1 million cars a year that are sold in Australia, and that share is likely to shrink even further due to the weak sales of Ford’s new line of fuel efficient four-cylinder Falcons.
Ford Australia is making hundreds of workers in Victoria redundant. The company will shed 440 jobs from its plants at Broadmeadows and at Geelong. It is understood the job losses will be evenly split between the sites and will take place between now and November.
The past few years have seen Ford and its competitor Holden struggle with falling sales, sparking serious concerns about the future viability of Australia’s car manufacturing sector.
The decision to cut jobs comes after the State and Federal governments gave the company a multi-million-dollar bailout in January to secure its presence in Australia until 2016.
In a statement, Ford says overall production numbers will be reduced in the next three years to “more closely align production with current market demand”. Production will be cut by 61 vehicles per day to 148, beginning in November. Sales of the Ford Falcon have continued to decline in big numbers and Ford is changing its manufacturing plan to match the growing demand for SUVs.
The redundancies will be offered on a voluntary basis in the first instance but a “compulsory program may follow if the required reductions aren’t reached”.
Ford Australia president Bob Graziano says although difficult, the reductions are necessary to provide more stability and certainty for the business. “We understand that unfortunately the impact on our employees will be significant, but implementing this structural change is essential to ensure the longer-term health of the business,” he said. “All employees who take up the redundancy will receive a competitive redundancy package, including training and career counselling.”
Victorian Opposition Leader Daniel Andrews has called on the Premier to do something to protect jobs in the state. “The real question today is how many jobs have to be lost in Victoria before Ted Baillieu starts doing his job, starts actually putting forward a jobs plan,” Mr Andrews said. “I’ve said for 18 months now that if you’ve got no jobs plan, then no job is safe. That’s exactly what we’re seeing whether it’s with Qantas, Ford the first time, Ford again today, Toyota, the list goes on and on.”
The Government has called the announcement distressing and says it is an example of the challenges facing automotive manufacturing in Australia. It says it will continue to work with Ford, other car manufacturers and the component industry to insure the industry remains competitive.
Australian Manufacturing Workers Union spokesman Leigh Deihm says the decision is a surprise. “It’s a real kick in the guts for our members. That’s a reality,” he said. “It’s been a large shock. It is very disappointing.”
Mr Deihm says there is little chance more than 400 people will seek a voluntary redundancy.
“They’re not going to have enough people apply for the voluntary redundancies; they’re talking about 220 from each plant, the Broadmeadows and the Geelong plant, so we’re not expecting they will get enough volunteers and obviously there will be compulsory redundancies from there.”
The union representing Ford workers says the entire Victorian car industry is at risk of collapsing after the latest job cut announcements.
Ford will make 440 workers at its Geelong and Broadmeadows plants redundant by November and is cutting production by 61 vehicles per day in what it says is a direct response to changing customer preferences.
The Australian Manufacturing Workers Union – AMWU – is in talks with Ford management in Geelong in a bid to learn when and how the job cuts will affect workers. AMWU assistant state secretary Leigh Diehm says the workers are still coming to terms with the job losses. “The workers out at both of those plants are gutted understandably. They face a very uncertain future,” he said. “We are going to be there to help them through that, but obviously that starts with the first step with discussions with Ford.”
Mr Diehm says the job losses will cause a significant flow-on effect for the entire car industry, in particular struggling car parts manufacturers. “It’s still yet to be seen what this means for the auto components industry, the suppliers to Ford,” he said. “Hopefully there’s not going to be further losses.”
Ford worker Jim Kontogeorgis told the ABC that staff are still unsure exactly what is happening. “We’re going to have to wait two or three weeks before they get back to us with any sort of numbers. We just can’t believe it,” he said.
The State Government says it is monitoring the impact the job losses could have on the wider components industry. Premier Ted Bailieu says it is still not clear what impact Ford’s decision will have on the many other businesses that supply parts to the carmaker, but most are prepared.