Ford Australia has axed 440 workers from its local operations and will scale back vehicle production by 30 per cent as it attempts to remain economically sustainable amid diminishing demand for the struggling Ford Falcon large car.
Ford Australia says it will cut production from 209 vehicles per day to 148 in November to “more closely align production with current market demand”, in what the company says is a “direct response to changing customer preferences”.
Ford says up to 440 redundancies will be offered across the business, primarily from the 1800 jobs at its manufacturing facilities, including the engine plant in Geelong and the vehicle assembly plant in Broadmeadows.
Voluntary redundancies will be offered initially but Ford admits it may be forced to issue compulsory redundancies if the required number is not originally met.
Ford Australia president and CEO Bob Graziano admitted the job cuts were regrettable but insisted they were in the long-term interest of the company.
“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, which is important for our employees, our suppliers and the communities in which we operate,” Graziano said.
“All employees who take up the redundancy will receive a competitive redundancy package, including training and career counselling; and we will work closely with them and our union partners to help our employees make the transition successfully.”
Ford Australia admitted it was considering job cuts last month when it announced its Broadmeadows and Geelong facilities would close for seven days during July to balance production with market demand.
The announcement comes just six months after Ford Australia announced a $103 million co-investment deal with the federal and Victorian governments, which Ford said would help fund updates to the Falcon and Territory in 2014 and guarantee the existence of its local operations until 2016.
Graziano says Ford Australia is unwavering in its commitment to continue building cars until that point.
“We are committed to the Ford brand and continuing to produce vehicles in Australia.”
The production adjustments will see Ford increase the Territory’s share of production to almost 50 per cent to reflect the increasing popularity of the model.
The Territory outsold the Falcon sedan over the first six months of this year for the first time in history. Sales of the large SUV are up 52.5 per cent so far in 2012 to 7695 units – in stark contrast to the Falcon sedan, which is down 24.6 per cent to 6846 sales. Sales of the Falcon Ute have also slipped 10.5 per cent, down to 2957 vehicles.
Falcon sales will hit a new low in 2012. Ford is currently on track to sell fewer than 15,000 large sedans for the year, which is around one-fifth of the 73,220 it delivered across Australia just nine years ago.
Ford Australia’s attempts to reverse the losses with the introduction of fuel-efficient versions of the Falcon are not proving as successful as it initially planned. Ford launched the new LPG-powered Falcon EcoLPi in July 2011 and followed it up with the four-cylinder petrol-powered Falcon EcoBoost in April 2012. At the launch of both variants, Ford said it believed each would eventually account for around 25 per cent of total Falcon sales, making half of all Falcons sold either an EcoBoost or EcoPLi variant. Since the launch of the EcoBoost, the two have accounted for just 21 per cent of total Falcon volume, leaving them well shy of their target.
Falling Falcon sales are compounding the financial pain for Ford Australia. In May, the company reported its biggest deficit on record: a $290 million post-tax loss for 2011.
The latest job cuts come 14 months after Ford Australia shed 240 workers from its Broadmeadows and Geelong plants – again due to falling demand for its vehicles – with daily vehicle production at the time sliced from 260 cars to the current level of 209.
The future of Ford Performance Vehicles was also cast into doubt last month when FPV confirmed the sacking of then-general manager Rod Barrett and around a dozen other Melbourne-based employees.