Rumours of Ford's demise based on unavoidable facts

falcon

THE obituary writers for Ford Australia have been told: news of our death has been greatly exaggerated.

With $103 million more poured into the kitty, Ford can freshen up the Falcon and Territory and keep going until 2016.

It’s unusual to learn about a company’s plans this far out, we’re told, but it’s necessary to stop the “wild rumours” about the company’s imminent exit, the latest of which has it shutting up shop as early as the end of next year.

Wild or not, the rumours have their basis in unavoidable facts. Chief among them is the declining demand for large cars generally - it tumbled again last year, to less than 8 per cent of the market - and the Falcon in particular, with sales plummeting 36.5 per cent last year to fewer than 20,000. Ironically, government fleets are now among the most reluctant to buy.

The other ingredient is the One Ford strategy championed by turnaround chief Alan Mulally, which dictates one model in each car category for sale in every market.

We’ve known for some time that the Falcon would need to change and since Ford abandoned plans to make a small car - something that’s working for Holden - it’s been unclear what it could make when the Falcon and Territory finish.

This cash injection does nothing to extend that timeline. Their lifecycles were destined to end in 2015-16 anyway. The question marks remain.

The money is an admission, in effect, that Ford Australia needs to be on life-support just to get it that far.

But it does keep it in the game, and anything can happen. Labor might still be in power at crunch time, and Kim Carr has reasserted its willingness to co-invest to keep the industry here. The Green Car Innovation Fund has gone, but there’s still what’s left of the $3.4 billion Automotive Transformation Scheme.

The other car-makers will still be around, too, with Holden close to agreement with Canberra on plans for the latter half of the decade, when crucial decisions will be made about the Commodore. Toyota is also secure for this generation of the Camry at least, with a new engine plant under construction.

These facts will encourage Ford HQ.

There’s also the not inconsiderable matter of its design and engineering capacity in Geelong, which is one of only a handful around the globe. In theory, it could exist without the manufacturing plant. But probably not for long.

All this means that even something as wildly unlikely as Ford spending huge to bring its Broadmeadows plant into the 21st century and re-equip it to make something else - when it doesn’t need the capacity and the high dollar means building cars here is expensive - could happen.

What we know for sure though, is that the car-makers will always have their hands out every time there’s a decision about the future to be made. That's now explicit in a way it never has been before. The thin veil of eventual sustainability has slipped off the industry forever.