Ford closures inevitable in fuel efficient world
A researcher at the Griffith Business School has described Ford Australia’s closures as tragic but inevitable.
Anna Mortimore says the importance of the international global shift towards fuel efficiency and low carbon emission standards does not appear to have been acknowledged, leading to short-term decisions that have ultimately exposed Australia’s motor manufacturing industry.
"The markets have changed and the products being manufacture here in Australia are not keeping up with those changes. It’s all about emissions and fuel efficiency nowadays," she said.
"Penalties are being imposed on high polluting vehicles globally, for example Ireland imposes vehicle purchase taxes of up to $25,000 for high emitting cars. This is in addition to GST. Many countries don’t want them on the road anymore.
"In the European Union, the large passenger vehicles being built in Australia have become a luxury item."
Ford Australia announced the closure of its Broadmeadows car factory and Geelong engine plant by October 2016, at the expense of 1200 jobs.
Ford CEO and president Bob Graziano told a media conference that manufacturing is not viable for Ford in the long term. Australia’s Ford operations have lost $600 million in Australia over five years.
"It’s very unfortunate but it is not surprising that sales have dropped. They’re building cars that people don’t want anymore," Mortimore said.
She is completing a PhD on the use of economic instruments in managing environmental externalities of road transport. This involves how greenhouse gas reduction strategies have impacted on road transport and motor manufacturing industries worldwide.
She is reviewing all environmental and taxation policies countries are adopting for the purposes of reducing road transport emissions.
She said manufacturers like Ford and Holden could have focused on the construction of electric, hybrid versions of the big car, but believes a short-term focus has ultimately led to today’s situation.
"The government has propped up jobs by throwing money at the situation, but on a global scale there is now a marriage of employment objectives and environmental objectives to be considered," Mortimore said.
She highlighted views expressed last month by the chief executive of the Federal Chamber of Automotive Industries, Tony Weber.
The Australian Financial Review reported Weber’s claims Thailand’s excise taxes on cars had a negative impact on exports of cars to the country. He provided the example that the Ford Territory is advertised in Thailand at a 'retail price of $99,000, twice the Australian price'.
Mortimore says Weber missed the point in his belief that Australia had to beat down non tariff barriers across South-East Asia.
"That type of attitude has not kept abreast of what’s happening in the global marketplace," Mortimore said.
"The high excise taxes in Thailand are meant to discourage the acquisition of fuel inefficient, high-emitting vehicles such as the Ford Territory.
"If Australia had exported a vehicle to Thailand that had emissions of no more than 120g of CO2/km, then country’s excise taxes would have been cut from 30 per cent to 17 per cent."
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