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Ford closures inevitable in fuel efficient world

By: Stephen O'Grady
30 May, 2013

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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Nev | Friday, May 31, 2013, 2:26 PM
A Ford Falcon on gas costs no more than a Mazda 3 to run and on an Australian fuel. An opportunity lost - by all Australians but especially the state and federal governments.
Stephen | Friday, May 31, 2013, 7:04 PM
God spare us from the stupid intelligencia like this woman! What a waste of space, oxygen, and vast amounts of money guzzling from the public tits!. It used to said that a Bs, MS, PHd, was translated as "bull sit, More of same, Piled hiher and deeper!! Here we have living proof!
Alan Swales | Saturday, June 1, 2013, 9:35 AM
The ultimate in personal transport is a fleet of small vehicles that are electrically powered from batteries that are charged from Solar Panels where the vehicle is garaged during daylight hours as well as on-vehicle solar panels as make-up energy. My father patented his INVERTER beginning in 1938, being finally awarded his patent in 1952. One of his aims was to have ordinary AC induction motors power electric vehicles. He died in 1956 so the invention was only used to power the prototype.
Lou Furbadamo | Saturday, June 1, 2013, 10:04 AM
Just another case of a distant academic making a pet boffin observation and then rashly rushing to sensational, counter productive, grossly unsubstantiated conclusions. That potentially further damage and destroy our vital Auto industry and send technical development back, well behind other leading advanced, productive nations! Arguably, Mortimore’s damming conclusion, is micro isolatable and belatedly surmountable! Further, it does not strongly configure with other obvious & varied prohibiting costing and viability reasons, given by Ford. Specifically, it doesn’t address the far more serious and important general structural and uncompetitive cost and pricing problems facing and crippling all Auto makers and component manufacturing in this country. I’d flag such wary, superficial, sensationalist articles, as hostile assaults on our weakened industry and arguably malicious to our industry and Australia’s best interests? We don’t need some obscure institutional research, to tell us what most people in the industry have known for years! That, ”Ford Oz. was building, out dated car designs that were big fuel guzzlers and fast becoming unpopular! The more pertinent, proactive research question should have been; Stubbornly Why?? What was the seemingly suicidal motivation and could it have been successfully treated and disaster avoided? Frankly, your old Aunty, could’ve probably told us that they needed to come into line with popular international trends and that announced closure and job losses were “tragic”? But to then prematurely effectively conclude, that the company was doomed from the outset because of environmental issues? Iis like concluding you’ve been shot, just because someone's points a gun? Or even disturbingly better, that you laughably had great sex, just because you managed a minor arousal simply dazzles credibility?? It’s obviously possible, but even in “Ford’s limp pre- Dickament” very curable and avoidable, if we Viagra chose to practically boost, stiffen support and elatedly recover the situation. In any case it’s only natural and expected, for designs and technology to change to keep up with newer, more enticing developments. Other auto facilities have routinely done it! So for Ford, to brazenly, not to have locally, suggests other overriding, insidious strategic and management considerations or problems. Which are crucially not properly factored, nor explained and need to be for Australia’s sake? Ever ominous, the lure to China & Asia has been simmering strong for over 20 years now. And is clearly encouraged by our Government Strategic Asian Century Butt wipe Policies! Obviously, doing a PhD on “how greenhouse gas reduction strategies have impacted on road transport and motor manufacturing” would never cloud nor polarise the issues, nor tempt over dramatisation and fluff up life and death importance of any sectarian, tit bit investigation and results? Notwithstanding, Ford wouldn’t have been the first company to undergo dramatic change and innovate, in order to move with the times. They have the multi-national technology and expertise, to make necessary changes and significantly move to world best practice, popular trends and times, especially with generous Aussie grants and support hand outs! Pity, Bad Move, Walk Out, Abandoner, “Multi National” Ford Manufacturing’s Brotherly Mantle, now excludes “This Nation”!! Thanks to our non industrial savvy, hapless Juliar Policies and Hand Bagging Sisters? The proof of my tastier, Aussie pudding assessment, being that Ford, has successfully spent trillions to start up from scratch and train newer, larger, modern trend factories in China, India and other “cheaper” places. So why not in stable, reliable, friendly, trained and English speaking and culture Australia? Continued 2/2.
Lou Furbadamo | Saturday, June 1, 2013, 10:06 AM
Continued 2/2. Clearly, because of our grossly uncompetitive, working environment and crippling cost pressures impacting on the ultimate rip-off value for money local price? Everybody knows that! They could continue & make their latest and best here, but they won’t! Not because of claimed out dated designs, fuel and environmental deficiencies, but because unpalatably, we’re simply uncompetitive, unprofitable and bad return on their investment. Too shocking for our wasteful duplicating multi-governments to cope and deal with, now we’re still in the boom shadow! Contradicting Weber, is grossly overstating the relative importance of her environmental objectives, compared to prohibitive foreign tariff protection and the resultant devastating impact on local employment. In the nonsense "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." Sure, ideally 17% tariff is easier to manage compete with than 30%. But that’s grot cold comfort to Geelong workers who are faced with a company that can’t justify the investment changes to deliver the said lower emissions and is now haemorrhaging sales, in part because of foreign barriers? And our betraying pollies crawl & bend over, to encourage further unimpeded offshore relocation, job exporting & industrial shafting! So don’t rub salt into the septic wound, by peddling “inevitable” doom dribble! Even Now! Ford Australia is salvageable, if we had the determination, guts and know how! But it started disappearing with the clueless Button plan and more recent commission global Be-trading, didn’t it? An you wouldn’t expected it from our worn out, sapping Lefty government, that’s never had the balls nor decency, nor patriotism to look after the best interests of “their average Aussie workers”. Reintroduce a levelling 40% tariff barrier to all Auto imports and see how quickly “outdated” Ford vehicles, suddenly become more environmentally efficient and buyer appealing, with all those quaint old features! Ford CEO Graziano said that manufacturing was clearly not viable here and that Aussie operations had lost $600 million over five years. Importantly, he “ shock” emphasised that our manufactured cost was a whopping, prohibitive four times greater, than that of our major Asian competitors and twice that of Germany! Prima-facie, arguably a gross, treacherous inditement on the entire Australian Political and Economic system and a beleaguered, status gauging parameter now so hopelessly bad, to warrant incompetent capital condemnation of every industry minister, prime minister and treasurer for the last 20 years! Pity paid academics aren’t interested in fundamentally researching, “why such a locally hopelessly destructive, uncompetitive price discrepancy”? Any credible report would’ve included this principle costing factor in its viability assessment and discussion? Perhaps they fear being victim impacted by finding recommendations that would include cuts to wasteful, exorbitant and unproductive education & university funding. So as to reduce the “impossible shock” and duplicating Government tax and demand burden on businesses and producers? We keep talking hype and big spending eduction & training, but where’s the commensurate success and results! As cynically stated before; “If we don’t want, or are incapable of fixing Australia’s failing, uncompetitive industrial problems and “impossible Shock”. Then re-introduce a 40% tariff and see how quickly we cheer up the Geelong & Broadmeadows Crowd and magically make local Fords appealing and trendy again, even without Grown Harry Potter’s magic stick? Cheers, Sobering, Stone the Pollies and No Academic Waffle Here, Wake up Australia , Furbo!
Geoff Thomas | Wednesday, June 5, 2013, 4:41 PM
Hey Furbo, I think you are being a bit unfair there, not everyone would realise that the big motor companies in America had also this problem of not leading the market but trying to keep the market in the past, and what is left of the American 'Greats' of car manufacturing? I recall that not too long ago a small Australian company tried to import an efficient in-expensive electric vehicle from India? China? was almost put in jail but no penny dropped at Ford, - possibly they thought that because of that political pressure they did not have to worry, but that is of no matter to potential customers. I fully agree that the car manufacturing industry should be kept but how can it if it doesn't change with the times? Cheers, Geoff.
Lou Furbadamo | Friday, June 7, 2013, 7:19 AM
Hello Geoff! Once again you seem compelled to bark up the wrong tree? Cause you’re either set on contradicting me regardless, or siding with the apparent green dreamers & spinners? Either way, your off track! I’ve stuck to the critical facts, so if the dopey looking hat’s your size & fits perfectly as if made for you? Wear it, cause it’s probably yours? How could anyone sensibly support this articles conclusion, when it’s carried out by a researcher, vested with completing a presumably “greenish” PhD on “… environmental externalities of road transport” and “how greenhouse gas reduction strategies have impacted on … motor manufacturing industries,” when Ford didn’t mention it, as a significant reason for its factory closures! Instead, clearly the key reasons were the high A$, mounting losses and worsened prohibitive costs of local manufacturing! Something this report has incredibly avoided, so how could it possibly draw credible conclusions? Even more damning, is that although, we have top quality, optioned, “clean vehicle” choice. Many more cars made in emerging India, China & eastern block countries, are still cheap & basic, because of affordability issues. They don’t overly worry about safety features, air pollution, carbon emissions and sometimes even expensive catalytic converters? Contradictory to local damnation, those companies are not going defunct, but expanding! As far as Yankee multi nationals. They may be falling behind in technology, but they’ve rebounded again. Being totally mercenary, they started strategically closing their high cost, uncompetitive factories, years before ours! But unlike Australia, the’ve proactively responded and fought to become significantly more competitive and profitable again! Their manufacturing cost would now be around half of ours? That’s why, they’re shutting us down instead! They’re cost price, margins and sales addicted and response predictable. If you sit near, you can hear their grasping penny pinching minds tick. They’ve no qualms doing a “Ford on you,” when the timings right, faster than you can whistle Yankee Doodle Dandy or Stick your knees up mother Brown! Labor, doesn’t want to save dispensable, expensive subsidy prone Ford, because viable local industry is impossible, unless they change their wasteful, impossible shock ways. Once gone, there’ll be no more billion dollar Ford subsidies required! High cost and uncompetitive-ness, is the noose strangling our industry, not menial environmental issues! As for your “efficient in-expensive electric vehicle?” That was gimmick comparable to a souped up, marginally oversized, ride on lawn mower! Structurally light weight & deficient all round, that didn’t meet safety standards. I’ve got an efficient 14HP ride-on lawn mower, but I wouldn’t suicidal dare ride it out amongst “big real car” traffic! There’s only one furbo treatment for potentially malicious or misleading nonsense, that can potentially malign, disadvantage or destroy Australia’s best interests, prosperity and independence. Of which, there’s been plenty, treacherously going on, to get us into this mess of waisted opportunity and unexpected economic malaise. And that’s not to pander or make excuses for it, as you seem to do? Stop being nonsense negative, cause the only thing unfair here is your dispersion and masquerading reports, unfairly condemning our industry . Get your facts straight before criticising, otherwise you’ll continue getting deserved Lefty come Greenie argument spanked! Finally, as far as leading edge design and innovation. We’ve supposedly, clever, cleverer, cleverest furbo engineers “to change designs with the times”?? So naturally, I comprehensively don’t agree with your comments! Cheers again, Your Industrially & Economically Quasi- Impeccable, Caringly Friendly Furbo!
Victoria | Tuesday, July 2, 2013, 1:59 AM
n January, 2007, five American soldiers were blrlauty murdered in Karbala, Iraq, by a team of operatives who had been trained by the Iranian Revolutionary Guards’ foreign legion, the Quds Force. The mastermind of the operation was a senior member of Hezbollah, the Lebanese-based terrorist organization that is a virtual part of the Iranian regime. That man, a Lebanese named Ali Musa Daqduq, was subsequently captured in southern Iraq, as were other key members of the assassination team.Daqduq is still under American control in Iraq, the last of the killers from the 2007 remaining in prison. Not so the others. Incredibly, the other captured terrorists were subsequently released to the Iraqi Government in the summer of 2009, and speedily repatriated to Iran, part of a swap for British soldiers who had been taken hostage by Iranian-run thugs. American military officers were not happy about the release, and when I discovered what was going on, and wrote about it, I received very vigorous denials from the (Bush) Pentagon, along the lines of “what do you take us for? We would never do such a thing.”But they did, and not just with the Karbala killers. Hundreds of Iranian and Iranian-trained terrorists who were once under U.S. control were sent home via the Iraqis, despite the predictable and entirely justifiable rage of American military men and women. But they were told to do it by their political bosses, and they followed orders, as they must.Michael Ledeen wrote all of that to build up to his main focus:It seems they are now on the verge of liberating Ali Daqduq, who has a lot of American blood all over his claws, not only from the Karbala Five. He worked directly for the Iranians, training Iraqi terrorists—sometimes in Iraq, sometimes in Iran itself—to assassinate our troops. They are planning to turn him over to the Iraqi Government, which will, as it always has, arrange for his onward travel to Iran.While my ieal ways would say that we should summarily execute any and all Iranaians caught in Iraq I realize there may be political pressure not to. It seems to me that more and more that politcal leaders desire to fight nice. That concerns me.And talk about being caught between a rock and a hard place:Many of those who are upset with this situation are venting their spleen on Iraqi Prime Minister Maliki, but that strikes me as unrealistic. What would you do in his position, whatever your innermost feelings about Iran? The Americans are about to leave in a few more days. Right across the border, and indeed all over your own country, the Iranians are preparing to enhance their power at your expense. If you are too obstreperous, they’ll blow you up. So of course you’re going to cater to Iranian desires, recommendations, and hints.Can Maliki possibly expect to survive a confrontation with Iran? Can he possibly expect any effective protection from Obama? No way. This is, after all, a president who staged a musical comedy in DC just a few weeks ago to accuse Tehran of plotting mass murder in our capital. And then did nothing, except to go public with a pathetic request that the Iranians return our drone.Sheesh. I think I'll include Maliki in my prayers. That's brutal.BTW, is Micheal Ledeen new to Pajamas Media? I do not recall reading any of his posts before.