Blue oval back in black

Marin Burela, President and CEO of Ford Australia, announced in a press conference today that the local manufacturer had posted a small, but significant $13 million profit for 2009. Burela advised the press that the 2009 outcome was a major financial turn-around from the year before -- to the tune of $287 million.

It was also, according to Burela, the first profit Ford Australia had incurred since 2005 and was achieved in a market environment of 7000 fewer vehicles sold by the company for the year, but with more money spent on R&D during the same period. Ford's investment in R&D for 2009 was actually 22 per cent higher than for the previous year.

"As we celebrate 85 years of manufacturing in Australia and 50 years of Falcon, Ford Australia is extremely pleased that our hard work and singular focus on the needs of our customers has seen us return to profitability a year ahead of plan," Burela told the local press.

"Like our parent company in the US, Ford Australia took decisive and immediate action at the onset of the global financial crisis in late 2008 in order to weather the breaking economic storm.

"We acted quickly to significantly restructure our business in line with the prevailing market conditions, which has resulted in a $13 million profit for 2009.

"We significantly changed our sales and production focus to build cars based on demand and introduced more fuel efficient vehicles like the Fiesta ECOnetic while improving the environmental performance of our locally manufactured models.

"The great work of our product development team paid off as the award-winning FG Falcon sedan increased its share of the large sedan segment from 25 per cent to 34 per cent over the year.

"We also streamlined our production build process and maintained a laser-like focus on our inventory management."

Burela says that the result was a reflection of Ford Australia "delivering profitable [sales] volume" and reducing the "manufacturing footprint". Basically, the company cut costs, avoided slash-and-burn discounting at retail level and built only those vehicles specifically ordered by paying customers.

In respect of the dealer inventory, Ford Australia can boast "the highest turn rate in Australia," says Burela, meaning cars arriving at the dealers are being snapped up by buyers in short order -- typically within a month.

Burela attributes Ford's impressive resilience during the Global Financial Crisis to its foresight. Seeing the coming crisis, the company embarked on what the president describes as a "significant seismic shift" in the way it conducted its operations. Burela believes the change for the better was a consequence of "taking the right steps to shore up" the business, which was "restructured" very quickly.

Among other measures, Ford also reduced its inter-company borrowings by a figure Burela puts at between 42 and 45 per cent. It has been able to set and maintain retail prices at levels allowing more profit and this has been, in part, a consequence of the company's resurgent "brand appeal" and finding "a new type of customer".

The profit reportedly puts Ford Australia ahead of its financial plan for 2009. That, in turn, bolsters the company's confidence in its sales and marketing strategies for the current year.

Burela predicts that the Aussie new-car market in 2010 will exceed a million units once more. Other executives heading up his competitors -- and even Burela himself, just a few months ago -- have been more conservative, suggesting that the local market won't return to seven figures before next year. Burela is basing his optimism for Ford over the next 12 months partly on the speculation that the 2010 market will be bigger than expected.

With this in mind, and also taking into account the introduction of the EcoBoost Falcon and liquid injection LPG system in coming months, Burela anticipates local production at Broadmeadows could improve  by as much as 20 per cent this year. The production line has been working overtime for the past "six or seven months," excluding the holiday period in January of this year and demand remains high for specific variants of the locally-manufactured Falcon and Territory range. These are the XR6 Turbo, the G6E Turbo, Territory TX and Territory Ghia.

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