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NEWS
Developing future for Ford Oz
Ford lobbies Productivity Commission for more R&D funding in AustraliaThe Productivity Commission is accepting no further submissions for its review of the automotive industry, which will be delivered early next year.
Ford Australia has its collective fingers crossed the review will recommend that the federal government allocate more funding for automotive R&D (research and development). The company announced earlier this year that it would cease manufacture of the Falcon and Territory from late 2016, but the iconic brand is not giving up on its local R&D team.
Some industry pundits have speculated that Ford's R&D effort in Australia – including ACART, the proving ground at Lara, and engineering at Campbellfield – will be laid to rest following the plant closures in 2016.
But Ford claims it is committed to R&D in this country. In fact, Ford's submission to the Productivity Commission review is clearly aimed at garnering support for enhanced assistance to all car companies employing engineers and designers in Australia.
"ATS [the Automotive Transformation Scheme] is broken into different categories," Sinead Phipps told motoring.com.au yesterday. "As of the end of 2016, we will obviously no longer meet the production category [requirements], so what we're asking for is a change in emphasis – towards more of the R&D work."
Ms Phipps, Ford Australia's Communications & Public Affairs Director also said: "That wouldn't just apply to us, that would apply to others as well – if the Productivity Commission decided to go down that path."
Any company – even full-line importers like Hyundai and Kia – with some sort of local engineering input for its imported cars could conceivably draw on that funding.
If Ford has seen fit to make its own submission to the Productivity Commission review, could that be interpreted as a sign the company is uncertain R&D work can be commercially sustainable in the current Australian business environment?
"I can't go into details, but our business plan going forward retains our R&D, so it's a critical part of our business – and we have no plans to change it," Ms Phipps responded.
Maintaining an R&D centre in Australia is only viable if it's cost-effective and efficient. That assumes that for each project undertaken in Australia, Ford Australia receives appropriate levels of funding from the parent. How then is it deemed a success in commercial terms?
"That's a difficult one to answer. We don't do anything with the intention of losing money, for starters, so it has to be able to be a viable part of the business, but it is also an expensive part of the business. To be able to continue winning global projects, the team here needs to be able to continue be on the cutting edge of new development and have access to new technology.
"We strongly believe that the benefits to the Australian economy, and the manufacturing/engineering industry as a whole – not just automotive – gets a lot of value out of the smarts that automotive R&D brings to Australia. So that's why we believe that it is worth directing more of the ATS credits towards it."
In other words, Ford is looking to the ATS to fund upgrades to the R&D facilities and all the 'smarts', not necessarily to cover off the cost of labour and other overheads.
Although Ford's ACART facility has undertaken work for at least one non-Ford client in the past, there are no plans for Ford Australia to find more R&D work outside the company, Ms Phipps said. There seems to be enough work within Ford to keep the local R&D team fully occupied anyway – although they have to pursue every project aggressively.
"The Australian-based team here has to compete against other development arms of Ford for work; that's no different than it has been in the past. Look at Ranger for example; when we started doing Ranger, the team here had never developed a pick-up truck of that nature before. They obviously had a lot of R&D [expertise] for large, rear-wheel drive sedans and utes, but not pick-up trucks of that nature.
"It really comes down to capability and capacity. If they can turn it around and do it for the cost and [within] the time, then they're equally as worthy as any other R&D centre."
Labour demands from R&D projects will wax and wane over time, Ms Phipps observed, but the number of engineering staff will hover between 1000 and 1200 heads after the company closes down its vehicle assembly plant in Campbellfield and the engine plant in Geelong.
Ford's submission wasn't entirely focused on R&D. It also mounted an argument in favour of assistance for local manufacturers – even though Ford will make the move to full-line importation after 2016.
"Our overall submission was done because we think that auto manufacturing and industry as a whole is important to the Australian economy," Ms Phipps said. "And we think that any country that has [a local manufacturing presence] should do what it can to keep it. That is why we've given everyone three years' notice of what we're doing – in terms of our manufacturing – because we think we want to give the industry as much time to transition as possible."
By implication, sudden plant closures could bring the whole industry to its knees. Three years' warning in advance provides the breathing space for parts suppliers and Holden and Toyota to make adjustments to the way they run their respective business.
"So we think the industry is important," Ms Phipps continued. "And we believe that even post-2016 Ford will continue to be a very big player in the industry – just in a different way."
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Written byKen Gratton
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