Ford casting plant to supply Bosch

Ford Australia is moving into a new era as a parts supplier. The local manufacturer's casting plant in Geelong will produce as many as a million units of brake rotor a year for Bosch Chassis Systems.

Today's announcement of the deal by Ford President Marin Burela reflects a tripartite outcome involving Ford, Bosch and the Victorian State Government, which has contributed an undisclosed sum for the upgrading of the casting plant. In total, the 'greening' of the plant costs $20 million and as well as improving the facility's environmental credentials, will secure existing jobs and expand the current 100-staff workforce to 150.

"Our $20 million investment is great news for local jobs, great news for the environment, great news for the automotive sector and great news for Ford Australia," Burela said.

"It keeps in Australia work that could otherwise have gone to Chinese manufacturers, which is a fantastic testament to the skills and productivity of our workforce.

"It is vital that automotive manufacturing skills remain in Australia for the viability and strength of the entire sector, and we’re very pleased the Australian and Victorian Governments have recognised this through their support."

Ford is spending the $20 million in a number of environmentally-friendly ways. By shortening the furnace idle times, the company will reduce the electricity required to run the plant by as much as 5100kW-hours a day.

Of the total water required for the plant each week, up to 77,000 litres (20 per cent of the total) will be sourced from recycled stormwater. Prior to the upgrade, the plant has been relying on just five per cent recycled water.

The company will also use 70 per cent recycled shredded metal instead of 32 per cent currently. That works out at 67 tonnes of metal a day or 15,000 tonnes a year recycled.

After use in the production process, surplus sand will go to Blue Circle Cement to be incorporated in that company's production process. Previously, the sand used in the casting process went to landfill, but henceforth, 100 per cent of the surplus sand -- 138 tonnes a week -- will be sold to the Geelong cement manufacturer.

Ford will continue producing engine blocks for the inline six at the plant, but is also promoting the plant as a 'centre of excellence for brake rotor casting'. It's a major turnaround for the plant, with Ford previously scrutinising its local assets and contemplating the closure of manufacturing facilities in the Geelong area.

"It's no secret we were looking at a range of options for the Plant, including new ownership," said Burela, "however after careful consideration we have a growth plan that takes the Plant to full capacity and, importantly, creates new jobs at Ford."

The news is good for Ford and the people of Geelong, especially those with jobs at the plant, but what's in it for Bosch? According to the company's Director of Purchasing for brakes, Steven Jennings, Bosch acknowledges that the quality and cost competitiveness of the brake rotors the plant has been producing for the Territory are up to par.

"We basically did our assessment... -- locally and internationally -- and we currently already source the Ford Territory rotors out of this facility," says Jennings.

"Pricewise, they're very globally competitive... and from a quality perspective, their quality performance is exceptional -- and that has been a really big factor in the decision-making process.

"So if you look at it from a quality perspective and a cost perspective, the decision was quite simple for us..."

It's telling that for a company known for marketing quality products, the current value of the Australian dollar seems to have little bearing on the decision to procure brake parts from the Ford facility.

"If you're looking at importing products, there are huge logistics costs," says Jennings, who also admits that the rotors produced by Ford could conceivably be shipped overseas.

"There's potential for [export markets], yes, but we haven't got any contracts in place at the moment."

With Ford's PR folk and Marin Burela mentioning the potential loss of rotor casting business "to China", what forestalled that? Could it be the reported pressure the US is placing on the Chinese government to float the Yuan? Jennings responds in a way that indicates, once again, currency exchange rates have not significantly influenced Bosch's decision.

"There is some consideration there, because it could impact us down the track, but it wasn't a huge consideration. It was all about proven quality performance and the competitive pricing that we were able to receive."

But the contract between Ford and Bosch is not a done deal yet, Jennings informed the Carsales Network. Nor has the duration of the contract been resolved, it seems. If Bosch is willing to enter a longer-term contract with Ford, that could keep the casting plant open beyond the anticipated 2014 expiry date for the model lifecycle of the current Falcon. While it's not certain to have any great impact on Ford's decision to extend the life of the current inline six, having the operation of the casting plant partly subsidised by an external customer (Bosch), could help mount a business case.

"[The contract] hasn't been finalised as yet," Jennings revealed. "We'll be trying to make it for as long as possible. The immediate timeframe -- and you'd probably need to talk to Ford about this -- they only approve projects on a three-year basis, so immediately it's a three-year deal, but we're looking to try and extend on that."

For his part, Ford boss Burela was keeping his cards closer to the chest on that point.

"It's a long-term contract. Obviously we don't normally disclose timeframes, but suffice it to say, it's a long-term contract. It's a significant investment by Ford to ensure we have the capability to deliver on it. The plant will be running upwards of 20 hours a day.

"I'd rather not get into [how long the contract will run], because it's commercially sensitive, but we wouldn't be making a $20 million investment if it was going to last 12 months."

Picture, left to right: Senator Kim Carr, Victorian Premier John Brumby, Ford President Marin Burela

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