Ford doesn't regret decision to cancel local Focus production

The small car that was once Ford Australia’s big manufacturing hope – the new generation Focus – went on sale locally this week as an imported model.

The company says it does not regret cancelling plans to produce the Focus here, even though small cars are now the largest segment of the new-car market, output at Broadmeadows is at an all-time low and Holden is enjoying sales success with the Cruze.

“What’s done is done,” said Ford Australia Vice President Marketing, Sales & Service, Beth Donovan, who added it was “unlikely” the decision to cancel local production would ever be reversed.

Ford Australia president and CEO Robert Graziano told motoring.com.au: “It’s always difficult to look backwards and decide whether or not things would be different today. There is no doubt the small car segment is a very important part of the business, or the industry here, but so are all the other products that we have.”

Although Ford’s local factory has a capacity to build 120,000 cars annually, fewer than 18,000 Falcons and Territorys rolled off the production line in the first half of this year – a drop of 35 per cent compared with the same period the year before.

In July 2007, when Ford announced plans to build the new generation Focus in Australia from 2011, it said the move would boost production by 40,000 units and add up to 300 jobs.

A statement quoting then Ford Australia boss Tom Gorman said at the time: “Rising fuel costs and changing consumer lifestyles have created a dramatic shift in customer buying preferences with small cars accounting for 21.7 per cent of all new cars sold in Australia, up from 15.4 per cent in 1998.

“Manufacturing the Ford Focus in Australia will allow us to deliver key business requirements of improving our capacity utilisation and strengthening Ford Australia's integration into the global Ford Motor Company. It also reflects the contemporary market demands for smaller vehicles and opens up significant export opportunities within the region.”

Then in July 2009, almost two years to the day after announcing plans to build the new Focus at Broadmeadows, Ford said it was axing the project, and production would eventually be moved to Ford’s Thailand factory.

“Although difficult, this is the right decision for Ford Australia,” said the then president and CEO of Ford Australia, Marin Burela, who also blamed changing global economic conditions for the decision to axe local production of Focus.

Despite Ford saying the project was viable two years earlier, Burela said the company “could not make a business case” for profitably manufacturing a small car at its Melbourne plants.

The then Innovations and Industry Minister, Senator Kim Carr, said that while Ford had been allocated Federal funding for Focus, none of it had been drawn on by the company.

Small cars today are even more signficant,
accounting for 25 per cent of the total new-car market. Holden’s
now-locally built Cruze is among the top sellers and challenges the
Commodore as the company’s star car. And nine out of the 10 top sellers
to private buyers are small cars.

When asked about the success of Holden Cruze small car which is now made in Adelaide instead of Korea, Donovan told motoring.com.au: “Do you think it’s profitable? We chose to put [our government funding] on sustainability,” such as the diesel Territory and new LPG and four-cylinder versions of the Falcon.

The new Focus has more technology than any other small car in the local marketplace – and even more than some limousines – but it is likely to get off to a slow start locally. Supply will be constrained over the next 12 months, the company says, because initial shipments will come from Europe (where demand is strong) until Ford Australia begins sourcing the Focus from its Thailand factory mid next year.

Prices for the new model start from $21,990 plus on-road costs. The previous model was advertised for $18,990 while in runout.