Geelong plant to stay open

Ford's six-cylinder engine plant at Geelong has earned a reprieve. The manufacturer will upgrade the facility with a $21 million cash injection to keep it viable beyond 2010.

Previously, the Carsales Network had reported that the plant was to be closed and staff either redeployed or offered voluntary redundancies (more here) -- and that was during a period when the whole Australian market was a little more buoyant than it's likely to be this year.

"This decision is good news, not only for our employees in Geelong, our suppliers and the surrounding community, but also for the many fans of our I6 engine, which will now be re-engineered to achieve Euro IV emissions standards," said Ford Australia President, Marin Burela.

"This is the first step in a broad product investment strategy to reduce emissions and deliver improved fuel economy across our locally built vehicle line-up, including Falcon, Falcon Ute and Territory."

Although it's undeniably a morale-booster for the local manufacturing industry generally and good news for both the Geelong-based Ford workers and Ford's supply chain partners, it also begs many questions -- questions we put to Ford's Communications Manager, Sinead McAlary.

Firstly, there was the obvious question -- what changes are necessary for the six to achieve Euro IV certification?

"There [is] a whole range of improvements in engine technology that have allowed us to do this, including the implementation of latest catalyst technology. Also we now have the availability of optimised engine control software and calibrations. And we've also significantly invested in upgrading our CAE (Computer-Aided Engineering) modelling techniques -- all of which have brought us to the conclusion that we can engineer this engine for Euro IV, whereas back in July 2007, we thought that was going to be too difficult to do and would require too much investment."

From what McAlary says then, the technology has advanced so quickly in just the short time since the original announcement, what was not viable 18 months ago is now. That suggests that the immediate near future could have been foreseen at the time, but the company went ahead with the decision to close the plant nonetheless. Was there more at play than just the question of cost? Does having a new President who is a Geelong native make a difference? We may never know...

"It was a very difficult decision [last year] and it was one that everyone wrestled with for a long time, but we really thought at that time last year it was the right option and we obviously communicated that to our employees accordingly," says McAlary.

"At the time, we also said to our employees that we're not going to give up; 'We're going to keep working and if we can come up with a way to do this, we will'. That's what we've managed to do."

It's tempting to presume that the Green Car Innovation Fund was a major motivating force in the decision to persevere with the inline six, but that's no so.

"Keeping the engine plant and engineering it for Euro IV, Ford is investing $21 million..." McAlary explains.

"We are also investing significantly in re-engineering that engine for Euro IV emissions standards. The engine development to meet Euro IV is subject to the reactivation of an ACIS-type 'J Grant', that we had received years ago to do that. Obviously, when we announced last year that we would be ceasing the engine [production], that grant was cancelled. So that grant is now reactivated."

But it seems the establishment of the Green Car Innovation Fund has had some bearing on the decision to keep the plant open. While it's not acutely relevant to the broader engine development for Euro IV compliance, the Green Car Innovation Fund can help Ford achieve future outcomes based on further development of the engine -- more grist for the mill, so to speak.

"What we are looking for under the framework of the Green Car Fund," says McAlary, "we believe that that gives us an opportunity to do a whole range of other things that weren't possible last year -- so, a variety of new engines and technologies that I'm not in a position to talk about today, because we're just working through those ideas and investment decisions. This is only the first step in a range of investment and product decisions from Ford."

For the sake of clarification, we asked how keeping the inline six in production beyond 2010 would fit with Ford's aims to rationalise powertrains around the world and improve economies of scale.

"Last year, we thought that the only way for us -- further out into the future -- to achieve the fuel economy standards we thought we would need to achieve, for us to achieve emissions standards etc, we thought the only way to we could do that in a way that made sense, was to move to the global V6 engine -- and get those economies of scale.

"What's happened now is that one, we can now engineer the engine for Euro IV, but there is also the framework of the Green Car Fund, to achieve those similar longer-term benefits in different ways -- that would not have been possible for us last year."

Far from being influenced by Ford's North American leadership team, the decision to close the Geelong plant was made locally, just as the counter-decision was also.

"We obviously have the support of our parent company in what we're doing, but both decisions were made locally," McAlary agreed.

"The [decision] last year was made with all the available information at the time and we believed at the time that it was the right thing to do, but the world has changed and the Green Car Fund gives us potential opportunities to do some pretty exciting things we wouldn't have been able to do this time last year."

Where does this leave Ford Australia? We asked about future export prospects for the Falcon, now that it's to be Euro IV-compliant and five-star-NCAP-rated.

"That is not an element in this decision at all," said McAlary. "This decision is based on [the] domestic market only."

And what about building four-cylinder engines at Geelong for the C-Platform car (Focus) when it goes into production at Broadmeadows?

"That's not in the plans," she said, elaborating that it hasn't been discussed as an option.

Given that we're not privy to Ford's future plans, it still seems like the local arm is going it alone, to some extent. The Falcon remains unique in the Ford world -- on a unique platform and powered by a unique engine. And that's not what the honchos in Dearborn want...

"This decision is just one element of what we're doing with Falcon, going forward," answers McAlary.

"It's the right decision for the Australian market -- and that's what Alan's [Mulally, Ford President and CEO] whole goal is, 'A' to be more globally-minded and have more synergies across the business, but we also still need to take into account what the individual markets need. So this decision has been made based on what this market needs to move forward."

Given former Ford Australia President Tom Gorman frequently mentioned the 70,000 units the Geelong plant was building -- versus the million-plus units of the global V6 -- could Ford Australia expand production at the Geelong plant and enhance economies of scale by exporting the engine for international applications, such as the F-Series truck, for example?

"That's not in the plans at all," McAlary responds.

"We've made the decision we've made based on the requirements for Australia and New Zealand for the products we already make. Now obviously, the world is changing every day and if any other alternative opportunities arose for us, we would grab them with both hands."

Although there's no room for sentiment in business, McAlary admits that the distress expressed by Falcon owners and enthusiasts at the news the Geelong plant would close had some influence on the company's management team opting to find an alternative.

"We have continued to get letters from customers who have loved the I6, who were devastated about the idea of it going away," says McAlary.

"So, it's been another factor that we took into account when we thought 'OK, is this the right thing to do?'

"One of the reasons we're doing it is because people have told us they want to do it.

"In the Geelong community in particular, this is obviously a very good news story... And we hope that it will reinvigorate the brand in this community, it gives a shot in the arm for suppliers, it gives a shot in the arm for other Ford employees and I think it also gives a shot in the arm for Australian manufacturing -- because there's been a lot of bad news around in the car industry of late and it's nice to be able to make a positive news announcement."

Whatever the case for the automotive industry in general, at the very least there'll be some celebrating down Geelong way tonight.

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